22 22
ANNUAL REPORT
2021 PROXY STATEMENT
THETHE
ORIGIN VISION
ORIGIN VISION
TO COMBINE THE POWER OF TRUSTED ADVISORS WITH INNOVATIVE
TECHNOLOGY TO BUILD UNWAVERING LOYALTY BY CONNECTING
PEOPLE TO THEIR DREAMS.
BEST BANKS TO WORK FOR 8 CONSECUTIVE YEARS
AMERICAN BANKER & BEST COMPANIES GROUP
OVER 250 ORGANIZATIONS SERVED
IN OUR COMMUNITIES SINCE 2020
44 BANKING CENTERS
SERVING 22 COMMUNITIES
DOLLARS IN MILLIONS
ENTRY: DFW 2008
HOUSTON 2013
LOCATIONS: 19
LOANS: $2,562
DEPOSITS: $2,574
ENTRY: 1912
LOCATIONS: 19
LOANS: $1,468
DEPSOITS: $2,453
ENTRY: 2010
LOCATIONS: 6
LOANS: $611
DEPOSITS: $468
LETTER FROM THE CHAIRMAN
The “Origin Story” begins in 1912 and throughout our history
I am proud to report that our employees across the company
our company has faced good times and bad; we have had great
have done a tremendous job of successfully executing in these
successes and encountered our share of challenges. What has
four strategic areas. Certainly, our industry and our country have
always been at the center of who we are as an organization is our
challenges ahead while navigating through the pandemic, but
deep commitment to our culture and a passion to be there when
I have seen what we can do when faced with challenges. I am
our employees, customers and communities need us most.
confident in our ability to be successful as we move forward in
In my thirty-seven years of being part of Origin, 2020 was the year
that made me the proudest. The resiliency of our employees during
CUSTOMER SUPPORT
the pandemic and the focus they have maintained on serving our
2021.
customers and communities has been relentless and unwavering.
From the outset of the pandemic, our bankers understood that we
COVID-19 RESPONSE
had an unprecedented opportunity to make a difference in the lives
of our customers and their businesses as they faced uncertainty
about the pandemic. Origin’s geographic market model gave us a
Origin entered 2020 with a clear strategy, but pivoted in response
competitive advantage because our executives and bankers know
to the coronavirus pandemic. While we remained focused on our
their clients so well. These deep relationships allowed our bankers
original key initiatives, we narrowed our broader strategy to four
to effectively communicate with our customers, addressing each
primary areas:
customer’s unique operating and financial needs.
• THE HEALTH AND SAFETY OF OUR EMPLOYEES
For example, we proactively reached out to our customers with
• SUPPORT FOR OUR CUSTOMERS AND COMMUNITIES
needs changed throughout the year, our forbearances declined
loan payment deferrals in early March 2020. As our customers’
• BALANCE SHEET PROTECTION
• EXPENSE MANAGEMENT
from a high of more than 21% on June 30, to less than 2% on
December 31 – a reduction of more than 90% during the last six
months of 2020. Our focus on relationships has always been at the
forefront of our banking philosophy and our proactive forbearance
activities exemplified that focus during the year.
What has always been at the center of who we are as an organization is
our deep commitment to our culture and a passion to be there when our
employees, customers and communities need us most.
We were also very active in the Paycheck Protection Program (PPP).
relationship banking by integrating a personalized user experience
Our team worked non-stop, often through all hours of the night,
for our customers. We will continue to keep technology at the
to get loans funded that allowed our customers to maintain their
forefront of our business strategy as we move forward.
businesses and pay their employees. This exceptional effort is
a prime example of the deep commitment our bankers have to
RELATIONSHIP BANKING
supporting our customers and communities.
In 2020, Origin funded more than $560 million in PPP loans, which
do, and I am deeply impressed by the performance of our teams,
supported more than 3,100 companies and approximately 63,000
especially in a challenging environment. We increased total
employees across our communities. The PPP process has been a
deposits by $1.5 billion in 2020, or 36% year-over-year. We also
tremendous, ongoing undertaking, and we can all take pride in
increased noninterest bearing deposits $529.9 million, or 49%
knowing that we have helped so many customers get through a
year-over-year. While a portion of this growth may be associated
Relationship banking has always been at the center of what we
difficult and uncertain time.
COMMITMENT TO OUR COMMUNITIES AND
SUPPORTING DIVERSITY AND INCLUSION
with the PPP initiative, this increase strongly suggests that our
teams strengthened existing relationships and developed new
ones throughout the year.
During the past decade, Origin has developed a proven track
One of Origin’s core values is corporate and individual commitment
record of strong loan growth. This was the case in 2020 as our
to our communities. This past year we saw first-hand how our
loans held for investment grew by approximately $1.6 billion.
communities were adversely impacted by the pandemic. In direct
This growth was driven by a nearly $800 million increase in our
response, we stood by this core value and donated a portion of our
mortgage warehouse portfolio and approximately $550 million in
PPP loan fees to a broad range of local charities, food banks and
PPP loans. Our mortgage warehouse team did an incredible job of
service organizations.
capitalizing on market conditions and expanding our client base in
2020. On top of significant loan growth in these two categories,
We also recognized the need to be proactive in our communities
our banking teams did a great job of growing relationships, leading
regarding diversity and inclusion. In 2020, Origin funded endowed
to a 5.9% increase in loan growth outside of mortgage warehouse
scholarships at four Historically Black Colleges and Universities
and PPP loans.
within our markets. We also created an important new role within
our company focused on diversity, inclusion and equity. Certainly,
Our mortgage banking team was highly effective this year, building
2020 marked a year where individuals and corporations took steps
on our long-term strategic decision to develop a mortgage
to be more proactive with diversity and inclusion, and Origin is at
platform that reflects a community-based retail model. In 2020,
the forefront of such endeavors.
the mortgage team had a record year, increasing revenue by $17.3
million to a total of $29.6 million for the year. This impressive
In total for 2020, Origin committed more than $1 million to
growth was driven by a team that worked tirelessly to serve our
community support initiatives in our markets, continuing our proud
customers.
tradition of serving our communities.
INNOVATIVE TECHNOLOGY
STRENGTHENING OUR POSITION
I have highlighted some of the ways we supported our employees,
Early in 2020 we laid out a new vision statement for our company:
customers and communities in 2020. The results of our activities
“To combine the power of trusted advisors with innovative
technology to build unwavering loyalty by connecting people
reinforce my firm belief that if we appropriately support these
three segments identified in our mission statement, the fourth
to their dreams.” At Origin, we fully embrace the importance
segment, you our shareholder, will also be rewarded. In last year’s
of providing innovative technology across many platforms to
annual report letter, I spoke to how we were well-prepared to
meet customers’ banking needs. With the rapid changes in
capitalize on the opportunities before us, and this year we took
customer behavior and the effects of the pandemic, we believe
strategic action to execute on those opportunities and strengthen
it is imperative to continue executing on our value proposition of
the company.
combining high-touch, personalized service with the appropriate
technology partners to deliver innovative mobile and online
We have been and will remain committed to the protection
solutions for our customers.
of our capital position and strengthening our balance sheet.
Early in 2020, before we knew of the pandemic challenges to
Our investment in technology has been effective, allowing our
come, we successfully completed the issuance of $70 million of
customers deeper use of our digital channels, particularly in
subordinated debt by the Bank. Then in October, we successfully
mobile delivery. Specifically, we have seen a 15.4% growth rate
completed an $80 million issuance of subordinated debt by Origin
year-over-year in registered app users, and a 24.8% growth rate
Bancorp, bringing our total offerings in 2020 to $150 million. The
in mobile deposit transactions. We are also introducing a new
website in the first quarter of 2021, incorporating our philosophy of
subordinated debt was issued to help support our capital position
and to enhance our liquidity.
Once the pandemic was upon us, it was prudent to reserve
focus is not on the pandemic, but on how all of our employees
capital for potential problem loans and economic uncertainty. We
across our markets showed unwavering loyalty to our customers,
reserved $59.9 million in 2020, further strengthening our balance
communities and shareholders when we were needed most.
sheet in preparation for uncertainties that might occur. Even with
significantly higher reserves than in years past, we were able to
Each year in this letter I thank our employees for their commitment
strengthen our financial position by growing retained earnings
to our culture. I know that our corporate culture is defined by each
through net income. We further bolstered our liquidity with
individual employee and their commitment to our mission and
additional cash on our balance sheet and growth in our investment
vision, and I never take that for granted. In a year that put us all
portfolio. We also ensured that, as we managed through the year
to the test, I am beyond thankful for our employees who rose to
and turned the page to 2021, our company was operating from a
meet every challenge, performed at an extremely high level and
position of strength and prepared for future success.
personally demonstrated what is unique about Origin and what
allows us to be successful.
CONCLUSION
I firmly believe Origin Bancorp is well-positioned to capitalize
you for your investment and belief in Origin Bancorp.
On behalf of our management team and board of directors, thank
on the opportunities that lie ahead in 2021 and beyond. We
had a strong year in 2020 and successfully navigated through an
unprecedented time. As I reflect on 2020 for our Company my
We had a strong year in 2020 and successfully navigated through
an unprecedented time.
DRAKE MILLS
Chairman of the Board,
President & Chief Executive Officer
Origin Bancorp, Inc.
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31,
(dollar amounts in thousands except per share data)
SUMMARY INCOME STATEMENT
2020
2019
Net Interest Income
$
191,536
$
173,712
Provision for Credit Losses
Noninterest Income
Noninterest Expense
Net Income
SUMMARY BALANCE SHEET
59,900
64,652
151,935
36,357
9,568
46,478
144,074
53,882
Total Loans Held for Investment
$
5,724,773
$
4,143,195
Total Assets
Total Deposits
7,628,268
5,324,626
5,751,315
4,228,612
Total Stockholders’ Equity
647,150
599,262
PER COMMON SHARE DATA
Diluted Earnings Per Common Share
$
1.55
$
Cash Dividends Declared Per Common Share
Book Value Per Common Share
RATIOS
Return on Average Assets
Return on Average Equity
Tier 1 Capital Ratio
Total Capital Ratio
0.3775
27.53
0.56%
5.82%
10.11%
13.79%
2.28
0.25
25.52
1.06%
9.27%
11.94%
12.76%
PROXY STATEMENT AND NOTICE OF
2 21
ANNUAL MEETING OF STOCKHOLDERS
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500 South Service Road East, Ruston, Louisiana 71270
March 12, 2021
DEAR ORIGIN BANCORP, INC. STOCKHOLDERS,
You are cordially invited to attend the Annual Meeting of Stockholders of Origin Bancorp, Inc., a
Louisiana corporation (the “Company”) to be held virtually on April 28, 2021. The Annual Meeting will
begin promptly at 12:00 p.m., Central Time.
On or about March 12, 2021, we mailed a Notice of Internet Availability of Proxy Materials to all
stockholders of record at the close of business on March 9, 2021, containing instructions on how to
access our Proxy Statement and how to vote your shares, as well as instructions on how to request a
paper copy of our proxy materials. You are urged to vote by proxy via the Internet, telephone or by
mail pursuant to the instructions in the Proxy Statement.
On February 24, 2021, F. Ronnie Myrick and George Snellings, IV informed the Board of Directors of the
Company that they have decided not to stand for re-election as directors at our 2021 annual meeting
of stockholders. Mr. Myrick and Mr. Snellings have been directors since 2008 and 2012, respectively.
The Chairman and the entire Board earnestly thank each of Messrs. Myrick and Snellings for their long
and dedicated service to the Company. Two new nominees, A. La’Verne Edney and Meryl Farr, have
been nominated to fill the vacancies created by the retirements of Messrs. Myrick and Snellings. We
are excited about the experience and skill sets these outstanding candidates will bring to our Board
going forward.
We have adopted rules promulgated by the Securities and Exchange Commission (“SEC”) that allow
companies to furnish proxy materials to their stockholders over the Internet. The Proxy Statement
contains information about the official business of the Annual Meeting. Whether or not you expect to
attend, please vote your shares now. Of course, if you decide to virtually attend the Annual Meeting,
you will have the opportunity to revoke your proxy and vote your shares electronically at the Annual
Meeting.
We appreciate your continued support of the Company.
iii
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS Notice of
Annual Meeting of
Stockholders
VOTING ITEMS
Date:
April 28, 2021
Time:
12:00 p.m.,
Central Time
Format: Virtual
Record Date: Close of
business on March 9, 2021
1. Elect ten incumbent directors and two new director nominees, for a total of 12 directors, to serve
until the next annual meeting of stockholders and to serve until their successors are elected and
qualified;
2. Approve, on a non-binding advisory basis, the compensation of our named executive officers
(“NEOs”) for 2020 (the “Say-on-Pay Proposal”);
3. Approve the Origin Bancorp, Inc. 2021 Employee Stock Purchase Plan (“ESPP”);
4. Ratify the appointment of BKD, LLP as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2021; and
5. To transact such other business as may properly come before the Annual Meeting or any
postponement or adjournment of the Annual Meeting.
Due to the unprecedented public health impact of the coronavirus pandemic (“COVID-19”) and
to mitigate risks to the health and safety of our communities, stockholders, employees and other
stakeholders, we will hold our Annual Meeting of Stockholders in a virtual only format, which will be
conducted via live webcast. Stockholders will have an equal opportunity to participate at the annual
meeting online regardless of their geographic location.
In order to attend the virtual meeting, you must register in advance at www.proxydocs.com/obnk
prior to the meeting. Upon completing your registration, you will receive further instructions via email,
including your unique link that will allow you access to the meeting on Wednesday, April 28, 2021, at
12:00 p.m., Central Time. You will have the ability to submit questions. Please be sure to follow the
instructions found on your Proxy Card and/or Voting Authorization Form and subsequent instructions
that will be delivered to you via email.
Our Board has fixed the close of business on March 9, 2021, as the record date for the determination
of stockholders entitled to notice of, and to vote at, the Annual Meeting. A list of stockholders entitled
to vote at the Annual Meeting will be available for inspection by any stockholder at our principal office
during ordinary business hours beginning two business days after the Notice of Internet Availability of
Proxy Materials is mailed through the completion of the Annual Meeting, including any adjournment
or postponement thereof. The mailing address for our principal office is 500 South Service Road East,
Ruston, Louisiana 71270.
iv
Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of
Stockholders to be held virtually on April 28, 2021. This proxy statement and our annual report to
stockholders are available at www.obnkannualmeeting.com.
By Order of the Board of Directors
Drake Mills
Chairman of the Board, President and Chief Executive Officer
Ruston, Louisiana
March 12, 2021
v
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TABLE OF CONTENTS
iv
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
1 PROXY STATEMENT
2
ABOUT THE ANNUAL MEETING
10 PROPOSAL 1: ELECTION OF DIRECTORS
10 Director Nominees
12 Director Nominee Qualifications and Experience
18 CORPORATE GOVERNANCE
18 Board Leadership Structure
19 Director Independence
20 Director Education and Self-Assessment
20 Board Meetings and Committees
31 Stockholder Nominees and Proposals for 2022
Annual Meeting
32 Certain Relationships and Related Transactions
34 Director Compensation
37
COMPENSATION DISCUSSION AND
ANALYSIS
37 Overview
37 Financial and Strategic Highlights
38 Executive Compensation Philosophy
39 Role of the Compensation Committee
39 Role of the Compensation Consultant
39 Role of Management
40 Role of Stockholders
40 Risk Assessment
40 Competitive Benchmarking and Compensation
Peer Group
41 2020 Named Executive Officers
43 Discussion of Executive Compensation Components
48 Other Compensation Policies and Information
49 Clawbacks for Any Restatement; Executive
Compensation Recovery Policy
49 Trading Restrictions regarding Hedging or Pledging
of Common Stock
49 Report of Compensation Committee
50 Executive Compensation Tables
51 Outstanding Equity Awards at Fiscal Year-End
53 Option Exercises and Stock Vested
53 2012 Stock Incentive Plan
53 Non-Qualified Stock Option Agreements
54 Supplemental Executive Retirement Plan and
Executive Supplemental Income Agreement
56 Life Insurance Plans
58 Employment Arrangements, Change-in-Control
Agreements, and Potential Payments Upon
Termination or Change-In-Control
65 Chief Executive Officer Pay Ratio
PROPOSAL 2: ADVISORY VOTE ON THE
SAY-ON-PAY PROPOSAL
PROPOSAL 3: APPROVAL OF EMPLOYEE
STOCK PURCHASE PLAN
66
68
74 PROPOSAL 4: RATIFICATION OF AUDITORS
75 OTHER INFORMATION
75 Stock Ownership of Principal Stockholders, Directors
and Management
77 ANNUAL REPORT ON FORM 10-K
78 HOUSEHOLDING OF PROXY MATERIALS
vii
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PROXY STATEMENT
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual Meeting, please read this proxy statement, the voting
instructions in the Notice of Internet Availability of Proxy Materials and vote. You may vote by proxy
over the Internet, via telephone or, if you requested a paper proxy card in the mail, by completing,
signing, dating and mailing the completed proxy card to us. You may also vote electronically at the
annual meeting. The instructions in the Notice of Internet Availability of Proxy Materials or your proxy
card describe how to use these convenient services. You may revoke your proxy in the manner described
in this proxy statement at any time before it is exercised. See “Voting Information and Questions You
May Have—May I Change My Vote After I Have Submitted a Proxy?” for more information on how to
vote your shares or revoke your proxy.
PROXY STATEMENT FOR
2021 Annual Meeting of Stockholders
to be held virtually on April 28, 2021
Unless the context otherwise requires, references in this proxy statement to “we,” “us,” “our,” “our
company,” “the Company” or “Origin” refer to Origin Bancorp, Inc., a Louisiana corporation, and
its consolidated subsidiaries. All references to “Origin Bank” or “the Bank” refer to Origin Bank,
our wholly owned bank subsidiary. In addition, unless the context otherwise requires, references to
“stockholders” are to the holders of our common stock, par value $5.00 per share.
This proxy statement is being furnished in connection with the solicitation of proxies by our Board for use
at the Annual Meeting of the Company to be held virtually on Wednesday, April 28, 2021, at 12:00 p.m.,
Central Time, and any adjournments or postponements thereof for the purposes set forth in this proxy
statement and the related notice of the Annual Meeting. The mailing address of the Company’s principal
executive office is 500 South Service Road East, Ruston, Louisiana 71270.
Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of
Stockholders to be Held on April 28, 2021
Pursuant to rules promulgated by the SEC we have elected to provide access to our proxy materials,
including this proxy statement and our annual report to stockholders for the fiscal year ended
December 31, 2020, over the Internet. Accordingly, we are providing our stockholders with a Notice of
Internet Availability of Proxy Materials (the “Notice”) instead of a paper copy of our proxy materials. The
Notice contains instructions on how to access our proxy materials and how to vote your shares, as well as
instructions on how to request a paper or e-mail copy of our proxy materials. We believe this electronic
distribution process expedites stockholders’ receipt of proxy materials and reduces the environmental
impact and cost of printing and distributing our proxy materials. We mailed the Notice on or about
March 12, 2021, to all stockholders of record entitled to vote at the Annual Meeting at the close of
business on March 9, 2021. You should read our entire proxy statement carefully before voting.
1
2021 Proxy Statement | ABOUT THE ANNUAL MEETING
ABOUT THE ANNUAL MEETING
VOTING INFORMATION AND QUESTIONS YOU MAY HAVE
The information provided in the “question and answer” format below is for your convenience only and
is merely a summary of the information contained in this proxy statement. You should read this entire
proxy statement carefully.
What is the Purpose of the Annual Meeting?
Matters to be Considered and Vote Recommendation
We are asking stockholders to vote on the following matters at the Annual Meeting:
Matters for Stockholder Consideration
Proposal 1: Election of Directors (page 10)
To elect ten incumbent directors and two new director nominees, for a total of 12
directors to serve until the next annual meeting of stockholders and to serve until their
successors are elected and qualified. Our Board believes that the 12 director nominees
possess the necessary qualifications to provide effective oversight of the Company’s
business and quality counsel to our management.
Proposal 2: Advisory Vote on the Say-on-Pay Proposal (page 66)
We are seeking a non-binding advisory vote from our stockholders to approve the
compensation paid to our NEOs in 2020, as described in the Compensation Discussion
and Analysis section and the executive compensation tables that follow, beginning on
page 50 of this proxy statement. Our Board values our stockholders’ opinions and the
Compensation Committee will take into account the outcome of the advisory vote when
considering future executive compensation decisions.
Proposal 3: Approval of Employee Stock Purchase Plan (page 68)
We are seeking approval from our stockholders of the Employee Stock Purchase Plan
(“ESPP”), a copy of which is attached as Appendix [A] to this proxy statement. A
summary of the terms of the Employee Stock Purchase Plan is included beginning on
page 56 of this proxy statement.
Proposal 4: Ratification of Auditors (page 74)
The Audit Committee and the Board believe that the continued retention of BKD,
LLP to serve as the independent registered public accounting firm of the Company
for the fiscal year ending December 31, 2021, is in the best interests of the Company
and its stockholders. As a matter of good corporate governance, our stockholders are
being asked to ratify the selection of BKD, LLP to serve as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2021.
Our Board’s
Recommendation
FOR each
Director
Nominee
FOR
FOR
FOR
Stockholders will also transact any other business that may properly come before the Annual Meeting
or any adjournment or postponement thereof.
2
| 2021 Proxy Statement ABOUT THE ANNUAL MEETING
When and Where Will the Annual Meeting Be Held?
The Annual Meeting is scheduled to take place virtually at 12:00 p.m., Central Time, on Wednesday,
April 28, 2021.
How Can I Attend the Annual Meeting?
The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted
exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were a
stockholder of the Company (i.e., a stockholder of record) as of the close of business on the Record
Date, March 9, 2021, or if you hold a valid proxy for the Annual Meeting. No physical meeting will
be held.
To register for the virtual meeting, please follow the instructions below:
• Visit register.proxypush.com/obnk on your smartphone, tablet or computer. You will need the
latest version of Chrome, Safari, Internet Explorer, Edge or Firefox to access the website. Please
ensure your browser is compatible.
• As a stockholder, you will then be required to enter your control number which is located in the
upper right hand corner of the proxy card or notice.
After registering, you will receive a confirmation email. Approximately, one hour prior to the start of
the meeting an email will be sent to the email address you provided during registration with a unique
link to the virtual meeting.
You may vote or submit questions during the Annual Meeting by following the instructions available
on the meeting website during the meeting. Additionally, you may call the number listed in your
confirmation email for further assistance. Whether or not you plan to attend the Annual Meeting, we
urge you to vote and submit your proxy in advance of the meeting by one of the methods described
below under, “How do I Vote?”.
Who Are the Nominees for Directors?
Please see Director Nominees section under Proposal 1: Election of Directors in this document for
further information.
Who is Entitled to Vote?
Holders of record of our common stock as of the close of business on March 9, 2021 (the “Record
Date”), may vote at the Annual Meeting. As of the Record Date, we had 23,488,884 shares of common
stock outstanding. In deciding all matters at the Annual Meeting, each stockholder will be entitled to
one vote for each share of common stock held on the Record Date. We do not have cumulative voting
rights for the election of directors.
3
2021 Proxy Statement | ABOUT THE ANNUAL MEETING
What Constitutes a Quorum for the Annual Meeting?
The holders of at least a majority of the outstanding shares of common stock entitled to vote on the
Record Date must be represented at the Annual Meeting, virtually or by proxy, in order to constitute a
quorum for the transaction of business.
What is the Difference Between a Stockholder of Record and a
“Street Name” Holder?
If your shares are registered directly in your name with EQ Shareowner Services, the Company’s stock
transfer agent, you are considered the stockholder of record with respect to those shares. The Notice
and, if requested, any printed copies of the proxy materials, including any proxy cards or voting
instructions, are being sent directly to you by EQ Shareowner Services at the Company’s request.
If your shares are held in a brokerage account or by a bank, broker or other nominee, the nominee is
considered the stockholder of record of those shares. You are considered the beneficial owner of these
shares, and your shares are held in “street name.” The Notice and, if applicable, any printed copies of
the proxy materials, including any proxy cards or voting instructions, are being forwarded to you by
your nominee. As the beneficial owner, you have the right to direct your nominee on how to vote your
shares.
How do I Vote?
You may vote your shares of common stock either electronically at the Annual Meeting or by proxy. The
process for voting your shares depends on how your shares are held, as described below.
Shares Registered in Your Name
In order to vote electronically at the Annual Meeting, stockholders of record must first register for the
annual meeting as indicated above under “How Can I Attend the Annual Meeting?” and as shown in
the instructions on how to register for the virtual meeting on your proxy card. Stockholders of record
then can attend and participate in the Annual Meeting online, vote shares electronically and submit
questions prior to and during the meeting on Wednesday, April 28, 2021, at 12:00 p.m., Central Time.
If you are a stockholder of record and want to vote your shares by proxy, you have three ways to vote:
• Via the Internet: You may vote your proxy over the Internet by visiting the website www.proxypush.
com/obnk. Have the Notice or, if applicable, the proxy card that may have been provided to you in
hand when you access the website and follow the instructions for Internet voting on that website.
• Via Telephone: To vote over the telephone, dial toll-free 1-866-883-3382 using a touch-tone phone
and follow the recorded instructions. You will be asked to provide the control number from the
Notice.
• Via Mail: If you request a paper copy of the proxy materials by mail, you may vote by indicating on
the proxy card(s) applicable to your common stock how you want to vote and signing, dating and
mailing your proxy card(s) in the enclosed pre-addressed postage-paid envelope as soon as possible
to ensure that it will be received in advance of the Annual Meeting.
4
| 2021 Proxy Statement ABOUT THE ANNUAL MEETING
ABOUT THE ANNUAL MEETING
Please refer to the specific instructions set forth in your Notice or proxy card for additional information
on how to vote. Voting your shares by proxy will enable your shares of common stock to be represented
and voted at the Annual Meeting if you do not attend the Annual Meeting and vote your shares
electronically using the online portal.
You will also be able to vote electronically during the Annual Meeting. If voting via mail, the
Company must receive your proxy via mail no later than April 27, 2021, to be counted at the Annual
Meeting. If voting shares of common stock held in our Employee Retirement Plan, you must vote via
Internet or telephone by no later than 11:59 p.m., Central Time, on April 25, 2021. If voting shares
of common stock held in our Employee Retirement Plan via mail, the Company must receive your
proxy via mail no later than April 25, 2021, to be counted at the Annual Meeting.
Shares Registered in the Name of a Broker or Bank
If your shares of common stock are held in “street name,” your ability to vote depends on your bank,
broker or other nominee’s voting process. Your bank, broker or other nominee should provide you
with voting instructions and materials to vote your shares. By following those voting instructions, you
may direct your nominee on how to vote your shares. Without instructions from you, a bank, broker
or nominee will be permitted to exercise its own voting discretion with respect to the ratification of
the appointment of BKD, LLP (Proposal 4), but will not be permitted to exercise voting discretion with
respect to any of the other proposals.
To vote the shares that you hold in “street name” electronically at the Annual Meeting, since your
bank, broker or other nominee is the stockholder of record, you must first obtain a legal proxy from
your broker, bank or other nominee (i) confirming that you were the beneficial owner of those shares
as of the close of business on the Record Date, (ii) stating the number of shares of which you were
the beneficial owner that were held for your benefit on the Record Date by that broker, bank or other
nominee and (iii) appointing you as the stockholder of record’s proxy to vote the shares covered by that
proxy at the Annual Meeting. The proxy must be submitted to EQSSProxyTabulation@equinit.com,
via email, either in advance of the meeting or during the meeting. If you fail to email a nominee-issued
proxy to EQSSProxyTabulation@equinit.com, you will not be able to vote your nominee-held shares
electronically at the Annual Meeting.
What is a Broker Non-Vote?
A broker non-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner
does not vote on a particular proposal because such nominee does not have discretionary voting
power with respect to that proposal and has not received voting instructions from the beneficial owner.
Your broker has discretionary authority to vote your shares with respect to the ratification of the
appointment of BKD, LLP as our independent registered public accounting firm (Proposal 4). In the
absence of specific instructions from you, your broker does not have discretionary authority to vote
your shares with respect to any other proposal.
5
2021 Proxy Statement | ABOUT THE ANNUAL MEETING
May I Change My Vote After I Have Submitted a Proxy?
Yes. Regardless of the method used to cast a vote, if you are a stockholder of record, you may change
your vote or revoke your proxy by:
• Casting a new vote over the Internet by visiting the website www.proxypush.com/obnk and
following the instructions online or in your Notice or the proxy card that may have been provided to
you before the Internet voting deadline;
• Casting a new vote by telephone by calling 1-866-883-3382 using a touch-tone phone and following
the recorded instructions before the telephone voting deadline;
• Completing, signing and returning a new proxy card with a later date than your original proxy card,
if applicable, no later than the deadline, and any earlier proxy will be revoked automatically; or
• Attending the Annual Meeting online and voting electronically, which would revoke any earlier proxy.
However, attending the Annual Meeting online will not automatically revoke your proxy unless you
vote again electronically at the Annual Meeting using the online portal.
You will also be able to vote electronically during the Annual Meeting. If voting via mail, the Company
must receive your proxy via mail no later than April 27, 2021, to be counted at the Annual Meeting. If
voting shares of common stock held in our Employee Retirement Plan, you must vote via Internet or
telephone by no later than 11:59 p.m., Central Time, on April 25, 2021. If voting shares of common
stock held in our Employee Retirement Plan via mail, the Company must receive your proxy via mail no
later than April 25, 2021, to be counted at the Annual Meeting.
If your shares are held in “street name” and you desire to change any voting instructions you have
previously given to the stockholder of record of the shares of which you are the beneficial owner, you
should contact the broker, bank or other nominee holding your shares in “street name” in order to
direct a change in the manner your shares will be voted.
How Will My Shares Be Voted if I Return a Signed and Dated Proxy Card,
but Do Not Specify How My Shares Will Be Voted?
If you are a stockholder of record who returns a completed proxy card that does not specify how you
want to vote your shares on one or more proposals, the proxies will vote your shares for each proposal
as to which you provide no voting instructions, and such shares will be voted in the following manner:
FOR the election of all of the nominees for director;
FOR, on an advisory basis, the Say-on-Pay Proposal;
FOR approval of the ESPP;
FOR the ratification of the appointment of BKD, LLP to serve as our independent
registered public accounting firm for the fiscal year ending December 31, 2020;
Proposal 1
Proposal 2
Proposal 3
Proposal 4
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| 2021 Proxy Statement ABOUT THE ANNUAL MEETING
ABOUT THE ANNUAL MEETING
If you are a “street name” holder and do not provide voting instructions on one or more proposals,
your bank, broker or other nominee will be unable to vote those shares on any of the proposals except
to vote on the ratification of the appointment of BKD, LLP (Proposal 4).
What Are My Choices When Voting?
With respect to all proposals you may vote “For” or “Against” or you may “Abstain” from voting.
What Percentage of the Vote is Required to Approve Each Proposal?
The affirmative vote of a majority of the votes cast by the holders of shares entitled to vote at the Annual
Meeting is required for (i) the election of the director nominees (Proposal 1), (ii) the approval, on a non-
binding basis, of our Say-on-Pay Proposal (Proposal 2), (iii) the approval of the ESPP (Proposal 3), and (iv)
the ratification of BKD, LLP’s appointment as the Company’s independent registered public accounting
firm (Proposal 4). A majority of the votes cast shall mean that the number of shares that voted “For”
the election of a director or a proposal, as applicable, exceeds the number of shares voted “Against”
that director or proposal, as applicable, and abstentions and broker non-votes shall not be counted as
votes cast either “For” or “Against” the election of any director or any proposal.
How Are Broker Non-Votes and Abstentions Treated?
Broker non-votes and abstentions are counted for purposes of determining the presence or absence of
a quorum. A broker non-vote or an abstention with respect to (i) the election of the director nominees
(Proposal 1), (ii) the approval, on a non-binding basis, of our Say-on-Pay Proposal (Proposal 2), (iii) the
approval of the ESPP (Proposal 3), and (iv) the ratification of BKD, LLP’s appointment as the Company’s
independent registered public accounting firm (Proposal 4), will not be counted as a vote cast either
“For” or “Against” such proposals.
Are There Any Other Matters to Be Acted Upon at the Annual Meeting?
Management does not intend to present any business at the Annual Meeting for a vote other than the
matters set forth in the Notice, and management has no information that others will do so. The proxy
also confers on the proxies the discretionary authority to vote with respect to any matter properly
presented at the Annual Meeting. If other matters requiring a vote of our stockholders properly come
before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy
to vote the shares represented by the proxies held by them in accordance with applicable law and their
judgment on such matters.
Where Can I Find Voting Results?
We will publish the voting results in a current report on Form 8-K, which will be filed with the SEC within
four business days following the Annual Meeting. If final voting results are not available to us in time
to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to
publish preliminary results and, within four business days after the final results are known to us, file an
additional Form 8-K to publish the final results.
7
2021 Proxy Statement | ABOUT THE ANNUAL MEETING
What Are the Solicitation Expenses and Who Pays the Cost of this
Proxy Solicitation?
Our Board is asking for your proxy, and we will pay all of the costs of soliciting proxies from our
stockholders. In addition to the solicitation of proxies via mail, our officers, directors and employees
may solicit proxies personally or through other means of communication, such as electronic mail,
without being paid additional compensation for such services. The Company will reimburse banks,
brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses
incurred in forwarding the proxy materials to beneficial owners of the Company’s common stock.
How Can I Communicate with the Board?
Our Board welcomes suggestions and comments from stockholders and has adopted a formal process
by which stockholders may communicate with our Board or any of its directors. Stockholders who
wish to communicate with our Board may do so by sending written communications addressed to
Origin Bancorp, Inc., 500 South Service Road East, Ruston, Louisiana 71270, Attn: Corporate Secretary,
or via e-mail at corpsecretary@origin.bank. Stockholder communications will be sent directly to the
specific director or directors of the Company indicated in the communication or to all members of
our Board if not specified. All communications (other than commercial communications soliciting the
sale of goods or services to, or employment with, the Company or directors of the Company) will be
directed to the appropriate committee, the Chairman of the Board, the Lead Independent Director, or
to any individual director specified in the communication, as applicable. In addition, all stockholders
are encouraged to attend the Annual Meeting where senior management and representatives from our
independent registered public accounting firm, as well as members of our Board, will be available to
answer questions.
Why did I Receive a One-Page Notice in the Mail Regarding the Internet
Availability of Proxy Materials Instead of Printed Proxy Materials?
In accordance with rules promulgated by the SEC, instead of mailing a printed copy of our proxy materials
to all of our stockholders, we have elected to provide access to such materials to our stockholders over
the Internet. Accordingly, on or about March 12, 2021, we mailed a Notice of Internet Availability
of Proxy Materials to all stockholders of record on the Record Date entitled to vote at the Annual
Meeting. Stockholders will have the ability to access our proxy materials on the website referred to in
the Notice. The Notice also contains instructions on how to vote your shares, as well as instructions on
how to request a paper or e-mail copy of our proxy materials. We encourage you to take advantage of
the availability of the proxy materials over the Internet to help reduce the environmental impact and
cost of printing and distributing our proxy materials.
How Can I Get Electronic Access to the Proxy Materials?
The Notice provides you with instructions regarding how to:
• View our proxy materials for the Annual Meeting over the Internet;
• Vote your shares after you have viewed our proxy materials (including any control/identification
numbers that you need to access your form of proxy);
8
| 2021 Proxy Statement ABOUT THE ANNUAL MEETING
ABOUT THE ANNUAL MEETING
• Obtain directions to attend the Annual Meeting and vote electronically online;
• Request a printed copy or e-mail copy with links to the proxy materials, including the date by which
the request should be made to facilitate timely delivery; and
•
Instruct us to send our future proxy materials to you by mail or electronically by e-mail.
Will I Receive any Other Proxy Materials by Mail (Besides the Notice)?
If you request paper copies of our proxy materials by following the instructions in the Notice, we will
send you our proxy materials, including a proxy card, in the mail.
What Should I Do if I Receive More Than One Set of Voting Materials?
You may receive more than one set of voting materials, including multiple copies of the Notice or
other proxy materials, including multiple proxy cards or voting instruction cards. For example, if you
hold your shares in more than one brokerage account, you may receive separate voting instructions for
each brokerage account in which you hold shares. Similarly, if you are a stockholder of record and hold
shares in a brokerage account, you may receive a proxy card for shares held in your name and voting
instructions for shares held in “street name.” To ensure that all of your shares are voted, we encourage
you to respond to each set of voting materials that you receive.
9
2021 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS
Proposal Snapshot
What am I voting on?
Stockholders are being asked to elect 12 director nominees for a term as outlined below. This
section includes information about the Board and each director nominee.
Voting recommendation:
FOR the election of each director nominee. We believe the combination of the various
qualifications, skills and experiences of the director nominees will contribute to an effective and
well-functioning Board. The director nominees possess the necessary qualifications to provide
effective oversight of our business and quality advice and counsel to our management.
Director Nominees
Based on the recommendation of the Nominating and Corporate Governance Committee, our Board,
which currently consists of 12 directors, has nominated each of the 12 director nominees to serve a
one-year term.
We seek directors with strong reputations and experience in areas relevant to the strategy, growth
and operations of our businesses. Each of the nominees for director has experience that meets this
objective. In their current and prior positions, each of the directors has gained experience in core
management skills, such as strategic and financial planning, corporate governance, risk management,
and leadership development. We also believe that each of the nominees has other key attributes that
are important to an effective Board, including: integrity and high ethical standards; sound judgment;
analytical skills; the ability to engage management and each other in a constructive and collaborative
fashion; diversity of background, experience, and thought; and the commitment to devote significant
time and energy to service on our Board and committees.
F. Ronnie Myrick and George Snellings, IV have decided not to stand for re-election as directors at our
2021 annual meeting of stockholders. Myrick and Snellings have been directors since 2008 and 2012,
respectively. The Chairman and the entire Board earnestly thank each of Messrs. Myrick and Snellings
for their long and dedicated service to the Company. Two new nominees, A. La’Verne Edney and
Meryl Farr, have been nominated to fill the vacancies created by the retirements of Messrs. Myrick and
Snellings. Mses. Edney and Farr were recommended to the Nominating and Corporate Governance
Committee as director nominees by the Company’s Chief Executive Officer, Drake Mills.
The following table presents certain information with respect to the Board’s nominees for director. All
of the directors are elected on an annual basis. Additionally, all director nominees of the Company are
also directors of the Bank, or, in the case of new director nominees, will be directors of the Bank, the
Company’s principal subsidiary, if elected to the Company’s board.
10
| 2021 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominees
Age(1)
Director
Since
Primary Occupation
James D’Agostino, Jr. * (LD)
74
2013
Managing Director of Encore
Interests LLC; Chairman of the
Board of Houston Trust Company
Committee
Memberships(2)
A, F (Chair), N, R
James Davison, Jr.
A. La’Verne Edney *
Meryl Farr *
54
54
32
1999
Director for Genesis Energy, L.P.
F, R (Chair)
New Director
Nominee
Litigation Partner at Butler Snow
LLP
New Director
Nominee
President and Owner of
Kennedy Rice Mill, LLC (“KRM”);
Managing Co-Owner and CEO of
Neighbors, LLC
Richard Gallot, Jr. *
54
2019
Stacey Goff, Jr. *
55
2020
Michael Jones *
65
1991
Gary Luffey *
Farrell Malone * (FE)
66
68
2017
2013
Drake Mills
60
2012
Elizabeth Solender *
69
2016
Steven Taylor *
67
2016
N, R(3)
A, F(3)
C, N
C, N
A, C, N (Chair)
President of Grambling State
University;
Director for Cleco Corporation
Executive Vice President, General
Counsel and Chief Administrative
Officer for CenturyLink, Inc.
Sole Practitioner Licensed
Certified Public Accountant &
Certified Fraud Examiner
Partner at the Green Clinic
C, R
A (Chair), F, N, R
C (Chair), N
C, F
Licensed Certified Public
Accountant & retired partner of
KPMG, LLP
Chairman, President and Chief
Executive Officer for Origin
Bancorp
President of Solender/Hall, Inc.;
Expert on nonprofit commercial
real estate issues
President of Car Town of
Monroe, Inc.;
President and Operating
Manager of West Monroe Land
Development Co., Inc.;
Partner in Ride Time Auto
Credit, LLC;
Partner in Twin City
Investments, LLC;
(1) Ages as of March 5, 2021
(2) A = Audit; C = Compensation; N = Nominating/Corporate Governance; R = Risk; F = Finance.
(3) Proposed committee memberships
* = Independent Director; LD = Lead Independent Director; FE = Audit Committee Financial Expert.
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2021 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
None of the director nominees were selected pursuant to any arrangement or understanding with any
person. There are no family relationships among directors or executive officers of the Company. Each
of the director nominees currently serving on the Board was elected by our stockholders at a previous
annual meeting of stockholders.
Each nominee has agreed to serve if elected, and we have no reason to believe that any of the director
nominees will be unable or unwilling to serve if elected. However, if any nominee should become
unable or unwilling to serve, proxies may be voted for another person nominated as a substitute by the
Board, or the Board may reduce the number of directors.
Director Nominee Qualifications and Experience
Included in each director nominee’s biography below is an assessment of the specific qualifications,
attributes, skills and experience of the nominee based on the qualifications described above.
New Director Nominee Qualifications and Experience
A. La’Verne Edney
Independent
Litigation Partner at Butler Snow, LLP
Ms. Edney has been a litigation partner at the law firm Butler Snow
LLP since 2018, where she practices within the Pharmaceutical,
Medical Device and Healthcare Litigation Group. Ms. Edney is
a Fellow of both the American College of Trial Lawyers and the
International Academy of Trial Lawyers. She is also a Fellow of the
American Board of Trial Advocates and has served on the faculty of
that organization’s Masters in Trial program, where she has taught
in Iowa, South Carolina, Kentucky, and Reno, Nevada. She has
also been on the faculty of trial academies for the American Bar
Association and American Board of Trial Advocates. She has been
named by Chambers as one of the Best Lawyers in America in the
area of Mass Torts/Class Actions in each year since 2016 and was
chosen as Lawyer of the Year by Mississippi College School of Law in
April 2018. Ms. Edney serves on numerous boards and committees
including the Board of Trustees of Mississippi College; Mississippi
Bar Foundation board; the Magnolia Speech School board; and the
Greater Jackson Chamber board. Additionally, she served as the
President of the Mississippi Bar Foundation from 2019-2020.
Ms. Edney holds a B.S. from Alcorn State University and a J.D. from
Mississippi College School of Law. Ms. Edney’s litigation experience
and immersion in the medical industry should prove to be invaluable
for our Board.
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| 2021 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Meryl Farr
Independent
President and Owner of KRM
Managing Co-Owner and CEO of
Neighbors, LLC
Ms. Farr is the President and Owner of Kennedy Rice Mill, LLC
(“KRM”) in Mer Rouge, Louisiana, and the Co-Owner and CEO of
Neighbors, LLC in West Monroe, Louisiana. KRM is a state-of-the art
facility and is one of the few new rice mills built in the United States
in the last quarter-century. Envisioning the need to bring sustainably
grown and organic products into the retail rice market, Ms. Farr
successfully engineered and implemented the packaging of organic
and sustainably grown products for KRM’s KenChaux & 4Sisters
brands.
Neighbors, LLC (“Neighbors”) is a leading manufacturer/producer
of specialized cookie dough for fundraising, private label, and co-
manufacturing partners. Nominated by the City of West Monroe’s
Mayor, Neighbors was recently presented with Louisiana Economic
Development’s “Lantern Award”, recognizing manufacturers in
Northeast Louisiana. Neighbors makes significant contributions
to the Ouachita Parish economy through capital improvements,
expansion, job creation, and community involvement, recently
receiving the “Thomas H. Scott” Large Business of the Year Award.
Ms. Farr serves on The Monroe Chamber of Commerce and, since
2019, has served on the USA Rice Board of Directors and the USA
Rice Executive Committee. Ms. Farr attended the University of
Georgia where she completed a degree in International Affairs with
a minor in Spanish. Ms. Farr has been an Advisory Board Member
for Origin Bank since 2012. Ms. Farr’s innovative and entrepreneurial
business approach, ownership, and leadership, as well as her
community involvement is expected to be a positive addition to our
Board.
Current Director Nominee Qualifications and Experience
James D’Agostino, Jr.
Independent
Managing Director of Encore
Interests LLC
Chairman of the board of directors of
Houston Trust Company
Director Since 2013
Board Committees:
• Audit Committee
• Finance Committee (Chair)
• Nominating and Corporate
Governance
• Risk Committee
Mr. D’Agostino, Jr. has served as a director of our Company and
Origin Bank since 2013. He is the Lead Independent Director of the
Company and Origin Bank. He has over 50 years of experience in
numerous capacities in the banking and financial services industries.
Mr. D’Agostino, Jr. founded Encore Bancshares, Inc. in 2000 and
served as its Chairman of the Board and CEO from 2000 until the
organization was sold in 2012. Currently, Mr. D’Agostino, Jr. is
the Managing Director of Encore Interests LLC, which is focused
on banking, investments and investment management. In 2013,
Mr. D’Agostino, Jr. became chairman of the board of Houston
Trust Company, a privately-owned trust company headquartered
in Houston, Texas with approximately $7.2 billion of assets under
management. Mr. D’Agostino, Jr. served on the board of directors of
Basic Energy Services, Inc. between 2004 and 2016. Mr. D’Agostino,
Jr. holds a B.S. in Economics from Villanova University and a J.D.
from Seton Hall University School of Law, and has completed the
Advanced Management Program at Harvard Business School. Mr.
D’Agostino, Jr.’s extensive banking experience and his knowledge
of the law and the financial services industry enable him to make
valuable contributions to our Board.
13
2021 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
James Davison, Jr.
Director for Genesis Energy, L.P.
(NYSE: GEL)
Director Since 1999
Board Committees:
• Finance Committee
• Risk Committee (Chair)
Richard Gallot, Jr.
Independent
President of Grambling State
University
Director for Cleco Corporation
Director Since 2019
Board Committees:
• Compensation Committee
• Nominating and Corporate
Governance
Stacey Goff
Independent
Executive Vice President, General
Counsel and Chief Administrative
Officer for CenturyLink, Inc.
(NYSE: CTL)
Director Since 2020
Board Committees:
• Compensation Committee
• Nominating and Corporate
Governance
Michael Jones
Independent
Certified Public Accountant
Certified Fraud Examiner
Director Since 1991
Board Committees:
• Audit Committee
• Compensation Committee
• Nominating and Corporate
Governance (Chair)
14
Mr. Davison, Jr., has served as a director of the Company since 1999.
Since 2007, he has served as a director for Genesis Energy, L.P.
(NYSE: GEL), and currently serves on its Governance, Compensation
and Business Development Committee. From 1996 until 2007, he
served in executive leadership positions of several related entities
acquired by, or oversaw substantial assets of which were acquired
by, Genesis Energy, L.P. Mr. Davison, Jr.’s management experience
in the energy and transportation industries and his work as a
director of a publicly traded enterprise enable him to make valuable
contributions to our Board.
Mr. Gallot, Jr. has served as a director of the Company since
May 2019. Since 2016, Mr. Gallot, Jr. has served as President of
Grambling State University where he has led the University in its
initiative to increase enrollment and alumni engagement. He is also
an attorney in Ruston, Louisiana, where he has practiced law since
1990. Prior to his role as President of Grambling State University,
Mr. Gallot, Jr. served a term as a member of the Louisiana State
Senate between 2012 and 2016. Prior to serving in the Louisiana
State Senate, he served three terms in the Louisiana House of
Representatives between 2000 and 2012. Since 2016, Mr. Gallot,
Jr. has also served on the board of directors of Cleco Corporation,
an electric utility company headquartered in Pineville, Louisiana. He
holds a B.A. in History from Grambling State University and a J.D.
from Southern University Law School. Mr. Gallot, Jr.’s experience in
professional and political leadership positions and his legal acumen
enable him to be a valuable contributor to our Board.
Mr. Goff has served as a director of the Company and of Origin
Bank since January 2020. Mr. Goff currently serves as Executive
Vice President, General Counsel and Chief Administrative Officer
for CenturyLink, Inc. (NYSE: CTL) (“CenturyLink”) where he is
responsible for CenturyLink’s legal, corporate strategy, business
development, mergers and acquisitions, internal and external
communications and public policy functions. He has played a
key role in negotiating and closing numerous acquisitions and
dispositions that CenturyLink has completed during the past 20
years. Mr. Goff also directs the negotiation of CenturyLink’s complex
agreements and large dispute resolutions with third parties and
leads CenturyLink’s legal affairs. Mr. Goff’s experience in public
company corporate governance and compensation, in addition to
his legal expertise enable him to provide great value to our Board.
Mr. Jones has served as a director of the Company since 1991
and Origin Bank since 1990. He is a sole practitioner licensed
Certified Public Accountant with an office in Ruston, Louisiana and
is a Certified Fraud Examiner. He is a member of the American
Institute of Certified Public Accountants, the Society of Louisiana
Certified Public Accountants and the Association of Certified Fraud
Examiners. Mr. Jones’ ties within the local community, business
experience and accounting knowledge qualify him to serve on
our Board.
| 2021 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Gary Luffey
Independent
Partner at the Green Clinic
Director Since 2017
Board Committees:
• Compensation Committee
• Risk Committee
Farrell Malone
Independent
Certified Public Accountant
Audit Committee Financial Expert
Director Since 2013
Board Committees:
• Audit Committee (Chair)
• Finance Committee
• Nominating and Corporate
Governance Committee
• Risk Committee
Dr. Luffey has served as a director of the Company since 2017
and of Origin Bank since 2002. An eye surgeon for over 35 years,
Dr. Luffey is a partner at the Green Clinic and is a member of the
Green Clinic’s Financial Committee. Dr. Luffey has been a member
of the Ruston-Lincoln Industrial Development Committee and
served in a leadership role with the Ruston-Lincoln Chamber of
Commerce. Additionally, he is a member of the National Association
of Corporate Directors. Over the past 40 years, Dr. Luffey has been
involved in the ownership and management of nursing homes,
hospitals and medical supply companies. He was also a consultant
with Alcon Laboratories, a subsidiary of Novartis, from 1996 to 2016.
These experiences afford Dr. Luffey a unique vantage point with
respect to our clients that are in healthcare, an increasingly important
and growing segment in our markets. Dr. Luffey’s extensive
experience with the healthcare industry and his community ties in
our Louisiana markets are valuable to our Company and our Board.
Mr. Malone has served as a director of the Company since 2013 and
Origin Bank since 2016. Mr. Malone is a licensed Certified Public
Accountant and retired partner of KPMG LLP,
where he served on its board of directors from 2005 to 2010,
including as lead director from 2008 to 2010. Mr. Malone is an
“Audit Committee Financial Expert,” as defined under applicable
SEC rules. He currently serves as the Chair of our Audit Committee.
Mr. Malone brings to our Board extensive accounting, management,
strategic planningplanning, risk assessment and financial skills, which
are important to the oversight of our financial reporting, enterprise
and operational risk management operations.
15
2021 Proxy Statement | Mr. Mills is our Chairman, President and Chief Executive Officer
(“CEO”). Mr. Mills has over 36 years of banking experience and
started out as a check file clerk with Origin Bank. Having worked
his way up through the organization, Mr. Mills has served in various
capacities, including in-house system night operator, branch
manager, consumer loan officer, commercial lender and Chief
Financial Officer. He became President and Chief Operations
Officer in 1996 and was named CEO of Origin Bank in 2003. He has
served our Company as President since 1998 and CEO since 2008,
and as Chairman of our Board since 2012. Under his leadership
as President and CEO, Origin Bank has experienced significant
asset growth, primarily through organic growth. Mr. Mills served
on the Community Depository Institutions Advisory Council to the
Federal Reserve Bank of Dallas from 2011 to 2014. He represented
the Federal Reserve Bank of Dallas on the Community Depository
Institutions Advisory Council to the Federal Reserve System in
Washington, D.C., and was appointed as the Council’s President for
a one year term in 2013. He is also a past Chairman of the Louisiana
Bankers Association. Mr. Mills graduated from Louisiana Tech
University with a B.S. degree in Finance. He also graduated from the
Graduate School of Banking of the South in Baton Rouge, Louisiana,
and the Graduate School of Banking of the South’s Professional
Master of Banking Program in Austin, Texas. Mr. Mills oversees
our executive management team as well as the development
and execution of our strategic plan. His vision and leadership are
instrumental in our growth and success.
Ms. Solender has served as a director of the Company since 2016,
and of Origin Bank since 2008. She is the President of Solender/
Hall, Inc., a commercial real estate and consulting company that
specializes in assisting businesses and nonprofit organizations buy,
sell, lease, manage and finance commercial real estate in the Dallas/
Fort Worth area. She is considered a national expert on nonprofit
commercial real estate issues. Prior to her career in commercial real
estate, she was the human resources manager for the Exploration
Division of Sun Company. The Dallas Business Journal has named
her one of the top 25 Women in Business in the Dallas/Fort Worth
area. Ms. Solender is a past national president of Commercial Real
Estate Women Network and past chair of the National Association of
Corporate Directors (“NACD”) North Texas Chapter. She has earned
the NACD Governance Fellow status, which requires continuing
education in corporate governance. Ms. Solender’s real estate
acumen, human resources knowledge and nonprofit experience
make her a valuable addition to our Board.
PROPOSAL 1. ELECTION
OF DIRECTORS
Drake Mills
Chairman, President and Chief
Executive Officer for Origin Bancorp
Director Since 2012
Elizabeth Solender
Independent
President of Solender/Hall, Inc.
Expert on nonprofit commercial real
estate issues
Director Since 2016
Board Committees:
• Compensation Committee (Chair)
• Nominating and Corporate
Governance Committee
16
| 2021 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Steven Taylor
Independent
President of Car Town of Monroe, Inc.
President and Operating Manager
of West Monroe Land Development
Co., Inc.,
Partner in Ride Time Auto Credit,
LLC,
Partner in Twin City Investments, LLC,
Director Since 2016
Board Committees:
• Compensation Committee
• Finance Committee
Mr. Taylor has served as a director of the Company since 2016, and
Origin Bank since 2007. Mr. Taylor has been President of Car Town
of Monroe, Inc. (“Car Town”) since 1987 and oversees its day-to-day
operations. Car Town is one of the largest Independent Automotive
Dealers in Louisiana and has been previously recognized as the
State Quality Dealer of the Year and one of the top 10 in the nation
by the National Independent Auto Dealers Association. Mr. Taylor
has other business interests and has served as the President and
Operating Manager of West Monroe Land Development Co., Inc.,
a corporation focused on real estate development, since 1983, as
a Partner in Ride Time Auto Credit, LLC, an automobile finance
company, since 2006, and as a Partner in Twin City Investments,
LLC, a real estate investment company, since 2004. Mr. Taylor is also
actively involved with the Boys & Girls Club of Northeast Louisiana.
He is the past president of the Bayou DeSiard Country Club, serves
on the St. Francis Hospital Foundation, and is a board member
of the Monroe Downtown Economic Development District. His
business experience in various companies and unique viewpoints
obtained in his successful enterprises make him a valued member of
our Board.
Stockholder Approval
The affirmative vote of a majority of the votes cast by the stockholders entitled to vote at the Annual
Meeting is required for the election of the 12 director nominees, provided that if the number of director
nominees exceeds the number of directors to be elected at such a meeting, the directors will be elected
by a plurality of the votes cast by the holders of shares entitled to vote at such a meeting at which a
quorum is present. The 12 director nominees will be elected if the number of shares that vote “For”
the election of a director exceeds the number of shares voted “Against” that director, and abstentions
and broker non-votes shall not be counted as votes cast either “For” or “Against” the election of any
director. Stockholders shall not have cumulative voting in the election of directors.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE ELECTION OF ALL OF THE NOMINEES LISTED ABOVE FOR ELECTION TO THE
BOARD.
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Board Leadership Structure
The Company has a policy that does not mandate the separation of the roles of CEO or President and
the Chairman of the Board. Our Board believes it is in the best interest of the Company to instead
make a determination regarding the separate roles of CEO, President and Chairman of the Board on a
regular basis based on the position and direction of the Company and the membership composition of
the Board. Our Board has determined that having our President and CEO, Mr. Mills, serve as Chairman
of the Board is in the best interests of our stockholders at this time. This structure makes best use of
the CEO’s extensive knowledge of our organization and the banking industry. Our Board views this
arrangement as also providing an efficient nexus between our management and the Board, enabling
the Board to obtain information pertaining to operational matters expeditiously and enabling our
Chairman to bring areas of concern before the Board in a timely manner.
Unless the Company has an independent non-executive Chairman of the Board, the Company’s
governance structure provides for a strong Lead Independent Director role. The Lead Independent
Director must be independent under the Nasdaq rules and elected by the independent Board members.
Our Board has elected James D’Agostino, Jr. to serve as the Lead Independent Director.
Our Board believes that it is able to have a thorough exchange of views, or address any issues
independent of the Chairman. Among other things, the Lead Independent Director is required to:
• Preside at Board meetings when the Chairman of the Board is not present;
• Establish the agenda for, and preside at, executive sessions of the non-management and independent
directors;
• Receive topic suggestions from other directors to be discussed at upcoming executive sessions and
facilitate discussion on key issues outside of meetings;
• Act as a liaison and facilitate communication between the Chairman of the Board and the independent
directors (provided that each director shall also be afforded direct and complete access to the
Chairman of the Board at any time as such director deems necessary or appropriate);
• Facilitate teamwork and communication among the independent directors;
• Approve information sent to the Board;
• Approve meeting agendas for the Board, in consultation with the Chairman of the Board;
• Coordinate the activities of non-management and independent directors, including the authority to
call meetings of non-management and independent directors;
•
If requested by any stockholder, ensure that he or she is available for consultation and direct
communication;
• Communicate, as appropriate, with the Company’s regulators;
• Regularly communicate with the Chairman of the Board on a variety of issues including business
strategy and succession planning;
• Maintain close contact with the Chairs of each standing committee of the Board, and serve as an
ex-officio member of each committee where he or she is not a member;
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• Assist the committee Chairs in the establishment of committee agendas and schedules;
• Provide input, as needed, into the assessment of the Board committees effectiveness, structure,
organization and charters, and the evaluation of the need for changes; and
• Coordinate the annual evaluation of the Board and committees self-evaluation and the evaluation of
the Chairman of the Board and the CEO with the Nominating and Corporate Governance Committee.
Director Independence
Our common stock is listed on the Nasdaq Global Select Market (“Nasdaq”). Under Nasdaq listing
standards, independent directors must comprise a majority of a listed company’s board of directors.
The rules of Nasdaq, as well as those of the SEC, also impose several other requirements with respect
to the independence of our directors. In addition, Nasdaq listing standards require that, subject to
specified exceptions, each member of a listed company’s audit, compensation, and nominating and
corporate governance committees must be independent.
Our Board has undertaken a review of the independence of each director and director nominee in
accordance with the SEC rules and Nasdaq listing standards. Based on this review, our Board has
determined that ten of our anticipated 12 directors, or Messrs. D’Agostino, Jr., Gallot, Jr., Goff, Jones,
Luffey, Malone, and Taylor and Mses. Edney, Farr and Solender, are independent as that term is defined
under the SEC rules and Nasdaq listing standards. In making this determination, our Board considered
the relationships that each non-employee director has with us and all other facts and circumstances
that the Board deemed relevant in determining their independence, including the beneficial ownership
of our capital stock by each non-employee director and the transactions described under the heading
“Certain Relationships and Related Transactions” and below in “—Board Meetings and Committees—
Compensation Committee—Compensation Committee Interlocks and Insider Participation.”
Governance Documents
We have a Code of Ethics in place that applies to all of our directors, officers and employees. The
Code of Ethics sets forth specific standards of conduct and ethics that we expect all of our directors,
officers and employees to follow, including our principal executive officer, principal financial officer and
principal accounting officer. Any amendments to the Code of Ethics, or any waivers of requirements
thereof, will be disclosed on our website within four days of such amendment or waiver.
We have also adopted Governance Principles that set forth the framework within which our Board,
assisted by its committees, directs the affairs of our organization. The Governance Principles address,
among other things, the composition and functions of our Board and its committees, director
independence, compensation of directors and succession planning. The Corporate Governance
Principles, our Code of Ethics, and information about other governance matters of interest to investors,
are available through our website at www.origin.bank by clicking on Investor Relations—Governance—
Governance Overview.
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Director Education and Self-Assessment
Our Board believes that director education is important to enable it to most effectively perform its
role of oversight of the management and affairs of the Company. Accordingly, it is our policy that new
non-employee directors receive an orientation from appropriate executives regarding the Company’s
business and affairs at the time that the director joins our Board. In addition, within three months of
election or appointment to our Board, each new non-employee director is invited to spend a day at
corporate headquarters for a personal briefing by executive management on the Company’s strategic
plans, its financial statements, and its key policies and practices.
Directors are also provided with continuing education on subjects that would assist them in discharging
their duties, including: regular programs on the Company’s financial planning and analysis, compliance
and corporate governance developments; business-specific learning opportunities through site visits
and board meetings; and briefing sessions on topics that present special risks and opportunities to the
Company. Additionally, the Company has a director education program to assist board members in
further developing their skills and knowledge to better perform their duties, including presentations
made via our board portal. Each director is asked to view the presentation and given an opportunity during
Board meetings to ask questions. For example, in 2020, presentations on the economic implications of
the COVID-19 pandemic, the Current Expected Credit Loss (“CECL”) model, cybersecurity, Regulation
FD training and updates, blockchain technology and artificial intelligence were reviewed and discussed.
Additionally, courses covering topics such as institutional fraud, compensation best practices, incentive
plans, diversity and inclusion, economic and commercial real estate trends and corporate governance
were completed by individual directors. Training was conducted by qualified employees regarding the
Bank Secrecy Act, anti-money laundering laws, Office of Foreign Assets Control compliance, fair lending
practices, CECL and COVID-19 issues and risks, among other topics. In addition to presentations,
our Board subscribes to bankdirector.com and Mr. D’Agostino and Ms. Solender have access to the
National Association of Corporate Directors (“NACD”). One of our directors, Ms. Solender, has earned
NACD Governance Fellow status, which requires continuing education in corporate governance.
Board Meetings and Committees
We expect all our
directors will attend
the upcoming Annual
Meeting.
All but one of
our directors
attended the 2020
annual meeting of
stockholders.
It is our policy to
invite all directors
and nominees for
director to attend the
Annual Meeting.
Our Board met 10
times during the 2020
fiscal year (including
regularly scheduled
and special meetings).
During the 2020
fiscal year, all of the
directors, except one,
participated in 75%
or more of the total
number of meetings
of the Board and
the committees
to which he or she
was assigned (held
during the period for
which the relevant
individual was a
director).
The business of our Board is conducted through its meetings, as well as through meetings of
its committees. Our Board has five standing committees: an Audit Committee, a Compensation
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Committee, a Finance Committee, a Nominating and Corporate Governance Committee, and a Risk
Committee, each of which has the composition and responsibilities described below. There were
28 meetings of Board committees during 2020, and each director participated in 75% or more of the
total of the number of committee meetings on which he or she was a member and full meetings of
the Board, except for Mr. Myrick who attended 68% of the total number of meetings of the Board
and committees to which he was assigned. Members serve on our committees until their resignation
or until otherwise determined by our Board. The standing committees report on their deliberations
and actions at each full Board meeting. Each of the committees has the authority to engage outside
experts, advisors and counsel to the extent it considers appropriate to assist the committee in its
work. In the future, our Board may establish such additional committees as it deems appropriate, in
accordance with applicable laws and regulations and the Company’s Charter and Bylaws.
Risk Management and Oversight
Our Board is responsible for oversight of management and the business and affairs of the Company,
including those relating to management of risk. Our Board determines the appropriate risk for us
generally, assesses the specific risks faced by us, and reviews the steps taken by management to
manage those risks. While the entire Board maintains the ultimate oversight responsibility for the risk
management process, the Risk Committee was formed by our Board to assist in its oversight and the
Board’s other committees assist in oversight of risk in specific areas. In particular, the Audit Committee
assists the Board in monitoring the effectiveness of the Company’s identification and management
of risk, including financial and other business risks. The Compensation Committee is responsible for
overseeing the management of risks relating to our executive and employee compensation plans and
arrangements, and periodically reviews these arrangements to evaluate whether incentive or other forms
of compensation encourage unnecessary or excessive risk-taking by the Company. The Nominating
and Corporate Governance Committee monitors the risks associated with the independence of our
Board. The Finance Committee is responsible for, among other things, overseeing the administration
and effectiveness of market and similar risks. Management regularly reports on applicable risks to
the relevant committee or the full Board, as appropriate, with additional review or reporting on risks
conducted as needed.
Audit Committee
The current members of our Audit Committee are Messrs. Malone (Chair), D’Agostino, Jr., Jones and
Snellings, IV. Our Board has evaluated the independence of the members of the Audit Committee and
has determined that (i) each of the members is independent under the applicable rules of Nasdaq,
(ii) each of the members satisfies the additional independence standards under the SEC rules for Audit
Committee service and (iii) each of the members has the ability to read and understand fundamental
financial statements. The Board also reviewed whether any members of the Audit Committee meet the
criteria to be considered a financial expert as defined by the SEC rules. Based on its review, the Board
determined that Mr. Malone qualifies as an “Audit Committee Financial Expert,” as defined under the
applicable rules of the SEC, by reason of his prior job experience. The Audit Committee held eight
meetings during the fiscal year ended December 31, 2020.
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Our Audit Committee oversees our accounting and financial reporting process and the audit of our
financial statements, and assists our Board in monitoring our financial systems and our legal and
regulatory compliance. Our Audit Committee is responsible for, among other things:
• Selecting, engaging and overseeing the Company’s independent registered public accounting firm,
including preapproving all services and the fees and terms of engagement;
• Overseeing the integrity of our financial statements, including the annual audit, the annual audited
financial statements and financial information included in our periodic reports that will be filed with
the SEC;
• Overseeing our financial reporting internal controls;
• Overseeing our internal audit functions;
• Overseeing our compliance with applicable laws and regulations;
• Overseeing our risk management function related to financial reporting;
• Overseeing our process for receipt, retention and treatment of complaints; and
• Overseeing our Ethics & Compliance Reporting (Whistleblower) Policy.
Our Board has adopted a written charter for the Audit Committee, which is available on our website at
www.origin.bank under “Investor Relations—Governance—Governance Overview.”
Independent Registered Public Accounting Firm
The Audit Committee has appointed BKD, LLP as the independent registered public accounting firm to
audit the consolidated financial statements of the Company for the 2021 fiscal year. BKD, LLP served
as the Company’s independent registered public accounting firm for the 2020 fiscal year and reported
on the Company’s consolidated financial statements for that year.
Audit Committee Policy on Pre-Approval of Audit and Permissible
Non-Audit Services
The Audit Committee has adopted a policy and established related procedures for the pre-approval
of audit and non-audit services rendered by the Company’s independent registered public accounting
firm. The policy generally pre-approves specified services in the defined categories of audit services,
audit-related services and tax services up to specified amounts. Pre-approval may also be given as part
of the Audit Committee’s approval of the scope of the engagement of the independent registered
public accounting firm or on an individual, explicit, case-by-case basis before the independent
registered public accounting firm is engaged to provide each service. The pre-approval of services may
be delegated to one or more of the Audit Committee’s members, but the decision must be reported to
the full Audit Committee at its next scheduled meeting. The Audit Committee has determined that the
rendering of services other than audit services by BKD, LLP is compatible with maintaining the principal
registered public accounting firm’s independence.
Typically, each year, prior to engaging our independent registered public accounting firm, management
submits to the Audit Committee for approval a list of services expected to be provided during that
fiscal year within each of the categories of services described in the fee table below, as well as related
estimated fees, which are generally based on time and materials. As appropriate, the Audit Committee
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then pre-approves the services and the related estimated fees. The Audit Committee requires our
independent registered public accounting firm and management to report actual fees versus the
estimated fees periodically throughout the year by category of service. During the year, circumstances
may arise when it becomes necessary to engage our independent registered public accounting firm
for additional services not contemplated in the initial annual proposal. In those instances, the Audit
Committee pre-approves the additional services and related fees before engaging our independent
registered public accounting firm to provide the additional services.
Fees Paid to Independent Registered Public Accounting Firm
The following is a description of the fees earned by BKD, LLP for services rendered to the Company
for the years ended December 31, 2020 and 2019, for purposes of considering whether such fees
are compatible with maintaining the independence of BKD, LLP, and concluded that such fees did
not impair the independence of BKD, LLP. The Audit Committee has pre-approved all of the services
provided by BKD, LLP and all of the fees described below.
(Dollars in thousands)
Audit Fees(1)
Audit-Related Fees(2)
Tax Fees
All Other Fees
Years Ended December 31,
2020
$ 576
90
—
—
$ 666
2019
$ 552
138
—
—
$ 690
(1) Audit Fees reflect the aggregate fees billed for services related to the review of our quarterly reports filed on
Form 10-Q, the audit of our consolidated financial statements and the preparation of our financial statements
in accordance with PCAOB standards, audit of internal controls to meet the reporting requirements of
Section 112 of the Federal Deposit Insurance Corporation Act and other SEC filings.
(2) Audit-Related Fees include aggregate fees billed for professional services rendered related to the audits of
retirement and employee benefit plans and review and consent procedures for our preliminary prospectus
supplement filed on Form 424B5.
During the fiscal year ended December 31, 2020, none of the total hours expended on the Company’s
financial audit by BKD, LLP were provided by persons other than BKD, LLP’s full-time permanent
employees.
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Report by Audit Committee
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year
ended December 31, 2020, with management of the Company. The Audit Committee has discussed
with the Company’s independent registered public accounting firm the matters required to be
discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by
the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received
the written disclosures and the letter from the Company’s independent registered public accounting
firm required by applicable requirements of the PCAOB regarding the independent registered public
accounting firm’s communications with the Audit Committee concerning independence, and has
discussed with the Company’s independent registered public accounting firm such accounting firm’s
independence. Based on the foregoing, the Audit Committee has recommended to our Board that the
audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2020.
THE AUDIT COMMITTEE
Farrell Malone (Chair)
James D’Agostino, Jr.
Michael Jones
George Snellings, IV
The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not
to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as
amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof
and irrespective of any general incorporation language in any such filing.
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Compensation Committee
The current members of our Compensation Committee are Ms. Solender (Chair) and Messrs. Gallot, Jr.,
Goff, Jones, Luffey, and Taylor.
The Compensation Committee is responsible for overseeing the management of risk related to
our executive and non-executive compensation plans. Our Board has determined that each of the
members of our Compensation Committee is independent within the meaning of the independent
director requirements of Nasdaq and the SEC. Our Board has also determined that the composition of
our Compensation Committee meets the requirements for independence under, and the functioning
of our Compensation Committee complies with, the applicable requirements of Nasdaq and SEC
rules and regulations. The members of the Compensation Committee also qualify as “non-employee
directors” according to the SEC rules. The Compensation Committee held five meetings during the
fiscal year ended December 31, 2020.
The Compensation Committee oversees the executive compensation policies and plans of the
Company. Our Compensation Committee is responsible for, among other things:
• Annually reviewing and approving the compensation of our CEO, including determination of salary,
bonus, benefits, incentive opportunities and other compensation, approving goals and objectives
relevant to the compensation of the CEO and evaluating the CEO’s performance in light of such
goals and objectives;
• Together with the CEO, annually reviewing and approving the evaluation process and compensation
structure for all other executive officers, including determination of salary, bonus, incentive
opportunities and other compensation based on an evaluation of each executive officers performance
against relevant goals and objectives;
• Overseeing and evaluating our organizational compensation structure, policies and programs, and
assessing whether these establish appropriate incentives and leadership development opportunities
for management and other employees;
• Retaining, or obtaining the advice of, such compensation consultants, legal counsel or other advisors
as the Compensation Committee deems necessary or appropriate for it to carry out its duties;
• Reviewing and approving employment agreements, severance or termination arrangements,
change-in-control agreements, retirement agreements and similar matters;
• Reviewing, approving and administering our equity compensation plans and recommending changes
to such plans as needed; and
• Regularly monitoring and evaluating, with the assistance of the Chief Risk Officer, the risk management
elements of the Company’s incentive compensation arrangements and appropriately balancing risk
and financial results in a manner that does not encourage excessive risk taking and is consistent with
safety and soundness.
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Compensation Committee Interlocks and Insider Participation
No members serving on the Compensation Committee during 2020 were officers or employees of the
Company or any of its subsidiaries.
Certain Commercial Relationships
Air Transportation
Ruston Aviation, Inc. is engaged by us from time to time to provide private air transportation to our
management team. The sole owner of Ruston Aviation, Inc., James Davison, Sr., is the father of our
director James Davison, Jr.
Origin Bank and Ruston Aviation, LLC jointly purchased an airplane from a third party, with each party
having an equal 50% ownership stake. Forty-nine percent of Ruston Aviation, LLC is owned by James
Davison, Sr., the father of our director James Davison, Jr., 49% is owned by Steven Davison, the brother
of our director James Davison, Jr., and 2% is owned by Ruston Aviation, Inc. The aggregate purchase
price of the aircraft was $5,162,040. Half of the purchase price was paid by the Bank and half was
paid by Ruston Aviation, LLC. Ruston Aviation, LLC and the Bank have allocated operating costs in
accordance with their respective use of the aircraft. We made payments of approximately $21,000
to Ruston Aviation, Inc. for the fiscal year ended December 31, 2020, including the Bank’s portion of
shared operating costs in connection with its joint ownership of the aircraft.
Hospitality and Country Club Membership
The Squire Creek Country Club in Choudrant, Louisiana is owned by Squire Creek Country Club and
Development LLC, which itself is jointly owned in equal 50% stakes by James Davison, Sr. and Steven
Davison, father and brother, respectively, of our director James Davison, Jr. From time to time, we use
the country club for corporate functions, employee and vendor lodging and similar activities. During
the fiscal year ended December 31, 2020, we paid approximately $95,000 to Squire Creek Country
Club and Development LLC for these services and we do not believe we pay more than standard rates.
Banking Location Leases
We are party to a lease with respect to our Northside Banking Center location with James Davison, Sr.,
the father of our director James Davison, Jr., with an initial term ending on December 31, 2037, and
a renewal option to extend the lease for an additional 60 months. Under the lease, in addition to a
monthly base rent of $7,083, we are also responsible for utilities, real property taxes, maintenance
and repairs. We made payments of approximately $85,000 for the fiscal year ended December 31,
2020, in connection with this lease. We are also party to a lease with respect to our Forsythe Banking
Center location with Jedco Properties, LLC. Jedco Properties, LLC is wholly owned by James Davison,
Sr., the father of our director James Davison, Jr. The current term of the lease expires on February
28, 2029, with an option to renew for an additional 10 years. The lease provides for a monthly base
rent of $11,333 and is subject to certain adjustments. We are also responsible for utilities, certain
real property taxes, maintenance (except with respect to common areas), repairs and alterations.
We made payments of approximately $136,000 for the fiscal year ended December 31, 2020, in
connection with this lease.
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Compensation Committee Processes and Procedures
Typically, the Compensation Committee meets at least quarterly and with greater frequency if necessary.
The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in
consultation with the other members of the Compensation Committee. The Compensation Committee
meets regularly in executive session. Our Chief People and Diversity Officer regularly attends meetings
of the Compensation Committee and, from time to time, various other members of management or
other employees, as well as outside advisors or consultants, may be invited by the Compensation
Committee to make presentations, to provide background information or to otherwise participate
in meetings. The Origin Bancorp, Inc. CEO, the Origin Bank CEO & President, and the Chief People
and Diversity Officer also interface with the Compensation Committee in connection with executive
compensation. The Compensation Committee periodically meets with the CEO to assess progress
toward meeting objectives set by the Board for both annual and long-term compensation. The CEO
may not participate in, or be present during, any deliberations or determinations of the Compensation
Committee regarding CEO’s compensation.
The Compensation Committee may form and delegate authority to subcommittees to the extent it
deems necessary or appropriate. Under its charter, the Compensation Committee has the authority to
select, retain and approve the fees and other retention terms of counsel, accountants or other experts or
advisors, including compensation consultants, at the expense of the Company, that the Compensation
Committee considers appropriate in the performance of its duties. The Compensation Committee
also has direct responsibility for the oversight of the work of any consultants or advisors it engages.
Under its charter, the Compensation Committee may select or receive advice from a consultant only
after taking into consideration certain factors set forth in the Nasdaq rules relating to the consultant’s
independence. Although the Compensation Committee is required to consider such factors, it is free
to select or receive advice from a consultant that is not independent.
Our Board has adopted a written charter for the Compensation Committee, which is available on our
website at www.origin.bank under “Investor Relations—Governance—Governance Overview.”
Nominating and Corporate Governance Committee
The current members of our Nominating and Corporate Governance Committee are Messrs. Jones
(Chair), D’Agostino, Jr., Gallot, Jr., Goff and Malone and Ms. Solender. Our Board has determined that
each of the members of our Nominating and Corporate Governance Committee is independent within
the meaning of the independent director requirements of Nasdaq. The Nominating and Corporate
Governance Committee held seven meetings during the fiscal year ended December 31, 2020.
The Nominating and Corporate Governance Committee nominates persons for election as directors
and reviews corporate governance matters. Candidates may come to the attention of the Nominating
and Corporate Governance Committee through current Board members, stockholders or other persons.
These candidates are evaluated at Nominating and Corporate Governance Committee meetings and
may be considered at any point during the year. Although, to date there have been no stockholder
nominations and the Company does not have a formal policy of considering director candidates
recommended by stockholders, the Nominating and Corporate Governance Committee will consider
properly submitted stockholder nominations for candidates for the Board. Among other things, the
Nominating and Corporate Governance Committee members are responsible for:
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2021 Proxy Statement | CORPORATE GOVERNANCE
• Evaluating and making recommendations to our Board regarding our Board’s number and
composition, committee structure and assignments, and director responsibilities;
• Assisting our Board in identifying prospective director nominees and recommending nominees for
each annual meeting of stockholders;
• Reviewing the background, qualifications and independence of individuals being considered as
director candidates, including persons proposed by stockholders or others;
• Recommending to our Board a slate of director nominees;
• Reviewing and overseeing the management succession program;
• Evaluating and recommending governance principles applicable to our Board composition and
operation;
• Developing and reviewing the Company’s related party transactions policy and reviewing or
approving related party transactions; and
• Reviewing and investigating matters pertaining to the adherence to the Code of Ethics or other
standards of business conduct by any director or executive officer of the Company, except as such
are related to accounting, auditing, financial reporting or internal control functions.
Our Board has adopted a written charter for our Nominating and Corporate Governance Committee,
which is available on our website at www.origin.bank under “Investor Relations—Governance—
Governance Overview.”
Finance Committee
The current members of our Finance Committee, a joint committee of the boards of directors of the
Company and Origin Bank, are Messrs. D’Agostino, Jr. (Chair), Davison, Jr., Malone, Myrick and Taylor.
The Finance Committee met four times in 2020. The Finance Committee has responsibility for, among
other things:
• Reviewing, approving and recommending for implementation our market risk functional framework,
liquidity risk and oversight policy;
• Overseeing the administration and effectiveness of, and compliance with, our market risk functional
framework and oversight policy and other significant investment and related policies;
• Reviewing and overseeing the operation of our Capital Management Policy as well as our capital
adequacy assessments, forecasting and stress testing processes and activities; and
• Reviewing capital levels and making recommendations to our Board regarding our dividend policy,
repurchases of securities, financing activities and significant capital expenditures.
Our Board has adopted a written charter for our Finance Committee, which is available on our website
at www.origin.bank under “Investor Relations—Governance—Governance Overview.”
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Risk Committee
The current members of the Risk Committee are Messrs. Davison, Jr., (Chair), D’Agostino, Jr., Luffey,
Malone, Myrick and Snellings, IV. Ms. Solender served as a member of the Risk Committee until January
2020. The Risk Committee held four meetings during the fiscal year ended December 31, 2020.
The Risk Committee was appointed by our Board to assist our Board in its oversight of (i) the Company’s
enterprise risk management framework, (ii) the Company’s risk appetite statement, including risk limits
and tolerances, and (iii) the performance of the Company’s Executive Risk Officer, Cary Davis. Mr. Davis
retired effective December 31, 2020. The Chief Credit and Banking Officer and the Chief Risk Officer
now share the duties formerly carried out by the Executive Risk Officer. Our Board believes an effective
enterprise risk management system is necessary to ensure the successful, safe and sound management
of the Bank. Among other things, our Risk Committee has responsibility for:
• Overseeing the Company’s enterprise risk management framework and risk appetite statement;
• Periodically reviewing and evaluating the major risk exposures of the Company and its business units
against established risk measurement methodologies and tolerances;
• Overseeing the Company’s risk identification framework;
• Receiving reports from the Chief Risk Officer, Chief Credit and Banking Officer and Chief Financial
Officer at least quarterly;
• Reviewing and recommending for our Board’s approval the Company’s risk appetite statement and
the Company’s other significant risk management and risk assessment guidelines and policies;
• Overseeing the Company’s process and significant policies for determining risk tolerance and
reviewing management’s measurement and comparison of overall risk tolerance to established limits;
• Regularly reporting to our Board on the adequacy and quality of the Company’s methods for
identifying, measuring, monitoring, controlling and reporting risks;
• Reviewing the Company’s insurance program and the policies in place to address insurable risks;
• Oversee management’s compliance with all regulatory obligations arising under laws, rules and
regulations;
• Reviewing and approving the Company’s internal annual compliance training schedule;
• Reviewing and approving the appointment and, as appropriate, replacement of the Chief Risk
Officer; and
• Coordinating with management, including the Chief Risk Officer and the Audit Committee, to
help ensure that the committees have received the information necessary to permit them to fulfill
their duties and responsibilities with respect to oversight of risk management and risk assessment
guidelines and policies.
Our Board has adopted a written charter for our Risk Committee, which is available on our website at
www.origin.bank under “Investor Relations—Governance—Governance Overview.”
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2021 Proxy Statement | CORPORATE GOVERNANCE
Human Capital Management
As of December 31, 2020, we employed 749 full-time employees. We appreciate the unique
contributions of each individual employee and we are fully committed to providing a culture of respect,
equity, diversity, and inclusion.
Safe Work Environment
We are committed to employee and customer health and safety. This focus has been magnified with the
impact of COVID-19 and employee and customer health and safety has become the first of our top four
strategic initiatives. During the pandemic, we instituted CDC recommended pandemic safety protocols
to prevent the spread of the virus among our employees and customers. We required employees to wear
masks when working around others and we closed our lobbies and assisted our customers by further
developing our online banking and teleconferencing capabilities. When customer needs required an
onsite meeting, we required appointments, masks and followed other appropriate safety protocols. We
expanded our work from home (“WFH”) capabilities in order to allow our employees to better serve our
customers while putting safety first. For those positions that required retail employees to be in banking
centers, we instituted staggered staffing in order to ensure we would have sufficient employees to staff
locations in the event an employee tested positive or was exposed to a person who tested positive and
was required to quarantine. For those employees who were coming in to bank locations, we utilized work
spaces of WFH employees for appropriate social distancing. These safety measures have been effective
as all Origin locations have remained open throughout the pandemic. We implemented pandemic paid
time off (“PTO”) policies over and above our normal PTO to provide our employees additional paid
time off to deal with personal and family issues brought about by the pandemic. We have maintained
ongoing communication with our employees regarding changes in CDC safety recommendations. We
continue to remind employees of our employee assistance program and the need to acknowledge the
stress that many are experiencing due to the pandemic and the importance of caring for their emotional
and physical well-being.
Compensation and Benefits
We provide competitive compensation and benefits in order to attract and retain top talent. In addition
to base pay and stock awards, we have several incentive programs that are designed to link performance
to pay and drive results towards the achievement of overall corporate goals. In addition, we have a
Dream Manager program that assists our employees in meeting their own personal and professional
goals. We launched a nationally-recognized financial wellness program in the first quarter of 2021
that is designed to assist our employees in becoming debt-free, empowering them to become better
financially prepared for their future. In one specific initiative designed to help out the communities we
serve, our Project Enrich program provides employees with twenty hours of paid time off to volunteer
in their communities.
Employee Feedback
Employee feedback is highly valued at Origin and our employees provide anonymous input via quarterly
surveys facilitated by Glint, a LinkedIn company. Our employees consistently rank Origin in the top 5%
of Glint’s global customer base with regard to employee engagement.
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| 2021 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Talent Development
Talent development at Origin begins with our comprehensive recruitment program and continues
throughout the employee life cycle. 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
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. We find benefit in developing our future leaders from within and succession
plans are in place for senior level positions as well as many other key leadership positions.
Diversity & Inclusion
At Origin, one of our core values is having a genuine respect for yourself and others. This value makes
the support of diversity, equity and inclusion a natural fit for our culture and essential to the way we
conduct business, foster individual and team enrichment, and participate in our communities. We believe
it is only with a diverse, equitable, and inclusive workplace that the organization can truly perform at its
best, carry out its vision, and make a difference in the communities we serve. We believe all employees
should be given opportunities to perform to their full potential, knowing their performance will be
measured and rewarded fairly.
It is because of our focused initiatives that Origin has been named one of America’s “Best Banks to
Work For” for eight consecutive years by the American Bankers Association (“ABA”). This ranking is
based on feedback given directly to the ABA from our employees. Regionally, Origin has won the “Best
Bank of the Delta” for fourteen consecutive years in northeast Louisiana. We have built our success
on valued relationships beginning with our employees, who then build long-term, customer-focused
relationships throughout our footprint.
Stockholder Nominees and Proposals for 2022 Annual Meeting
If a stockholder desires to submit a stockholder proposal pursuant to Rule 14a-8 under the Exchange
Act for inclusion in the proxy statement for the 2022 annual meeting of stockholders, such proposal
and supporting statements, if any, must be received by us at our principal executive offices, located at
500 South Service Road East, Ruston, Louisiana 71270, no later than November 17, 2021. However, if
the date of the 2022 annual meeting of stockholders is changed by more than 30 days from April 28,
2022, then the deadline will be a reasonable time before we begin to send proxy materials. Any such
proposal must comply with the requirements of Rule 14a-8.
Stockholder proposals to be presented at the 2022 annual meeting of stockholders, other than
stockholder proposals submitted pursuant to Rule 14a-8 under the Exchange Act,, for inclusion in the
proxy statement (including a director nomination) for the 2022 annual meeting of stockholders must,
in addition to other requirements, be in proper form and received in writing at the Company’s principal
executive offices no earlier than December 29, 2021, and no later than January 28, 2022. If the 2022
annual meeting is not called for a date that is within 30 days of April 28, 2022, notice must be delivered
not later than the close of business on the tenth day following the date on which such notice of the
date of the meeting was mailed or public disclosure of the date of the meeting was made, whichever
occurs first. Please consult our Bylaws before sending in a notice as we may disregard proposals or
nominations not made in accordance with the requirements in our Bylaws.
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2021 Proxy Statement | CORPORATE GOVERNANCE
Director Nominees
Our Bylaws provide that nominations of persons for election to the Board may be made by or at the
direction of our Board or by any stockholder entitled to vote for the election of directors at the Annual
Meeting who complies with certain procedures in our Bylaws as described above. The Nominating and
Corporate Governance Committee is responsible for identifying and recommending candidates to our
Board as vacancies occur.
The Nominating and Corporate Governance Committee is responsible for monitoring the mix of
skills and experience of the directors in order to assess whether our Board has the necessary tools to
perform its oversight function effectively. Director candidates are evaluated using certain established
criteria, including familiarity with the financial services industry, their personal financial stability, their
willingness to serve on our Board and our Corporate Governance Principles. In addition, our Corporate
Governance Principles indicate directors should possess the highest personal and professional ethics,
integrity and values, and be committed to representing the long-term interests of the stockholders.
They must also have an inquisitive and objective perspective, practical wisdom and mature judgment.
Although we do not have a separate diversity policy, the Nominating and Corporate Governance
Committee considers the diversity of our directors and nominees in terms of knowledge, experience,
skills, expertise and other characteristics that may contribute to our Board. In addition, the Company’s
strategic plan includes a focus on attracting Board members who represent a broad mix of skills,
backgrounds and perspectives that will more closely reflect the diversity of our customer base,
stockholders and communities we serve.
The Nominating and Corporate Governance Committee utilizes a variety of methods for identifying
and evaluating nominees for director and regularly assesses the appropriate size of our Board, and
whether any vacancies on our Board are expected due to retirement or otherwise. In the event that
vacancies are anticipated, or otherwise arise, the Committee considers various potential candidates
for director.
Candidates may come to the attention of the Committee through current Board members, professional
search firms, stockholders or other persons. These candidates are evaluated at regular or special
meetings of the Nominating and Corporate Governance Committee, and may be considered at any
point during the year. The Nominating and Corporate Governance Committee will consider director
candidates recommended by stockholders in the same manner as it considers candidates recommended
by others, provided that such candidates are nominated in accordance with the applicable provisions of
our Bylaws. Because of this, there is no specific policy regarding stockholder nominations of potential
directors. At present, our Board does not engage any third parties to identify and evaluate potential
director candidates.
Certain Relationships and Related Transactions
Transactions by Origin Bank or us with related parties are subject to a formal written policy, as well as
regulatory requirements and restrictions. These requirements and restrictions include Sections 23A and
23B of the Federal Reserve Act (which govern certain transactions by Origin Bank with its affiliates)
and the Federal Reserve’s Regulation O (which governs certain loans by Origin Bank to its executive
officers, directors and principal stockholders). We and our wholly owned subsidiary, Origin Bank, have
adopted policies designed to ensure compliance with these regulatory requirements and restrictions.
In addition, our Code of Ethics provides guidance for addressing actual or potential conflicts of
32
| 2021 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
interests, including those that may arise from transactions and relationships between the Company
and its executive officers or directors.
We have also adopted a written Related Party Transaction Policy. Related party transactions are
transactions, arrangements or relationships in which we are or will be a participant, the amount involved
exceeds $120,000 and a related party has or will have a direct or indirect material interest. Related
parties include our directors (including nominees for election as directors), our executive officers,
beneficial owners of more than 5% of our capital stock and the immediate family members of any of
the foregoing persons.
Transactions subject to the policy are referred to the Nominating and Corporate Governance
Committee for evaluation and approval. In determining whether to approve a related party transaction,
the Nominating and Corporate Governance Committee will consider, among other factors:
• Whether the transaction was undertaken in the ordinary course of the Company’s and the Related
Party’s business;
• Whether the transaction was initiated by the Company or the Related Party;
• The purpose of the transaction and its potential risks and benefits to the Company;
•
In the event the Related Party is a director, an Immediate Family Member of a director or an
entity in which a director is a partner, stockholder or executive officer, the impact on the director’s
independence and, if the director serves on the Compensation Committee, such director’s status as
a “non-employee director” under the SEC rules;
• The availability of other sources for comparable products or services;
• The approximate dollar value of the transaction and the amount and nature of the Related Party’s
interest in the transaction; and
• The terms of the transaction and whether the proposed transaction is proposed to be entered
into on terms no less favorable than the terms available to unrelated third parties or to employees
generally.
Our Related Party Transactions Policy is available on our website at www.origin.bank under “Investor
Relations—Governance—Governance Overview.”
General
In addition to the relationships, transactions and the director and executive officer compensation
arrangements discussed under “Director Compensation,” ”Executive Compensation” and
“Compensation Committee Interlocks and Insider Participation,” the following is a description of
transactions since January 1, 2020, including currently proposed transactions, to which we have been
or will be a party in which the amount involved exceeded or will exceed $120,000, and in which any
of our directors (including nominees), executive officers or beneficial holders of more than 5% of our
capital stock, or their immediate family members or entities affiliated with them, had or will have a
direct or indirect material interest. We believe the terms and conditions set forth in such agreements
are reasonable and customary for similar transactions.
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2021 Proxy Statement | CORPORATE GOVERNANCE
Ordinary Banking Relationships
Certain of our officers, directors and principal stockholders, as well as their immediate family members
and affiliates, are customers of, or have or have had transactions with, Origin Bank, us or our affiliates
in the ordinary course of business. These transactions include deposits, loans, mortgages and other
financial services transactions. Related party transactions are made in the ordinary course of business,
on substantially the same terms, including interest rates and collateral (where applicable), as those
prevailing at the time for comparable transactions with persons not related to us, and do not involve
more than normal risks of collectability or present other features disproportionately unfavorable to us.
As of December 31, 2020, we had approximately $1.4 million of loans outstanding to our directors and
officers, their immediate family members and their affiliates, as well as those of Origin Bank, and we
had approximately $2.7 million in unfunded loan commitments to these persons. As of December 31,
2020, no related party loans were categorized as nonaccrual, past due, restructured or potential
problem loans. We expect to continue to enter into transactions in the ordinary course of business on
similar terms with our officers, directors and principal stockholders, as well as their immediate family
members and affiliates.
Director Compensation
The Compensation Committee is responsible for reviewing and making recommendations to our Board
with respect to the compensation of directors. Employees of the Company and its subsidiaries are not
compensated for service as a director of the Company or its subsidiaries and are excluded from the
tables below.
Director compensation is reviewed periodically by the Compensation Committee of our Board
and adjustments are considered, as needed. Periodically, the Committee engages an independent
consultant to review director compensation amounts and structure using the same group of peer banks
that was used by the Compensation Committee to review the compensation of senior management. In
2019, the Compensation Committee engaged McLagan as its independent compensation consultant
for this purpose. The Compensation Committee approved an increase of $5,000 to the annual director
retainer in 2020 which brought the total retainer to $29,000 per year.
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| 2021 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
The following table summarizes the committee and other fees/benefits paid to non-employee directors
during the year ended December 31, 2020:
Committee
Member Fees $
Committee
Chair Annual
Fee $
Other Annual
Fees/Benefits $
Committee fees:
Audit
Compensation
Finance
Nominating and Corporate Governance
Risk
Other Fees:
Retainer per director
Lead independent director
Equity-based awards per director(1)
6,000
4,000
2,000
2,000
2,000
—
—
—
12,000
8,000
4,000
4,000
4,000
—
—
—
—
—
—
—
—
29,000
16,000
36,000
(1)
Equity awards are granted to non-employee directors as part of Origin’s 2012 Stock Incentive Plan in May of each year following the annual
stockholders meeting and the election of directors. These grants vest on April 1st of the following year.
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2021 Proxy Statement | CORPORATE GOVERNANCE
The following table summarizes the total compensation paid by the Company to non-employee
directors for the fiscal year ended December 31, 2020:
Name
James S D’Agostino Jr.
James E Davison Jr.
Richard J Gallot Jr.
Stacey Goff(2)
Michael Jones
Gary E Luffey
Farrell J Malone
F. Ronnie Myrick(3)
George M Snellings IV
Elizabeth Solender
Steven Taylor
Fees Earned or
Paid in Cash
$
Stock Awards(1)
$
61,823
39,406
35,823
35,417
45,823
37,406
53,823
33,000
43,406
43,989
37,406
36,001
36,001
36,001
48,008
36,001
36,001
36,001
—
36,001
36,001
36,001
Total
$
97,824
75,407
71,824
83,425
81,824
73,407
89,824
33,000
79,407
79,990
73,407
(1)
(2)
The amounts shown in this column reflect restricted stock awards granted to the directors during 2020 and are disclosed as the aggregate
grant date fair value of the awards, computed in accordance with ASC Topic 718, based on the closing market price of our common stock
on the grant date. For additional information on our calculation of stock-based compensation, please refer to the notes to our audited
financial statements for the fiscal year ended December 31, 2020, included in our Annual Report on Form 10-K.
The stock award amount shown for Mr. Goff, includes a pro-rated stock award of 12,007 that he received for serving on the Board from
January 1 to April 30, 2020, plus the full RSA award he received in May, 2020 for the current term year.
(3) Due to an administrative error, Mr. Myrick did not receive the stock award in 2020 which was his first year on the board as a non-employee
director. This error was corrected in Q1 2021.
Directors have been and will continue to be reimbursed for travel, food, lodging and other expenses
directly related to their activities as directors. Directors are also entitled to the protection provided by
the indemnification provisions in our Charter and Bylaws, as well as the articles of incorporation and
bylaws of Origin Bank, as applicable.
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| 2021 Proxy Statement CORPORATE GOVERNANCE
COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The following discussion provides an overview and analysis of our Compensation Committee’s philosophy
and objectives in designing Origin’s compensation programs, the alignment between our business
results and executive compensation through our compensation program, and the compensation
determinations and the rationale for those decisions relating to our Named Executive Officers (“NEOs”).
This discussion should be read together with the compensation tables for our NEOs, which can be
found following this discussion. Unless otherwise indicated, any references to a particular year in this
discussion means the fiscal year ended December 31 of such year.
Financial and Strategic Highlights
• Pre-tax, pre-provision (“PTPP”) earnings were the highest in our history at $104.3 million for the
year ended December 31, 2020, compared to $76.1 million for the year ended December 31, 2019.
Additionally, our PTPP return on average assets (“PTPP ROAA”) for the year ended December 31,
2020, was 1.62%, compared to 1.49% for the year ended December 31, 2019.
• Total loans held for investment were $5.72 billion, an increase of $1.58 billion, or 38.2%, from
December 31, 2019.
• Total deposits were $5.75 billion at December 31, 2020, and increased by $1.52 billion, or 36.0%,
from December 31, 2019.
• Grew net interest income $17.8 million, or 10.3%, and noninterest income $18.2 million, or 39.1%,
year over year.
• Reduced our annual efficiency ratio to 59.31% during the year ended December 31, 2020, from
65.43% during the year ended December 31, 2019.
•
Issued $8.9 million in common stock dividends to stockholders during the year ended December 31,
2020.
• Origin Bank completed an offering of $70 million in aggregate principal amount of subordinated
notes due 2030 in February 2020; the Company completed an offering of $80 million in aggregate
principal amount of subordinated notes due 2030 in October 2020.
• Success in partnering with companies like MX, nCino, Precision Lender and others to improve the
customer and employee experience.
• For the eighth consecutive year, Origin Bank was named one of the best banks to work for in the
U.S. by American Banker and Best Companies Group, which identifies U.S. banks for outstanding
employee satisfaction.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking
industry. However, we provide other financial measures, such as pre-tax, pre-provision earnings and
PTPP ROAA, in this proxy statement that are considered “non-GAAP financial measures.” Generally,
a non-GAAP financial measure is a numerical measure of a company’s financial performance, financial
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2021 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the
most directly comparable measure calculated and presented in accordance with GAAP.
We consider PTPP and PTPP ROAA, as presented in this proxy statement as an important measure of
financial performance as it provides supplemental information that we use to evaluate our business, to
assess underlying operational performance and to allow a comparison to prior periods mitigating the
impact of increases in the allowance for credit losses, and related income tax effects, associated with
the implementation of CECL and continuing impact of the COVID-19 pandemic.
We believe non-GAAP measures and ratios, when taken together with the corresponding GAAP
measures and ratios, provide meaningful supplemental information regarding our performance and
capital strength. We use, and believe that investors benefit from referring to, non-GAAP measures in
assessing our operating results and related trends. However, non-GAAP measures should be considered
in addition to, and not as a substitute for or preferable to, amounts prepared in accordance with GAAP.
In the following table, we have provided a reconciliation of pre-tax pre-provision earnings to the most
comparable GAAP financial measure.
(Dollars in thousands, except per share amounts)
2020
2019
December 31,
Calculation of PTPP Earnings:
Net Income
Plus: provision for credit losses
Plus: income tax expense
PTPP Earnings
Divided by total average assets
PTPP ROAA
$ 36,357
$ 53,882
59,900
7,996
9,568
12,666
$ 104,253
$ 76,116
$ 6,442,528
$ 5,092,971
1.62%
1.49%
Executive Compensation Philosophy
The quality and loyalty of our employees, including our executive team, is critical to executing our
community banking philosophy, which emphasizes personalized service combined with the full resources
of a larger banking organization. To meet the primary goal of our executive compensation philosophy of
attracting, retaining and incenting highly qualified and loyal executives and employees within the context
of our corporate culture, our compensation programs are designed with the following principles in mind:
• We are committed to providing effective compensation and benefit programs that are competitive
within our industry and with other relevant organizations with which we compete for talent.
• Our programs are designed to encourage and reward behaviors that contribute to the achievement
of organizational goals.
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| 2021 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
• Our programs ensure executive’s total compensation opportunities are aligned with the achievement
of our strategic goals and delivering stockholder value.
• Pay programs and practices reinforce our commitment to providing a work culture that promotes
respect, integrity, teamwork, initiative, and individual growth opportunities.
Consistent with our overall philosophy, we have designed our executive compensation programs to
align pay and performance, be competitive in the employment market, and effectively attract, retain
and motivate highly qualified executive talent. Our philosophy is to tie a significant percentage
of an executive’s compensation to the achievement of Company financial and performance goals.
Accordingly, we strive to set base salaries at competitive levels, with an opportunity for each executive
to be rewarded through an annual cash incentive bonus.
Decisions made by the Compensation Committee and our Board relative to compensation take all
current applicable rules, regulations and guidance into consideration and are made with the goal of
being compliant with all such requirements.
Role of the Compensation Committee
The Compensation Committee has overall responsibility for evaluating and approving our executive
officer compensation, benefits, severance, equity-based or other compensation plans, policies and
programs. The Committee sets the Chief Executive Officer’s compensation, and in conjunction with
the CEO, reviews the evaluation process and compensation structure for all other Executive Officers.
Role of the Compensation Consultant
McLagan, a part of Aon plc (“McLagan”) an independent compensation consulting firm has been
engaged by, and has reported directly to, the Compensation Committee periodically since 2012 while
working on various compensation initiatives. After evaluating information presented in accordance
with SEC independence rules and Nasdaq listing standards, the Compensation Committee concluded
that McLagan was independent.
During 2020, McLagan assisted the Compensation Committee with the review of, and offered
recommendations on, our 2020 Proxy Compensation Discussion and Analysis, recommended potential
changes to our Executive Incentive Plan metrics, and reviewed (i) the addition of annual long term
equity awards to our executive compensation structure, (ii) the Executive Stock Ownership guidelines
to be issued in 2021, (iii) the impact of COVID-19 to 2020 incentive plans and made recommendations
for a potential 2021 Compensation Peer Group, as well as, providing current trends in executive
compensation. The results of these analyses were used as one of the factors to establish executive
compensation for 2020. McLagan did not provide any non-compensation related services or products
to the Compensation Committee nor did it provide any services to the Board.
Effective February 1, 2021, the Compensation Committee has retained Meridian Compensation
Partners, LLC as our compensation consultant.
Role of Management
Our CEO performs an annual performance review of executive officers of the Company and provides a
recommendation to the Compensation Committee regarding base salary and incentive bonus payouts
related to the performance of each executive under his or her Executive Incentive Plan. The Compensation
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2021 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
Committee has discretion to approve or modify the incentive bonus payouts to be more or less than what
is provided under each Executive Incentive Plan. The CEO is present for the Compensation Committee’s
deliberations and decisions with respect to the other executive officer’s individual compensation.
The Compensation Committee meets separately on an annual basis with our CEO to discuss his compensation
and performance based on the CEO’s annual incentive plan objectives. The Compensation Committee
meets in executive session to approve the final incentive payout recommendation for the CEO and presents
their recommendation to our Board for final approval. The results of these analyses were used as one of
the factors to establish executive compensation for 2020. McLagan did not provide any non-compensation
related services or products to the Compensation Committee nor did it provide any services to the Board.
Role of Stockholders
We welcome feedback from our stockholders. Our compensation policies and practices will continue
to evolve as we receive additional input from our stockholders, review correspondence submitted by
stockholders to our Board and the Compensation Committee, review market practice, review reports
issued by proxy advisory firms and the results of our advisory votes on the Say-on-Pay Proposal (Proposal 2).
Risk Assessment
The Compensation Committee is responsible for overseeing the management of risk related to our
executive and non-executive compensation plans. Annually, the Executive Risk Officer prepares a risk
assessment which include an analysis of the design and operation of the Company’s incentive compensation
programs, identifying and evaluating situations or compensation elements that may raise material risks, and
an evaluation of other controls and processes designed to identify and manage risk. The Risk Committee
helps coordinate the Executive Risk Officer’s annual compensation risk assessment and risk management
duties with the CEO and the Compensation Committee. During the Compensation Committee’s
December, 2020 meeting, the Executive Risk Officer presented the risk assessment he prepared and
concluded that our compensation policies and practices do not create risks that are reasonably likely to
have a material adverse effect on our business or operations. The Compensation Committee includes
this risk assessment in their evaluation and review of the policies and practices of compensating our
employees, including executives and non-executive employees, as such policies and practices relate to
risk management practices and risk-taking, and also concluded that the compensation plans and practices
are not likely to have any material adverse effect on the Company. The compensation plans and practices
are subject to review and modification by the Compensation Committee on an annual basis and the
Compensation Committee retains discretion with regard to any executive bonus award decisions.
Competitive Benchmarking and Compensation Peer Group
The Compensation Peer Group is periodically updated by the Compensation Committee and consists of
companies that the Compensation Committee believes are comparable in size, performance and business
model to the Company and companies with which we may compete. In late 2019, McLagan conducted
an analysis of the Compensation Peer Group to determine appropriate companies for inclusion, with an
emphasis on asset size, location, business model and performance as the measures of comparability.
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| 2021 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Based upon its analysis, the Compensation Committee approved the following 2019 Compensation
Peer Group, which did not change in 2020, and was used to evaluate executive compensation for the
2020 calendar year:
First Bancshares Inc.
Allegiance Bancshares Inc.
Atlantic Capital Bancshares Inc. First Financial Bankshares
BancFirst Corp.
Capital City Bank Group Inc.
CBTX Inc.
Enterprise Financial Services
FB Financial Corp.
First Bancorp
Franklin Financial Network Inc.
Great Southern Bancorp Inc.
Guaranty Bancshares Inc.
HomeTrust Bancshares Inc.
Republic Bancorp Inc.
Seacoast Banking Corp. of Florida
ServisFirst Bancshares Inc.
SmartFinancial Inc.
Southside Bancshares Inc.
Stock Yards Bancorp Inc.
Triumph Bancorp Inc.
Veritex Holdings, Inc.
2020 NAMED EXECUTIVE OFFICERS
The following section describes the compensation that we pay our NEOs. “Officer” is defined in the
SEC rules to include those who perform a policy-making function, and “named executive officers” are
defined by Item 402 of Regulation S-K to be the principal executive officer, the principal financial officer,
and the other three most highly compensated executive officers, each of whose total compensation for
the last fiscal year exceeded $100,000. The business address for all of these individuals is 500 South
Service Road East, Ruston, Louisiana 71270. We have identified our NEOs in the table below:
Name
Drake Mills
Stephen Brolly
M. Lance Hall
Cary Davis
Preston Moore
Age
60
58
47
70
60
Title
Chairman, President, and Chief Executive Officer
Senior Executive Officer and Chief Financial Officer
President and Chief Executive Officer of Origin Bank
Senior Executive Officer and Executive Risk Officer
Senior Executive Officer and Chief Credit and Banking Officer
The following is a brief discussion of the business and banking background and experience of our
executive officers if not already included above. For information regarding Mr. Mills, see “Director
Nominee Qualifications and Experience.” All of our executive officers are appointed by our Board and
serve at the discretion of our Board.
STEPHEN BROLLY
Mr. Brolly is our Chief Financial Officer. Mr. Brolly has approximately 22 years of banking experience and,
before joining us in January 2018, most recently served as Chief Financial Officer of Fidelity Southern
Corporation and its wholly owned subsidiary, Fidelity Bank, for approximately 10 years from 2006 to 2017.
At Fidelity Southern, Mr. Brolly was responsible for equity and debt raising activities, strategic planning,
budgeting and forecasting, and managing various financial, operational and strategic activities relating
to acquisitions. Prior to his tenure at Fidelity Southern, he served as Senior Vice President and Controller
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2021 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
of Sun Bancorp, Inc. and its wholly owned subsidiary, Sun National Bank, for seven years, during which
time he managed financial reporting and accounting operations, including Sarbanes-Oxley and internal
control compliance frameworks. Mr. Brolly began his professional career in public accounting and spent
13 years at Deloitte & Touche.
M. LANCE HALL
Mr. Hall was promoted to President and CEO of Origin Bank in January 2020 after previously being
promoted to President of Origin Bank in July 2018. As President and CEO of the Bank, Mr. Hall oversees
the Bank’s regional presidents, lending, information technology, retail banking, operations, marketing,
strategic planning, brand teams and mortgage operations. Prior to his promotion to Origin Bank
President, Mr. Hall served as Louisiana State President from March 2013 until July 2018. While serving as
Louisiana State President, Mr. Hall also became Chief Strategy Officer in March 2016, and became Chief
Operating Officer of the Bank in February 2017. Mr. Hall has served our organization for over 21 years
through various roles of increasing responsibility. Prior to joining Origin Bank, Mr. Hall spent four years
at Regions Bank as a Credit Analyst and Commercial Relationship Manager.
CARY DAVIS
Mr. Davis retired from Origin effective December 31, 2020. Mr. Davis became our Executive Risk Officer
in October 2019 in order to prepare for his succession and to continue to drive the strategic direction of
Origin as it relates to credit and enterprise risk management. Prior to this change, Mr. Davis served as
our Chief Risk Officer since 1998 and was responsible for overseeing our centralized loan underwriting
team, credit administration, internal audit and enterprise risk management. Mr. Davis has over 47 years
of experience in the banking industry, more than 22 of which have been with the Bank. Before joining
the Bank, he served in numerous executive officer capacities, including Executive Vice President and
Chief Credit Officer for Central Bank, a subsidiary of First Commerce Corporation, which was the second
largest bank holding company in Louisiana at the time of its acquisition in 1998 by Banc One Corporation.
Mr. Davis also spent four years with the Office of the Comptroller of the Currency as a bank examiner.
PRESTON MOORE
Mr. Moore assumed the role of Chief Credit and Banking Officer in October 2019, and prior to this
role, he served as our Houston Regional President. He has been with the bank since November 2012.
Mr. Moore has performed various roles in the banking industry for more than 37 years, and he has a vast
wealth of financial knowledge. Mr. Moore serves as a board member for the Harris County Improvement
District No. 12. Mr. Moore formerly served as the President and Director for Encore Bancshares, Inc.
Before he took on his role at Encore Bancshares, Mr. Moore served as the Executive Vice President and
Manager of the Investment Division at Amegy Bank of Texas. Mr. Moore earned his bachelor’s degree in
political science at Washington and Lee University and later went on to earn his MBA in finance at the
University of Texas.
42
| 2021 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Discussion of Executive Compensation Components
Our goal is to provide executives with a total compensation package that is competitive with the
market, aligns pay and performance, encourages executives to remain with the organization and helps
to drive the Company to desired levels of performance. The following table outlines the major elements
of 2020 total compensation for our NEOs:
Compensation Element
Purpose
Link to Performance
Base Salary
Short Term Incentive
Program
Supplemental Executive
Retirement Plan
Helps attract and retain
executives through market-
competitive base pay
Based on individual
performance and market
practices
Encourages achievement
of financial performance
metrics that create near-
term stockholder value
Provides income security
into retirement and
a competitive total
compensation package
Based on achievement
of predefined corporate,
departmental, and
individual performance
objectives
Competitive practice;
Benefits are tied to the
length of service
Fixed/
Performance-
Based
Short/
Long-Term
Fixed
Short-Term
Performance-
Based
Short-Term
Fixed
Long-Term
Benefits and Perquisites Provides health and welfare
benefits on the same basis
as to our general employee
population; and some
limited perquisites
Base Salary
Competitive practice
Fixed
Short-Term
Base salary for the CEO is established by the Compensation Committee based on the CEO’s
performance, experience, effective execution of strategic objectives, and level of responsibilities.
Based on recommendations from the CEO, the Compensation Committee approves base salaries for
the other NEOs. Base salaries for other executive officers are recommended by the CEO based on each
executive’s performance, experience, execution of strategic objectives and level of responsibilities. No
changes were made to NEOs’ base salaries in 2020.
Name
Drake Mills
Stephen Brolly
M. Lance Hall
Cary Davis
Preston Moore(1)
(1) Mr. Moore was not a NEO during 2019.
2020 Base Salary
$
2019 Base Salary
$
Percentage Change
%
835,800
450,000
500,000
329,394
450,000
835,800
450,000
500,000
329,394
N/A
—
—
—
—
N/A
43
2021 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
Short-Term Incentive Program
The Short-Term Incentive program (“STIP”) or Annual Cash Incentive Bonus plan for 2020, under
which certain executives have an Executive Incentive Plan is designed (i) to motivate executives to
attain superior annual performance in key areas we believe create long-term value to Origin and its
stockholders and (ii) to provide incentive compensation opportunities competitive with Origin’s peers.
Annual Incentive Goals are reviewed and approved each year by the Compensation Committee with input
from management. Part of our NEOs’ cash incentive bonuses are tied to Company performance metrics
to reflect the Company’s focus on profitability, credit quality, and growth. For 2020, after discussion
with senior management, the Compensation Committee agreed it would be more appropriate to use
the Company’s budgeted PTPP ROAA earnings as the incentive trigger. This decision was made due to
the uncertainty related to COVID-19 and the choice made by the Company to consciously strengthen
our provision in 2020 as a conservative measure. Using PTPP earnings stabilizes the incentive target,
and mitigates the impact of the adoption of Current Expected Credit Losses (“CECL”) and the volatility
caused by the COVID-19 pandemic, which was primarily outside of the ability of our executives to
completely predict or control. Additionally, using PTPP earnings allows the Company to recognize the
extraordinary efforts of our executives to rise to and work through the challenges provided by these
unprecedented times.
Executive STIP payouts are calculated based on multiple incentive components as defined in each
individual’s 2020 Executive Incentive Plan. Each executive has a bonus pool that is based on a
percentage of base salary multiplied times the key target measure of the incentive plan. Messrs. Mills,
Brolly, and Hall’s STIP bonus pool is funded based on the Company’s performance to plan with respect
to meeting our budgeted PTPP ROAA target. The actual payout percentage is calculated on a sliding
scale based on attaining a minimum of 80% of plan target and funding the pool at maximum should the
bank attain 120% of target. For Messrs. Davis and Moore, our credit and risk executives, the STIP pool
is funded based on the bank’s attainment of targeted credit and risk management goals. All executive
incentive plans include components of the incentive payouts that are based on certain ratios related
to risk management and the executive’s individual annual goals and a discretionary component that
provides payment opportunity for achievements in additional to the executive’s annual goals.
The risk and credit executive incentives are not tied to Company profitability to encourage overall
safety and soundness without incurring unnecessary risks that may jeopardize the financial integrity of
the Company. Departmental performance and specific credit metrics are used to determine the level
of incentives that will be utilized for awards in the risk and credit executive incentive plans.
The goals were selected in light of our strategic plan, key initiatives, and the need to balance risks in
executive compensation arrangements. The 2020 goals represent metrics addressing key areas of the
Company’s performance including profitability, credit and asset quality, and growth in assets and the
customer base. The goals were established based on the expectation that 2020 performance results
would be impacted by the declining interest rate environment.
44
| 2021 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
The table below shows the components and goal percentages used to determine the short-term
incentive program bonus payout to our NEOs for 2020:
PTPP
ROAA(1)
%
Results
Achieved
%
Executive
Annual
Goals(2)
%
Results
Achieved
%
Risk
Mgmt &
Credit
Quality(3)
%
Results
Achieved
%
Discretion(4)
%
Discretion
%
Awarded
Departmental
Results
Results
Achieved
%
Name
Drake Mills
Stephen Brolly
M. Lance Hall
30
25
30
100
100
100
Cary Davis(5)
N/A
N/A
Preston Moore(6)
N/A
N/A
30
35
30
30
30
100
75
100
100
100
25
25
25
30
30
100
100
100
100
100
15
15
15
15
15
150
34
150
58
150
N/A
N/A
N/A
25
25
N/A
N/A
N/A
100
100
(1)
Payout is determined by Company performance to 2020 budgeted goal of 1.48% PTPP ROAA. The Company exceeded the target by
achieving 1.62% PTPP ROAA, and executive incentives were calculated at 124%. The Company must achieve a minimum of 80% of target
to achieve a 50% of target potential and a maximum of 150% of target will be paid should the Company achieve 120% of target. Actual
payout is calculated on a sliding scale based on the Company’s achievement.
(2) NEOs set between five to ten strategic weighted goals annually at the beginning of the year. Achievements are measured in February of
the following year on the weighted percentage of goals attained.
(3) Credit quality is a Bank-wide incentive focus. Achievement in this component is based on maintaining appropriate ratios of non-performing
assets to total loans and other real estate owned < 1.5%, maintaining a ratio of net charge-offs to total average loans held for investment
of < 0.30%, and remaining in good Community Reinvestment Act standing.
(4) Discretion is provided to address significant accomplishments that were not included in the executives’ annual goals. Justifications for
adjustments were submitted to the Compensation Committee for approval. The incentive plan structure allows up to 150% payable on the
discretionary component.
(5) Mr. Davis’ department performance for the risk management and compliance quality component is based on achieving the 2020 objectives
that were established for each area such as developing the allowance for credit loss methodology in compliance with the Current Expected
Credit Losses accounting standard; enhancing loan portfolio concentration monitoring; managing of operational risks, including the
management of the Bank’s insurance program; ongoing review, monitoring, and management of various credit metrics including past
dues, non-accruals, and criticized assets; and ongoing management of regulatory requirements.
(6) Mr. Moore’s departmental responsibilities include the credit underwriting and approval process, management of credit metrics focusing
on past dues as well as financial and collateral exceptions, as well as loan pricing and treasury management.
The Compensation Committee reviewed Company performance to target, each individual NEO’s 2020
goals that were set in the beginning of the year, and the percentage of each individual’s goals that
were accomplished, and the payout calculations prior to approving 2020 incentive payouts. There
were unprecedented challenges in 2020 with the effects of COVID-19 which required real-time crisis
management from our executives. We implemented additional administrative and safety measures,
quickly shifting approximately 17% of our employees to work from home and restricted location access
while continuing to provide effective customer service. The Company implemented additional loan
and credit processes to clients to access the Paycheck Protection Program (“PPP”), originating over
3,100 PPP loans totaling over $560.0 million. Low mortgage interest rates required the management
team to quickly scale effective processes and operations. These challenges, along with other significant
NEO accomplishments in 2020 were considered in determining bonus awards that effectively linked
Executive Annual Goals and Discretionary considerations which are summarized below.
45
2021 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
Name
Drake Mills
Chairman, President,
and Chief Executive
Officer
Position
2020 Accomplishments
Stephen Brolly
Senior Executive
Officer and Chief
Financial Officer
M. Lance Hall
President and Chief
Executive Officer of
Origin Bank
• Completed two successful Sub-Debt offerings, improving
liquidity
• Rebuilt M&A model and established metrics
•
• Enhanced Company focus on efficiency and expense
Implemented structural changes to our mortgage division
management
• Restructured executive management roles and structure
• Expanded investor and analyst relationships
• Enhanced internal culture and a developed employee
engagement focus
• Committed to Bank and Board diversity and inclusion
initiatives
• Successfully implemented the ongoing modeling
and reporting of the Current Expected Credit Losses
accounting standard
• Oversaw the implementation of a new budgeting software
improving the efficiency of the expense management
process
• Completed two successful Sub-Debt offerings, improving
•
liquidity
Implemented procedures and guidance for enhanced
investment strategy and maintained desired liquidity ratios
•
Led the Company’s strategic and tactical initiatives with
a focus on (1) employee and client health and safety (2)
delivery for our customers and communities (3) balance
sheet protection and (4) stronger expense management.
• Created an updated retail staffing model which maintained
high service levels throughout the pandemic while avoiding
furloughs and layoffs
• Expanded our work from home staff and enhanced the
employee and customer technical experience
• Utilized employee feedback surveys to drive culture and
employee engagement
• Participated in multiple investor relations conferences,
meetings, and our quarterly earnings calls
Cary Davis
Senior Executive
Officer and Executive
Risk Officer
• Provided guidance and support to the Chief Risk Officer
and the Chief Credit and Banking Officer to ensure a
smooth management succession transition
• Maintained strong interaction between Credit Risk and the
markets in support of quality loan growth while maintaining
credit quality
• Ensured the risk assessment processes and risk mitigation
controls that are in place are consistent with the bank’s risk
appetite
• Maintained stated asset quality
• Maintained a strong compliance system
• Completed the annual incentive compensation review and
ensured the Company maintains an effective enterprise risk
management program
46
| 2021 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Name
Position
2020 Accomplishments
Preston Moore
Senior Executive
Officer and Chief
Credit and Banking
Officer
•
Implemented risk mitigating procedures in the wake of the
COVID-19 pandemic and economic uncertainty
• Monitored asset quality trends and the bank’s loan
portfolio
• Managed overdrafts, borrowing base activity, past due
loans, and COVID-19 loan modifications
• Assisted with the Paycheck Protection Program loans
• Monitored the industry sectors that could be adversely
impacted by the COVID-19 pandemic
• Monitored the impact of the economic downturn and the
pandemic to assess risk ratings and risk rating migration
• Adhered to Origin Bank’s credit guidelines and
underwriting standards, emphasizing the bank’s focus on
relationship banking, client selection, and secondary and
tertiary sources of repayment with respect to collateral and
strong guarantors
The 2020 STIP cash incentive opportunities as a percentage of salary for each of the NEOs and 2020
results are shown below. Amounts paid out as short-term incentive program bonuses are subject to our
Clawback Policy if certain triggering events occur.
Short-term Incentive Program Opportunity Levels
as a % of Base Salary
Name/Position
Threshold
Target
Maximum
Drake Mills, CEO
Stephen Brolly, CFO
M. Lance Hall, President
Cary Davis, ERO
Preston Moore, CC & BO
25%
17.5%
20%
17.5%
17.5%
50%
35%
40%
35%
35%
75%
52.5%
60%
52.5%
52.5%
Actual
Earned(1)
66.5%
35.2%
53.2%
32.8%
37.8%
(1)
The Compensation Committee and the Board approved and finalized executive and CEO incentive numbers at their respective February
2021 meetings.
Long-term Incentive Plan
Equity grants have been made to executives from time to time as the result of meeting key performance
objectives such as the successful initial public offering launch in 2018. Equity compensation rewards
executives for performance results relative to Company objectives while aligning the interests of our
executives with those of our stockholders. Additionally, it provides executives the opportunity to
increase their ownership in the Company while at the same time creating a retention vehicle through
the use of a multi-year vesting period.
47
2021 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
Supplemental Retirement and Income Benefits
The Company has entered into an individual Supplemental Executive Retirement Plan (“SERP”) with
several of our NEOs. Eligibility to participate in a SERP is limited to senior officers and determined by
the Board. Currently our CEO, CFO, and President of Origin Bank participate in a SERP. The SERPs are
unfunded and designed to be a nonqualified deferred compensation retirement plan in compliance
with Section 409A of the Internal Revenue Code (“IRS Code”). In October 2019, the Company also
entered into an Executive Supplemental Income Agreement (“ESIA”) with Mr. Hall.
The Company believes SERPs and the ESIA provide an effective long-term retention measure in
keeping with an overall competitive compensation strategy aimed at retaining high performing
executives. The plans are defined benefit style programs in which the participant is promised a benefit
according to a set formula and such benefit is paid to the participant (or his or her beneficiary) in
equal annual installments over a specified period of time as outlined in each individual’s agreement.
Vesting requirements are also outlined in each individual agreement and are tied to the number of
years of service of the executive which encourages our executives to remain with the Company for
an extended period or until retirement. Additional tables provided on page 54 provide more details
regarding these plans.
Benefits and Perquisites
Executive officers are eligible to participate in all employee benefit plans that are available to eligible
employees generally, including health, life, and disability insurance and the Origin Bancorp, Inc.
Employee Retirement Plan, which currently provides an employer match of 50 cents on each dollar
of employee contributions up to 6% of eligible compensation subject to ERISA limits. Additionally, if
approved, executives can participate in the ESPP, a summary of which is included under “Proposal 3-
Approval of the Origin Bancorp, Inc. 2021 Employee Stock Purchase Plan.” We also provide our NEOs
with certain perquisites, including the use of Company cars, the payment of life insurance premiums,
reimbursement for country club dues and certain other expenses which we believe make us competitive
in the employment market and encourage retention.
Change-in-Control and Severance Benefits
Our NEOs are generally entitled to certain limited change-in-control and severance protections. We
believe that appropriate change-in-control and severance protections accomplish two objectives. First,
they create an environment where key executives are able to take actions in the best interest of the
Company without incurring undue personal risk. Second, they foster management stability during
periods of potential uncertainty. The change-in-control and severance benefits payable to our NEOs
are discussed under the heading “Employment Arrangements, Change-in-Control agreements, and
Potential Payments Upon Termination or Change-In-Control” below.
Other Compensation Policies and Information
In addition to adhering to the processes described in the preceding sections, the Compensation
Committee maintains a strong corporate governance culture with respect to executive compensation.
Over the years it has adopted policies, including those described below, to further align executive
compensation with performance and what the Company believes is the best interest of our stockholders.
48
| 2021 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Clawbacks for Any Restatement; Executive Compensation Recovery Policy
The Compensation Committee and Board approved a Clawback Policy that covers incentive-based
compensation for our NEOs. Under this policy, incentive based compensation may be subject to
clawback if both (i) the Company is required to prepare an accounting restatement and (ii) our Board
determines that a fraudulent or intentional act or omission of a current or former executive officer
contributed to the circumstances requiring the restatement.
Trading Restrictions regarding Hedging or Pledging of Common Stock
Hedging Transactions. Our Insider Trading Policy requires Covered Persons, including our directors
and officers, to pre-clear any proposed hedging or monetization transactions with our Compliance
Officer at least two weeks before the proposed execution of a transaction. Such executive or director
may not engage in a transaction without first obtaining pre-clearance of the transaction from the
Compliance Officer. The Compliance Officer is under no obligation to approve a transaction submitted
for pre-clearance and may determine not to permit the transaction.
Margin Accounts. Persons covered by our Insider Trading Policy are not permitted to hold our securities
in a margin account.
Pledged Securities. Our Insider Trading Policy requires Covered Persons, including our directors and
officers, to pre-clear any proposed pledging of our securities as collateral for a loan (not including
margin debt) to receive approval from our Compliance Officer at least ten business days prior to
the proposed execution of documents evidencing the proposed pledge. The person must clearly
demonstrate the financial capacity to repay the loan without resorting to the pledged securities to
meet repayment obligations when seeking approval from the Compliance Officer. The Compliance
Officer is under no obligation to approve the pledging of our securities.
Report of Compensation Committee
The Compensation Committee has reviewed and discussed with management the disclosures contained
in the Compensation Discussion and Analysis. Based upon this review and our discussions, the Origin
Bancorp, Inc. Compensation Committee recommended to the Board that the Compensation Discussion
and Analysis be included in this proxy statement and be incorporated by reference in its Annual Report
on Form 10-K for the fiscal year ended December 31, 2020.
THE COMPENSATION COMMITTEE
Elizabeth Solender (Chair)
Richard Gallot, Jr.
Stacey Goff
Michael Jones
Gary Luffey
Steven Taylor
The foregoing report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be
incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act,
whether made before or after the date hereof and irrespective of any general incorporation language
in any such filing.
49
2021 Proxy Statement | EXECUTIVE COMPENSATION
TABLES
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding the compensation paid to each of our NEOs for
the fiscal years ended December 31, 2020, 2019 and 2018. Except as set forth in the notes to the table,
all cash compensation for each of our NEOs was paid by the Bank.
Short-term
Incentive Plan
Long-term
Incentives
Name and
Principal
Position
Year
Salary
($)
Bonus
Compensation
($)(1)
Discretionary
Bonus ($)(2)
Stock
Awards
($)(3)
Option
Awards
($)
Change in
Deferred
Compensation
Value ($)(4)
All Other
Compensation
($)(5)
Total
($)
Drake Mills
Chairman of
the Board/CEO
& President of
Origin Bancorp,
Inc.
Stephen Brolly
Chief Financial
Officer
M. Lance Hall
President and
CEO of Origin
Bank
Cary Davis(6)
Executive Risk
Officer
Preston Moore(7)
Chief Credit &
Banking Officer
2020
835,800
555,490
2019
835,800
425,000
—
—
— —
437,336
53,318
1,881,944
— —
339,295
47,492
1,647,587
2018
835,800
347,693
82,472
1,002,969 —
323,402
75,212
2,667,548
2020
450,000
158,500
2019
450,000
126,000
—
—
— —
121,662
77,970
808,132
— —
116,097
77,720
769,817
2018
436,442
161,708
88,300
247,936 —
54,560
58,064
1,047,010
2020
500,000
266,000
2019
500,000
250,000
—
—
— —
85,114
27,151
878,265
— —
56,278
20,679
826,957
2018
450,000
179,631
45,400
350,003 —
49,023
15,749
1,089,806
2020
329,394
108,000
2019
329,605
110,000
—
—
— —
202,300
85,756
725,450
— —
120,547
19,155
579,307
2020
450,000
170,000
10,000
— —
—
36,710
666,710
(1)
(2)
(3)
(4)
The amounts shown in this column represent payouts with respect to incentives earned for performance in the year shown and were
determined based on the achievement of certain Company performance goals, specific individual goals, objectives and Company risk
management goals. For more information about our annual incentive awards, see “Short-Term Incentive Program.” 2020 incentives were
finalized at the Compensation Committee meeting in February 2021.
The amounts shown in this column reflect discretionary bonuses paid to recognize the executives for their significant contributions, majority
of which were awarded in connection with our 2018 successful initial public offering. For Mr. Brolly, the amount in 2018 also includes a sign-
on bonus in connection with his hiring. Mr. Moore’s 2020 bonus was for outstanding efforts related to PPP.
The amounts shown in this column reflect restricted stock awards granted to the NEOs and are disclosed as the aggregate grant date fair
value of the awards, computed (i) with respect to awards granted after our initial public offering in May 2018, in accordance with ASC Topic
718, based on the closing market price of our common stock on the grant date and (ii) with respect to Mr. Brolly’s award of 3,500 shares of
restricted stock in February 2018 as part of his hiring package, in accordance with our calculation of a rolling average based on the prices at
which our common stock was privately sold during the three months prior to the grant date. Majority of the grants were made based upon
tenure and contributions to and involvement in our initial public offering. For additional information on our calculation of stock-based
compensation, please refer to the notes to our audited financial statements for the fiscal year ended December 31, 2020, included in our
Annual Report on Form 10-K.
Includes the change in the present value of the projected benefits under the Supplemental Executive Retirement Plans and Employee
Supplemental Income Agreement, which is a non-cash amount that can vary from year to year based upon the underlying assumptions.
Assumptions such as discount rate, retirement age and mortality age are reviewed annually by the Company and are intended to be
individually appropriate.
50
| 2021 Proxy Statement EXECUTIVE COMPENSATION
TABLES
EXECUTIVE COMPENSATION
TABLES
(5)
The amounts shown in this column for 2020 are composed of the amount of perquisites and other compensation described in the table
below.
(6) Mr. Davis was not a NEO during 2018. Mr. Davis’ 2019 salary was impacted by payment of non-performance related benefits during the
year. His base salary was not adjusted in 2020 nor 2019. Mr. Davis retired from his employment with Origin Bank on December 31, 2020.
(7) Mr. Moore was not a NEO during 2019 or 2018.
Amounts of perquisites and other compensation paid to our NEOs in 2020 are set forth below:
Description
Mills
($)
Brolly
($)
Hall
($)
Davis
($)
Personal use of company car
8,652
14,012
12,267
9,662
Auto allowance
Employer retirement plan contributions
Bank-owned life insurance premiums(1)
Country club membership dues
Housing expense reimbursement(2)
Transfer ownership of company car(3)
Post employment payment(4)
—
8,550
30,267
5,849
—
—
—
—
8,550
1,559
5,849
48,000
—
—
—
8,550
485
5,849
—
—
—
—
8,550
2,670
—
—
19,780
45,094
Moore
($)
—
9,000
8,550
—
19,160
—
—
—
Total
53,318
77,970
27,151
85,756
36,710
(1) Details of our insurance plans are described below under the subheading “Life Insurance Plans.”
(2) Mr. Brolly was reimbursed for moving expenses, realtor fees and rental housing in connection with his relocation to Louisiana.
(3) Ownership of the Company car passed to Mr. Davis as part of his retirement package.
(4)
Represents the amount of accrued paid time off received by Mr. Davis upon his retirement.
Our NEOs are eligible to participate in the same benefit plans designed for all of our full-time
employees, including health, disability and basic group life insurance coverage. We also provide our
employees, including our NEOs, with the opportunity to participate in a 401(k) plan to assist participants
in planning for retirement. Additionally, if approved, executives will have the opportunity to participate
in the ESPP, a summary of which is included under “Proposal 3- Approval of the Origin Bancorp, Inc.
Employee Stock Purchase Plan.” We also provide certain perquisites and other benefits to our NEOs.
During 2020, we provided Messrs. Mills, Brolly, Hall and Davis with Company cars for commuting and
other personal transportation and Mr. Moore was paid an auto allowance. We also paid the premiums
on life insurance policies taken out on Messrs. Mills, Brolly, Hall, and Davis. Additionally, we provided
Messrs. Mills, Brolly, Hall and Moore with reimbursement for country club membership dues.
Outstanding Equity Awards at Fiscal Year-End
The following table provides information regarding outstanding equity awards held by each of our
NEOs as of December 31, 2020. All of the restricted stock awards shown in the table below were
granted under the 2012 Plan. All of the stock option awards were issued under stand-alone stock
option award agreements prior to our adoption of the 2012 Plan and were granted with a per share
exercise price equal to the fair market value of our common stock on the grant date. There were no
equity incentive plan unearned options for any of the NEOs.
51
2021 Proxy Statement | EXECUTIVE COMPENSATION
TABLES
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
Exercisable(1)
(#)
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Number
of Shares
of Stock
That
Have Not
Vested
(#)
Market
Value of
Shares
of Stocks
That
Have Not
Vested(2)
($)
Option
Exercise
Price ($)
Option
Expiration
Date
Name
Grant Date
Drake Mills
Chairman of the
Board/CEO &
President of Origin
Bancorp, Inc.
Stephen Brolly
Chief Financial
Officer
M. Lance Hall
President and CEO
of Origin Bank
Cary Davis
Executive Risk
Officer
Preston Moore(6)
Chief Credit &
Banking Officer
1/1/2005
120,000
10/1/2011
50,000
11/13/2018(3)
2/20/2018(4)
11/13/2018(3)
11/13/2018(3)
—
—
—
—
—
—
—
—
—
—
11/13/2018(5)
—
—
—
—
—
—
—
—
—
8.25 12/31/2024
17.50 12/31/2030
—
—
—
—
—
—
—
—
—
16,465
457,233
—
1,167
32,408
—
2,586
71,813
—
5,746
159,566
—
—
—
—
N/A
—
—
—
—
—
—
—
(1) All options were fully exercisable as of December 31, 2020.
(2) Market value is determined by multiplying the closing market price of our common stock on December 31, 2020, by the number of shares
or units that have not vested.
(3)
(4)
Time-based restricted stock awards that vest annually in 20% increments with the final tranche vesting on November 13, 2023.
Time-based restricted stock awards that vest annually in 33.3% increments with the final tranche having vested on February 20, 2021.
(5) Mr. Davis’ shares fully vested in conjunction with his retirement on December 31, 2020.
(6) Mr. Moore did not have any outstanding equity awards at December 31, 2020.
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EXECUTIVE COMPENSATION
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Option Exercises and Stock Vested
The following table summarizes the stock awards that vested during 2020 for the NEOs. Additionally, there
were no stock options awarded or exercised during the fiscal year ended December 31, 2020, for any of
the NEOs. The amounts reflected below show the number of shares acquired at the time of exercise or
vesting, as applicable. The amounts reported as value realized on vesting are shown on a before-tax basis:
Name
Drake Mills
Stephen Brolly
M. Lance Hall
Cary Davis
Preston Moore
Stock Awards
Number of Shares
Acquired on Vesting (#)
Value Realized on Vesting ($)
5,488
2,029
1,915
5,048
1,667
140,328
63,295
48,967
133,015
30,956
2012 Stock Incentive Plan
In 2012, our Board adopted the 2012 Stock Incentive Plan, effective as of January 1, 2012. The 2012
Plan was subsequently approved by our stockholders at our 2012 annual meeting and is primarily
administered by the Compensation Committee.
The equity grants that may be awarded under the 2012 Plan consist of incentive stock options, non-
qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, dividend
equivalent rights, performance unit awards or any combination thereof. Any of our employees, officers
or directors may be eligible for an award, although incentive stock options may be granted only to
participants who meet the definition of “employee” within the meaning of Section 422 of the IRS Code.
A maximum of 1,400,000 shares of our common stock may be issued in connection with awards granted
under the 2012 Plan, any or all of which may be issuable as incentive stock options. As of December 31,
2020, 921,248 shares of our common stock were available for issuance under the 2012 Plan, and there
were 103,359 restricted stock grants and no unvested stock options that remained subject to forfeiture.
Non-Qualified Stock Option Agreements
Because we did not have a formal stock option or other long-term equity plan until the adoption of the
2012 Plan, non-qualified options were issued to various executives prior to 2012, including some of our
NEOs, under individual employment or other agreements or arrangements with us. As of December 31,
2020, there were outstanding non-qualified options to purchase an aggregate of 224,000 shares of our
common stock issued under stand-alone stock option agreements.
Defined Contribution Benefit Plan
The Company maintains a Retirement Plan, which is a defined contribution benefit plan. The Retirement
Plan covers substantially all employees, including our NEOs, who have been employed 25 days and
meet certain other requirements and employment classification criteria. Under the provisions of the
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Retirement Plan, the Company may make discretionary matching contributions on a percentage. The
Company currently provides an employer match of 50 cents on each dollar of employee contributions
up to 6% of eligible compensation subject to ERISA limits. Any percentage(s) determined by the
Company shall apply to all eligible persons for the entire plan year. Eligible compensation includes
salaries, wages, overtime and bonuses, and excludes expense reimbursements, severance payments,
any amounts related to split dollar life insurance agreements, and fringe benefits. In addition, the
Company may make additional discretionary contributions out of current or accumulated net profit.
Matching contributions are invested as directed by the participant. The total of the Company’s
contributions may not exceed limitations set forth in the Retirement Plan document or the maximum
deductible under the IRS Code.
Supplemental Executive Retirement Plan and Executive Supplemental
Income Agreement
The Executive Salary Continuation Plan (“SERP”) are limited to eligible executive employees as
determined by our Board. In 2019, the Company entered an ESIA agreement with Mr. Hall that provides,
in addition to other benefits, an in-service benefit to Mr. Hall beginning at age 60 payable for 6 years.
The intent of the Company is to assist NEOs with meeting retirement needs while providing an overall
total compensation and benefits package that aligns pay with performance and is competitive in the
market. The terms “Cause,” “Good Reason,” “Change-in-Control,” “Separation from Service” and
“Accrued Liability Retirement Balance” are defined in the respective employment agreements with
each NEO. Mr. Moore does not have a SERP or an ESIA.
Name
Drake Mills(2)
Stephen Brolly(3)
M. Lance Hall(4)
M. Lance Hall(5)
Cary Davis(6)
Plan Name
SERP
SERP
SERP
ESIA
SERP
Number of Years
of Credited
Service
(#)
Present Value(1)
of Accumulated
Benefit as
of 12/31/20
($)
Payments
During Last
Fiscal Year
($)
19
2
18
—
19
2,526,113
292,319
371,555
18,822
1,176,131
—
—
—
—
—
(1)
Please see Note 14 - Employee Retirement Plan, Other Benefit Plans in the Notes to Consolidated Financial Statements in the 2020 Annual
Report for more information.
(2) Annual installments of $264,040 in the first year after retirement, with an annual 1.5% cost of living adjustment (“COLA”) increase, paid until
death.
(3)
Fifteen year annual benefit based on 25% of base salary at the age of 65. For purposes of the present value calculation, the salary as of
December 31, 2020, was used.
(4) Annual installments of $118,939 in the first year after retirement, with an annual 1.5% COLA increase, paid until death.
(5)
Six year installments based on 10% of salary at distribution age (60). For purposes of the present value calculation, the salary as of
December 31, 2020, was used.
(6) Original benefit under the terms of the SERP was $59,177 per year. This benefit has increased by 8% per year for each full year worked
past normal retirement age of 65. Mr. Davis retired as of December 31, 2020. The initial installment of $86,950 will be paid on July 1, 2021.
Thereafter annual installments with an annual 1.5% COLA increase will be paid on January 1 until death.
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EXECUTIVE COMPENSATION
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Mr. Mills’ SERP, the Amended and Restated Executive Salary Continuation Plan, effective May 1,
2008, provides for certain benefits in connection with his retirement or a Change-in-Control. Upon
attainment of his retirement date, which is the earlier of the date when he attains the age of 65 or
his separation from service, Mr. Mills will receive an annual benefit of $264,040 that will increase by
1.5% each year, paid in equal installments until Mr. Mills’ death. Subject to the terms of the plan, if
Mr. Mills dies, his designated beneficiary will receive the Accrued Liability Retirement Balance in a
lump sum. If Mr. Mills’ employment terminates voluntarily or without Cause prior to the age of 65,
Mr. Mills will receive, over three annual installments, an amount equal to the balance, on the date of
his termination, of the Accrued Liability Retirement Balance. In the event Mr. Mills becomes disabled
prior to retirement, he will receive all of his Accrued Liability Retirement Balance in a lump sum thirty
days following his disability. Upon a Change-in-Control, Mr. Mills will receive such benefit as if he had
been continuously employed and retired at the age of 65 and payments will commence on the first
day of the month following the date Mr. Mills turns 65. If Mr. Mills is terminated for Cause at any time,
notwithstanding any other provision in the plan to the contrary, he will forfeit all benefits under the plan
and the plan will terminate.
Mr. Brolly’s SERP, the Supplemental Executive Retirement Agreement effective July 1, 2018, provides
for certain salary continuation benefits. If Mr. Brolly experiences a Separation from Service after the age
of 65, he will be entitled to an annual payment for 15 years equal to 25% of his base salary when he
was 65 (the “Retirement Benefit”). If Mr. Brolly dies before reaching 65, he will not receive any benefit,
but if he dies after attaining the age of 65, any remaining payments for the Retirement Benefit will be
paid to his beneficiary. If Mr. Brolly voluntarily terminates his employment, is involuntarily terminated
without Cause or for Good Reason or becomes disabled, he will receive the vested benefit of the
Accrued Liability Retirement Balance as of the effective date of termination or disability in one lump sum
payable within thirty days. If a Change-in-Control followed within two years by Mr. Brolly’s Separation
from Service, Mr. Brolly will be entitled to a lump sum payment within 30 days of termination equal to
the present value of the Retirement Benefit. Mr. Brolly’s interest in such payments will vest 10% for each
year of service from August 17, 2018. In certain limited circumstances, Mr. Brolly may be permitted to
draw on his benefit early.
Mr. Hall’s Section §409A Amended & Restated Executive Salary Continuation Agreement, effective
January 1, 2004, will pay, upon Mr. Hall’s retirement on or after he attains the of age 65 (“Hall Retirement
Date”), an annual benefit of $118,939 that will increase by 1.5% each year, paid in equal installments
until Mr. Hall’s death. If Mr. Hall dies while actively employed by the Bank or prior to the Hall Retirement
Date, his designated beneficiary will receive the Accrued Liability Retirement Balance in a lump sum. If
Mr. Hall is terminated without Cause or resigns prior to the age of 65, Mr. Hall will receive, as severance
compensation over 15 annual installments, an amount equal to the accrued balance with interest, on
the date of his termination, of Mr. Hall’s liability reserve account. Upon a Change-in-Control, if Mr. Hall
is terminated, except for Cause, he will receive the annual benefit as if he had retired at the age of 65.
Mr. Hall has an ESIA, effective October 29, 2019, which provides for, beginning at the age of 60
an annual amount equal to ten percent of Mr. Hall’s annualized base for the calendar year in
which Mr. Hall attains the age of 60. The annual payments will begin within thirty days following
Mr. Hall attaining the age of 60 and continue annually for six years. If Mr. Hall dies before 60, he
will not receive any benefit, but if he dies after attaining the age of 60, any remaining payments
will be paid to his beneficiary. If Mr. Hall is terminated involuntarily without Cause or experiences
a Separation from Service for Good Reason or becomes disabled, he will receive 100% of the
Accrued Liability Retirement Balance as of the effective date of the termination or disability.
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If Mr. Hall experiences a voluntary Separation from Service, he will receive the vested benefit of the
Accrued Liability Retirement Balance as of the effective date of termination. Mr. Hall’s interest, prior
to turning 60, shall vest based on each fully completed year of service after the effective date of the
ESIA during which he is employed full-time with the sixth year of vesting being the first year in which
Mr. Hall’s interest will become partially vested. If Mr. Hall experiences an involuntary Separation from
Service within 24 months following a Change-in-Control, other than for Cause, he will be paid the
present value of the benefit provided under the plan in one lump payment within thirty days following
his termination. In certain limited circumstances, Mr. Hall may be permitted to draw on his benefit early.
Mr. Davis retired effective December 31, 2020. Mr. Davis’ §409A Amended & Restated Executive
Salary Continuation Agreement, dated December 15, 2008, and as further amended on December 14,
2016, provided an annual benefit of $86,950 to be paid to Mr. Davis on the first of the month following
his retirement. The initial payment will be delayed until July 1, 2021 due to Mr. Davis’ NEO status.
Beginning in 2022, the annual benefit payment will be paid on the first of the year and the amount will
increase by a 1.5% COLA each year, until Mr. Davis’ death with a fifteen year distribution period certain.
Life Insurance Plans
The Company has purchased bank owned life insurance (“BOLI”) on the life of certain NEOs and has
entered into split dollar life insurance agreements that provide a life insurance benefit to the NEO’s
designated beneficiary as described in the paragraphs below. Mr. Moore does not have a split dollar
life insurance agreement.
Name
Drake Mills
Drake Mills
Drake Mills
Stephen Brolly
M. Lance Hall
M. Lance Hall
Cary Davis
Agreement
Effective Date
2/7/2001
5/1/2008
2/27/2020(1)
7/13/2018
7/23/2002
10/29/2019
2/7/2001
Death Benefit
Payable to Beneficiary
at December 31, 2020
($)
227,274
1,441,192
1,500,000(1)
1,379,712
403,605
278,714
515,815
(1) On February 27, 2020, the Bank entered into an Amended and Restated Endorsement Split Dollar Life Insurance Agreement that replaced
the Endorsement Method Split Dollar Life Insurance Agreement, dated October 29, 2019. The February 27, 2020 restatement was executed
to correct the death benefit to a $1,500,000 payment as approved by the Board in 2019.
Mr. Mills has (i) an Amended and Restated Life Insurance Endorsement Method Split Dollar Plan
Agreement, effective February 7, 2001, with the Bank (the “2001 Agreement”), and (ii) an Amended and
Restated Life Insurance Endorsement Method Split Dollar Plan Agreement, effective May 1, 2008, with
the Bank. Under both agreements, Origin Bank has agreed to pay the premiums under life insurance
policies issued with respect to Mr. Mills, and his designated beneficiaries will be entitled to 65% of
the net-at-risk insurance portion of the proceeds upon his death. Under the 2001 Agreement, upon a
Change of Control, if Mr. Mills is subsequently terminated without Cause, his designated beneficiaries
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EXECUTIVE COMPENSATION
TABLES
will be entitled to the benefits under the 2001 Agreement as if he had died while employed by the
Bank. On February 27, 2020, the Bank entered into an Amended and Restated Endorsement Split
Dollar Life Insurance Agreement with Mr. Mills (the “2020 Agreement”) that amended and restated
the Endorsement Method Split Dollar Life Insurance Agreement, dated October 29, 2019. The 2020
Agreement provides, upon Mr. Mills’ death, Mr. Mills’ beneficiary will be entitled to insurance proceeds
of $1,500,000 unless (i) Mr. Mills is terminated for Cause or (ii) Mr. Mills is subject to a final removal or
prohibition order issued by an appropriate federal banking agency of the Federal Deposit Insurance
Act. The Bank owns the policy and will be the beneficiary of any remaining death proceeds after Mr.
Mills’ interest is determined. No benefit will be paid under the 2020 Agreement if (i) Mr. Mills commits
suicide or (ii) if the insurance company denies coverage in certain instances.
Mr. Brolly has an Endorsement Split Dollar Life Insurance Agreement, effective July 13, 2018, with the
Bank. Under the agreement, upon Mr. Brolly’s death, his designated beneficiary will be entitled to the
lesser of (i) the present value of Mr. Brolly’s Supplemental Executive Retirement Agreement had he
worked until the age of 65 or (ii) one hundred percent of the total death proceeds of the individual
insurance policy or policies adopted by the Bank for purposes of insuring Mr. Brolly’s life minus the
greater of (x) the cash surrender value or (y) the aggregate premiums paid by the Bank. If Mr. Brolly is
voluntarily or involuntarily terminated including termination for Cause, he will no longer be entitled to
the benefits under the agreement. Mr. Brolly will also no longer be entitled to the benefits under the
agreement if he were subject to a final removal or prohibition order issued by a federal banking agency
or his beneficiaries are denied coverage under the terms of the life insurance policies.
Mr. Hall has a Life Insurance Endorsement Method Split Dollar Plan Agreement, effective July 23, 2002,
as amended, with the Bank. Under the agreement, the Bank has agreed to pay the premiums under
a life insurance policy issued with respect to Mr. Hall and Mr. Hall’s designated beneficiaries will be
entitled to a certain portion of the insurance proceeds upon his death. In the event of Mr. Hall’s death or
disability during employment with the Bank, his designated beneficiaries will be entitled to 80% of net-
at-risk insurance portion of proceeds. Upon a Change-in-Control, if Mr. Hall is subsequently terminated
without Cause, his designated beneficiaries will be entitled to the benefits under the agreement as if
he had died while employed by the Bank.
On October 29, 2019, the Company entered into a second Endorsement Split Dollar Life Insurance
Agreement with Mr. Hall that provides additional key man coverage for the Company and a life
insurance benefit to Mr. Hall’s designated beneficiary. Under this agreement, in the event of the death
of Mr. Hall while being employed by the Bank, his designated beneficiaries will be entitled to receive
the lesser of (i) the present value of the benefits Mr. Hall would have received under his Executive
Supplemental Income Agreement or (ii) one hundred percent (100%) of the total death proceeds of
the individual insurance policy or policies adopted by the Bank for purposes of insuring Mr. Hall’s life
minus the greater of (x) the cash surrender value or (y) the aggregate premiums paid by the Bank.
Mr. Hall’s beneficiaries will not be entitled to any payments under the Endorsement Split Dollar Life
Insurance Agreement if his employment is voluntarily or involuntarily terminated or if he were subject
to a final removal or prohibition order issued by a federal banking agency or his beneficiaries are
denied coverage under the terms of the life insurance policies.
Mr. Davis has a Life Insurance Endorsement Method Split Dollar Plan Agreement, effective February 7,
2001, as amended, with the Bank. Under the agreement, Origin Bank has agreed to pay the premiums
under life insurance policies issued with respect to Mr. Davis, and his designated beneficiaries will be
entitled to 80% of the net-at-risk portion of the insurance proceeds upon his death.
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Employment Arrangements, Change-in-Control Agreements, and Potential
Payments Upon Termination or Change-In-Control
Below are summaries of certain arrangements between the NEOs and the Company or Origin Bank.
These summaries do not include all of the provisions of the employment or Change-in-Control
agreements with each NEO, and this section is qualified in its entirety by reference to the full
employment or Change-in-Control agreements which can be accessed through links in the exhibit
index to the Company’s Form 10-K for the fiscal year ended December 31, 2020. The terms “Cause,”
“Good Reason,” “Change-in-Control,” and “Change-in-Control Protection Period” are defined in the
respective employment agreements with each NEO.
DRAKE MILLS
On February 27, 2020, the Company entered into a restated employment agreement with Drake Mills.
The agreement provides for three-year terms that renew automatically for successive three-year terms
unless either party provides at least 180 days’ notice of non-renewal.
Under his employment agreement, Mr. Mills is entitled to a base salary of $835,800, which the Board
can adjust, and an annual bonus the criteria of which is determined by the Board.
In addition to a base salary and bonus, Mr. Mills is eligible to participate in the Company’s employee
benefit plans in a comparable manner as other executives, to use a Company car and to receive
reimbursement or payment of professional development dues, professional organization membership
costs, country-club dues, and business-related travel expenses.
Mr. Mills’ employment agreement includes indefinite obligations of confidentiality and non-disparagement,
and a prohibition, subject to certain geographic limitations, on soliciting Company customers or employees
for two years after termination of his employment.
Under the restated employment agreement, upon termination of employment for any reason other
than Cause, Mr. Mills will be paid a prorated bonus based on his actual performance for the year.
If Mr. Mills’ employment is terminated by the Company without Cause or by Mr. Mills for Good Reason,
and such termination does not occur within a Change-in-Control Protection Period, then, subject to
Mr. Mills entry into a valid release of claims in favor of the Company, Mr. Mills will be entitled to receive
two times the sum of (i) his then-current base salary, (ii) the average short-term incentive plan bonus
paid during the last three years immediately preceding termination, and (iii) the average discretionary
bonus paid during the last three years immediately preceding termination to be paid in equal monthly
installments over the twenty-four months following termination. The Company will also pay the cost
of Mr. Mills’ premiums for continued participation in the Company medical hospitalization insurance
program under COBRA for up to twenty-four months following termination, or, if doing so would
cause the plans to provide discriminatory benefits, the Company will make monthly cash payments to
Mr. Mills in an amount equal to the premium payments.
If Mr. Mills’ employment is terminated by the Company without Cause or by Mr. Mills for Good Reason,
and such termination occurs within the Change-in-Control Protection Period, then, subject to a valid
release of claims in favor of the Company, Mr. Mills will be entitled to the sum of (i) three times his
then-current base salary, (ii) three times the average short-term incentive plan bonus paid to him in the
three calendar years immediately preceding the Change-in-Control, and (iii) three times the average
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EXECUTIVE COMPENSATION
TABLES
discretionary bonus paid to him in the three calendar years immediately preceding the Change-in-
Control, with such total amount reduced pro-rata for each full month that has elapsed between the
Change-in-Control and the termination. The amount will be paid in a lump sum within sixty days of
termination subject to certain exceptions. The Company will also pay the cost of COBRA premium-
payments for a maximum of eighteen months.
STEPHEN BROLLY
Mr. Brolly does not have a formal employment agreement with the Company however, he entered into
a Change-in-Control Agreement with the Bank on April 2, 2018. The Change-in-Control Agreement
has an initial term of three years and automatically renews for successive one-year terms unless notice
is given 90 days prior to the end of a term. If Mr. Brolly is terminated in the two years after a Change-in-
Control or the earlier of (i) the date negotiations commence leading to the consummation of a Change-
in-Control and (ii) six months prior to the effective date of a Change-in-Control other than for Cause
or for Good Reason, then Mr. Brolly will be entitled to severance benefits. Those severance benefits
will consist of (a) a lump sum cash payment of two times Mr. Brolly’s then-current base salary, (b) a
lump sum cash payment of two times the average short-term incentive plan bonus paid to him within
the three calendar years (or such fewer years as he has been employed by us) immediately preceding
his termination, (c) two times the average discretionary bonus paid to him within the three calendar
years (or such fewer years as he has been employed by us) immediately preceding his termination, and
(d) any equity-type award under any plan or arrangement will become fully vested and exercisable.
The Change-in-Control benefits will be paid no later than the thirtieth day following the later of (i) the
termination of service and (ii) effective date of a Change-in-Control. Under the terms of the Change-in-
Control Agreement, Mr. Brolly may not, for a period of one year following a Change-in-Control, solicit
any of our customers in the year prior to termination in certain parishes and counties in which we are
doing business and he may not recruit or hire any person who was an employee in the six month period
prior to termination.
Mr. Brolly will also be entitled to the benefits described above in “Supplemental Executive Retirement
Plan and Executive Supplemental Income Agreement” under his Supplemental Executive Salary
Retirement Agreement, including benefits upon termination in connection with a Change-in-Control.
M. LANCE HALL
On February 27, 2020, the Company entered into a restated employment agreement with M. Lance
Hall for three-year terms that renew automatically for successive three-year terms unless either party
provides at least 180 days’ notice of non-renewal.
Under the employment agreement, Mr. Hall is entitled to a base salary of $500,000, which the Board
can adjust, and an annual bonus the criteria of which is determined by the Board.
Mr. Hall is also eligible to participate in the Company’s employee benefit plans in a comparable manner
as other executives, to use a Company car and to receive reimbursement or payment of professional
development dues, professional organization membership costs, country-club dues, and business-
related travel expenses.
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Under the terms of the restated employment agreement, Mr. Hall is subject to indefinite obligations
of confidentiality and non-disparagement, and is prohibited, subject to certain geographic limitations,
from soliciting Company customers or employees for two years after termination of employment.
Upon termination of employment for any reason other than Cause, Mr. Hall will be paid a prorated
bonus based on his actual performance for the year.
If Mr. Hall’s employment is terminated by the Company without Cause or by Mr. Hall for Good Reason,
and such termination does not occur within a Change-in-Control Protection Period, then, subject to
Mr. Hall’s entry into a valid release of claims in favor of the Company, Mr. Hall will be entitled to receive
two times the sum of (i) his then-current base salary, (ii) the average short-term incentive plan bonus he
received in the three calendar years immediately preceding termination, to be paid in equal monthly
installments over the twenty-four months following termination, and (iii) the average discretionary
bonus he received in the three calendar years immediately preceding termination, to be paid in equal
monthly installments over the twenty-four months following termination. The Company will also pay
the cost of Mr. Hall’s premiums for continued participation in the Company medical hospitalization
insurance program under COBRA for up to twenty-four months following termination, or, if doing
so would cause the plans to provide discriminatory benefits, the Company will make monthly cash
payments to Mr. Hall in an amount equal to the premium payments.
If Mr. Hall’s employment is terminated by the Company without Cause or by Mr. Hall for Good Reason,
and such termination occurs within the Change-in-Control Protection Period, then, subject to a valid
release of claims in favor of the Company, Mr. Hall will be entitled to the sum of (i) three times his then-
current base salary, (ii) three times the average short-term incentive plan bonus paid to him in the three
calendar years immediately preceding the Change-in-Control, with such total amount reduced pro-rata
for each full month that has elapsed between the Change-in-Control and the termination, and (iii) three
times the average discretionary bonus paid to him in the three calendar years immediately preceding
the Change-in-Control, with such total amount reduced pro-rata for each full month that has elapsed
between the Change-in-Control and the termination. The amount will be paid in a lump sum within
sixty days of termination subject to certain limited exceptions. The Company will also pay the cost of
COBRA premium-payments for a maximum of eighteen months.
CARY DAVIS
Mr. Davis retired effective December 31, 2020, and his employment agreement ended upon his
retirement.
PRESTON MOORE
Mr. Moore entered into a Change In Control agreement with the Company effective March 28, 2018.
Following an initial term that ends on March 27, 2021, this agreement shall automatically renew for
successive one year terms unless notice is given 90 days prior to the end of a term. If Mr. Moore
is terminated in the two years after a Change-in-Control or the earlier of (i) the date negotiations
commence leading to the consummation of a Change-in-Control and (ii) six months prior to the
effective date of a Change-in-Control other than for Cause or for Good Reason, then Mr. Moore will be
entitled to severance benefits. Those severance benefits will consist of a (a) lump sum cash payment of
two times Mr. Moore’s thencurrent base salary, (b) a lump sum cash payment of two times the average
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EXECUTIVE COMPENSATION
TABLES
short-term incentive plan bonus paid to him within the three calendar years immediately preceding his
termination, (c) two times the average discretionary bonus paid to him within the three calendar years
immediately preceding his termination, and (d) any equity-type award under any plan or arrangement
will become fully vested and exercisable. The Change-in-Control benefits will be paid no later than the
thirtieth day following the later of (i) the termination of service and (ii) effective date of a Change-in-
Control. Under the terms of the Change-in-Control Agreement, Mr. Moore may not, for a period of
nine months following a Change-in-Control, solicit any of our customers in the year prior to termination
in certain parishes and counties in which we are doing business and he may not recruit or hire any
person who was an employee in the six month period prior to termination.
Potential Payments Upon Termination or Change In Control
The table below shows the estimated amounts that could have been paid to each NEO in 2020 under
his respective agreement (or agreements) and any applicable benefit plans in the event each NEO
was terminated in certain instances. The following information is based on the executive’s base salary
compensation at December 31, 2020, and 2020 bonuses to be paid in early 2021, and assumes the
triggering event occurred on December 31, 2020. Capitalized terms used in this section have the
meanings ascribed to them in the respective executive’s agreements.
Drake Mills
Termination
by Company
for Cause
($)
Termination
Other Than
Termination
for Cause
($)
Death
($)
Disability
($)
Change-In-
Control
($)
Retirement
($)
Employment Agreement
Benefits Payable under SERP
—
—
2,612,037(1)
555,490(2)
555,490(2)
3,918,055(3)
555,490(2)
2,526,113(4)
2,526,113(4)
2,526,113(4)
6,105,573(5)
6,105,573(5)
Accrued PTO(6)
115,758
115,758
115,758
115,758
115,758
115,758
Split Dollar Life Insurance eff.
02/07/2001(7)
Split Dollar Life Insurance eff.
05/01/2008(8)
Split Dollar Life Insurance eff.
10/29/2019(9)
Company Paid Life Insurance(10)
RSA Accelerated Vesting(11)
Continuing Medical Coverage(12)
—
—
—
—
—
—
—
—
—
—
—
227,274
1,441,192
1,500,000
400,000
—
—
—
—
—
—
—
—
—
—
—
—
457,233
457,233
457,233
457,233
16,949
—
—
12,712
—
Totals
115,758
5,270,857
7,223,060
3,654,594
10,609,331
7,234,054
(1) Upon termination of employment without Cause or for Good Reason outside of the Change-in-Control Protection Period, Mr. Mills will be
paid two times the sum of (i) his then current base salary, (ii) the average short-term incentive plan bonus compensation paid during the last
three years preceding his date of termination and (iii) the average discretionary bonus paid during the last three years preceding his date
of termination. The value reported excludes premium payments to which he would also be entitled that are included under “Continuing
Medical Coverage.”
(2) Upon termination of employment for any reason other than Cause, Mr. Mills will be paid a prorated short-term incentive plan bonus based
on his actual performance for the year. For the purpose of this calculation, the value reported is the full year short-term incentive plan
bonus amount paid to Mr. Mills for December 31, 2020.
(3) Upon termination of employment without Cause or for Good Reason within the Change-in-Control Protection Period, Mr. Mills will be paid
the sum of (i) three times his then current base salary, (ii) three times the average short-term incentive plan bonus paid during the last three
years preceding his date of termination and (iii) three times average discretionary bonus paid during the last three years preceding his date
of termination. The value reported excludes eighteen months of premium payments to which he would also be entitled.
61
2021 Proxy Statement | EXECUTIVE COMPENSATION
TABLES
(4) Amounts are equal to the Accrued Liability Retirement Balance as of December 31, 2020. Under Mr. Mills’ SERP, upon termination without
Cause or voluntary termination, he would receive the balance of his Accrued Liability Retirement Balance paid out in three annual installments
of $842,038. Upon Mr. Mills’ death, his beneficiaries would receive a lump sum payment equal to the Accrued Liability Retirement Balance
within 60 days of death. Upon disability, he would receive a lump sum payment of the Accrued Liability Retirement Balance within 30 days
following disability.
(5) Upon a Separation from Service after the age of 65 or a Change-in-Control, Mr. Mills will receive $264,040 in annual installments beginning
on the first day of the month following Mr. Mills’ Separation from Service following the age of 65 until death. This amount is calculated using
projected death at age 85 with an annual 1.5% COLA increase.
(6) Company policy provides that, upon termination, all employees are paid for any accrued but unused paid time off (“PTO”). The PTO
amount above is based on 2020 accrued and unused PTO hours as of December 31, 2020, times Mr. Mills’ hourly rate.
(7)
(8)
Split dollar life insurance dated February 7, 2001, provides for a $227,274 death benefit as of December 31, 2020, equal to 65% of the
net-at-risk insurance portion of the proceeds. The net-at-risk insurance portion is the total proceeds less the cash value of the policy. This
benefit is retained under each circumstance listed in the table above except for termination for cause.
Split dollar life insurance dated May, 1, 2008, provides for a $1,441,192 death benefit payment to Mr. Mills’ beneficiaries. This is the amount
equal to 65% of the net-at-risk insurance portion of the proceeds. The net-at-risk insurance portion is the total proceeds less the cash value
of the policy. This benefit is retained under each circumstance listed in the table above except for termination for cause.
(9) On February 27, 2020, the Bank entered into the 2020 Agreement that replaced the Endorsement Method Split Dollar Life Insurance
Agreement, dated October 29, 2019. The 2019 agreement provided for a formulaic death benefit in error. The 2020 agreement provided
for a $1,500,000 death benefit payment as approved by the Board in 2019. This benefit is retained under each circumstance listed in the
table above except for termination for cause.
(10) Origin provides a life insurance benefit to eligible employees of two times the employee’s current salary up to a maximum of $400,000.
(11) Accelerated vesting is provided on outstanding restricted stock awards in the event of death, disability, Change-in-Control, or retirement.
This value was determined by multiplying the current number of unvested shares times the share price of $27.77 as of December 31, 2020.
(12) Mr. Mills’ employment agreement provides he receive or have paid on his behalf for a period of up to eighteen months following termination
date without Cause or resignation for Good Reason in of the Change-in-Control Protection Period, all COBRA premiums for continuation
of Employer’s current medical hospitalization insurance program. If Mr. Mills is terminated without Cause or resigns for Good Reason
outside of the Change-in-Control Protection Period, he will be entitled to two years of COBRA premiums until he secures alternative health
benefits from a new employer or COBRA coverage terminates.
Stephen Brolly
Termination
by Company
for Cause
($)
Termination
Other Than
Termination
for Cause
($)
Change-in-Control Agreement(1)
Benefits Payable under SERP
—
—
Death
($)
Disability
($)
Change-In-
Control
($)
Retirement
($)
1,256,339(1)
—
58,464(2)
—
58,464(2)
1,115,877(3)
1,687,500(4)
Accrued PTO(5)
57,098
57,098
57,098
57,098
57,098
57,098
Split Dollar Life Insurance eff.
07/13/2018(6)
Company Paid Life Insurance(7)
RSA Accelerated Vesting(8)
—
—
—
—
—
—
1,379,712
400,000
—
—
—
—
—
—
104,221
104,221
104,221
104,221
Totals
57,098
115,562
1,941,031
219,783
2,533,535
1,848,819
(1) Mr. Brolly’s Change-in-Control Agreement provides that if he is terminated without Cause or for Good Reason in connection with a Change-
in-Control, Mr. Brolly would be entitled to the sum of (i) two years of his then base salary, (ii) two times the average short-term incentive plan
bonus paid to him in the last three years, and (iii) two times the average discretionary bonus paid during the last three years preceding his
date of termination.
(2) Under Mr. Brolly’s SERP, upon his voluntary Separation from Service or Involuntary Separation from Service without Cause or due to a
disability, he would receive the vested Accrued Liability Retirement Balance in a lump sum. As of December 31, 2020, the Accrued Liability
Retirement Balance was $292,319 and Mr. Brolly was vested in 20% of the benefit.
(3) Upon a Change-in-Control, he receives the present value of his Accrued Liability Retirement Benefit in a lump sum. The value reported is
based on his current salary and uses a three percent discount rate.
(4)
The total projected retirement benefit is based on his current salary with an annual benefit of $112,500 per year upon reaching normal
retirement age of 65. Upon retirement, Mr. Brolly will receive annual installments beginning within thirty days of retirement and will be paid
on the same date for fifteen years. The benefit provides a payout of 25% of Mr. Brolly’s base salary at retirement and was calculated using
current base salary as of December 31, 2020.
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| 2021 Proxy Statement
EXECUTIVE COMPENSATION
TABLES
EXECUTIVE COMPENSATION
TABLES
(5) Company policy provides that, upon termination, all employees are paid for any accrued but unused paid time off. The PTO amount above
is based on 2020 accrued and unused PTO hours as of December 31, 2020, times Mr. Brolly’s hourly rate.
(6)
Split dollar life insurance, dated July 13, 2018, provides for a benefit equal to the lesser of (i) the present value of Mr. Brolly’s Supplemental
Executive Retirement Agreement assuming he worked until the age of 65 or (ii) 100% of the total death proceeds of the individual insurance
policies adopted by the Bank subject to certain adjustments. The value reported assumes he died on December 31, 2020, and is the
present value death benefit payment of $1,379,712 to Mr. Brolly’s beneficiaries based on his current salary and a three percent discount.
(7) Origin provides a life insurance benefit to eligible employees of two times the employee’s current salary up to a maximum of $400,000.
(8) Accelerated vesting is provided on outstanding restricted stock awards in the event of death, disability, Change-in-Control, or retirement.
This value was determined by multiplying the current number of unvested shares times the share price of $27.77 as of December 31, 2020.
M. Lance Hall
Employment Agreement
Benefits Payable under SERP
effective 01/01/2004
Executive Supplemental Income
Agreement dated 10/29/2019
Termination
by Company
for Cause
($)
—
—
—
Termination
Other Than
Termination for
Cause
($)
1,494,021(1)
Death
($)
Disability
($)
266,000(2)
266,000(2)
Change-In-
Control
($)
2,241,031(3)
Retirement
($)
266,000(2)
620,325(4)
371,555(5)
—
2,910,499(6)
2,910,499(6)
18,822(7)
—
18,822(7)
193,088(8)
300,000(9)
Accrued PTO(10)
71,173
71,173
71,173
71,173
71,173
71,173
Split Dollar Life Insurance
07/23/2002(11)
Split Dollar Life Insurance
10/29/2019(12)
Company Paid Life Insurance(13)
RSA Accelerated Vesting(14)
Continuing Medical Coverage(15)
Totals
—
—
—
—
—
—
—
—
—
49,150
403,605
278,714
400,000
159,566
—
—
—
—
—
—
—
—
—
—
159,566
159,566
159,566
—
36,862
—
71,173
2,253,491
1,950,613
515,561
5,612,219
3,707,238
(1) Upon termination of employment without Cause or for Good Reason outside of the Change-in-Control Protection Period, Mr. Hall will
be paid two times the sum of (i) his then current base salary, (ii) the average short-term incentive plan bonus paid during the last three
years preceding his date of termination, and (iii) the average discretionary bonus paid during the last three years preceding his date of
termination. The value reported assumes Mr. Hall’s 2020 employment agreement was in effect and excludes premium payments to which
he would also be entitled that are included under “Continuing Medical Coverage.”
(2) Upon termination of employment for any reason other than Cause, Mr. Hall will be paid a prorated short-term incentive plan bonus based
on his actual performance for the year. For the purpose of this calculation, the value reported is the full year short-term incentive plan
bonus amount paid to Mr. Hall for December 31, 2020.
(4)
(3) Upon termination of employment without Cause or for Good Reason within the Change-in-Control Protection Period, Mr. Hall will be paid
the sum of (i) three times his then current base salary, (ii) three times the average short-term incentive plan bonus paid during the last three
years preceding his date of termination, and (iii) three times the average discretionary bonus paid during the last three years preceding his
date of termination. The value reported assumes Mr. Hall’s 2020 employment agreement was in effect and terminated on December 31,
2020, and excludes eighteen months of premium payments to which he would also be entitled.
Represents the Accrued Liability Retirement Balance as of December 31, 2020, for Mr. Hall. If Mr. Hall is terminated without Cause or
resigns prior to the age of 65, Mr. Hall will receive, as severance compensation over 15 annual installments starting on the date he turns
65, an amount equal to the accrued balance with interest, on the date of his termination, of Mr. Hall’s liability reserve account. The number
reported for the payment upon termination without Cause excludes interest that would be payable when payments begin being made
when Mr. Hall turns 65.
This value represents the value of the death benefit as of December 31, 2020, payable to Mr. Hall’s beneficiary in a lump sum on the 1st day
of the month after death.
(5)
(6) Mr. Hall’s SERP will pay, upon Mr. Hall’s retirement at age 65, an annual benefit of $118,939 that includes an annual 1.5% COLA increase, paid
in equal installments until Mr. Hall’s death. Upon a Change-in-Control, if Mr. Hall is terminated, except for Cause, he will receive the annual
benefit as if he had retired at the age of 65. The projected total retirement benefit of $2,910,499 assumes death at age 86 based on the MP
2015 Mortality table.
Represents 100% of the Accrued Liability Retirement Balance as of the effective date of the termination or disability of Mr. Hall, which we
assume to be December 31, 2020.
Represents the present value of the benefits provided under the ESIA as of December 31, 2020, in the event that Mr. Hall is involuntarily
separated from service following a Change-in-Control, other than for Cause, using a three percent discount rate.
(8)
(7)
(9) Mr. Hall has an ESIA, effective October 29, 2019, that provides for, beginning at the age of 60 and irrespective of whether Mr. Hall retires,
an annual amount equal to ten percent of Mr. Hall’s annualized base salary for the calendar year in which Mr. Hall attains the age of 60. The
63
2021 Proxy Statement | EXECUTIVE COMPENSATION
TABLES
annual payments will begin within thirty days following Mr. Hall turning 60 and continue annually for six years. For purposes of estimating
the payment amount, we assumed that Mr. Hall retired and turned 60 on December 31, 2020.
(10) Company policy provides that, upon termination, all employees are paid for any accrued but unused PTO. The PTO amount above is
based on 2020 accrued and unused PTO hours as of December 31, 2020, times Mr Hall’s hourly rate.
(11) Represents 80% of the net-at-risk insurance portion of the proceeds as of December 31, 2020. The net-at-risk insurance portion is the total
proceeds less the cash value of the policy, which will be paid in a lump sum upon Mr. Hall’s death.
(12) Under the 2019 Endorsement Split Dollar Life Insurance Agreement, in the event of the death of Mr. Hall while being employed by the
Bank, his designated beneficiaries will be entitled to receive the lesser of (i) the present value of the benefit Mr. Hall would have received
under his ESIA or (ii) the proceeds from his life insurance policy, excluding the greater of the cash surrender value or the aggregate
premiums paid by the Bank. In the event Mr. Hall died on December 31, 2020, the Present Value is the lesser amount and was calculated
using a three percent discount rate and a benefit based on his current salary as of December 31, 2020.
(13) All active company employees are provided with life insurance providing for a death benefit of two times the annual salary up to a
maximum of $400,000.
(14) Accelerated vesting is provided on outstanding restricted stock awards in the event of death, disability, Change-in-Control, or retirement.
This value was determined by multiplying the current number of unvested shares times the share price of $27.77 as of December 31, 2020.
(15) Mr. Hall’s employment agreement provides he receive or have paid on his behalf for a period of up to eighteen months following
his termination without Cause or resignation for Good Reason in the Change-in-Control Protection Period, all COBRA premiums for
continuation of Employer’s current medical hospitalization insurance program. If Mr. Hall is terminated without Cause or resigns for
Good Reason outside of the Change-in-Control Protection Period, he will be entitled to two years of COBRA premiums until he secures
alternative health benefits from a new employer or COBRA coverage terminates.
Cary Davis
Benefits Payable under SERP(1)
Split Dollar Life Insurance(3)
Totals
Death
($)
1,176,131(2)
515,815
1,691,946
(1) Mr. Davis retired on December 31, 2020, and will begin receiving annual payments beginning July 1, 2021. This benefit is calculated based
on death at 85 and receiving annual payments currently valued at $86,950 with an annual 1.5% COLA increase until death.
(2) Upon death, Mr. Davis’ beneficiaries will be entitled to the Accrued Liability Retirement Balance on date of death in a lump sum payment
to be made the first day of the second month following death.
(3)
The Split Dollar Agreement provides for a death benefit of 80% of the net-at-risk insurance portion of the proceeds calculated as of
December 31, 2020.
Preston Moore
Change-in-Control Agreement(1)
Company Paid Life Insurance(2)
Accrued PTO(3)
Totals
Termination
by Company
for Cause
($)
—
—
53,671
53,671
Termination
Other Than
Termination for
Cause
($)
—
—
53,671
53,671
Death
($)
—
400,000
53,671
453,671
Disability
($)
—
—
53,671
53,671
Change-In-
Control
($)
1,227,853
—
53,671
1,281,524
Retirement
($)
—
—
53,671
53,671
(1) Mr. Moore’s Change-in-Control Agreement provides that if he is terminated without Cause or for Good Reason in connection with a Change-
in-Control, Mr. Moore would be paid two times the sum of (i) his then base salary, (ii) the average short-term incentive plan bonus paid to him
in the last three years preceding his date of termination, and (iii) the average discretionary bonus paid during the last three years preceding
his date of termination.
(2) Origin provides a life insurance benefit to eligible employees of two times the employee’s current salary up to a maximum of $400,000.
(3) Company policy provides that, upon termination, all employees are paid for any accrued but unused PTO. The PTO amount above is
based on 2020 accrued and unused PTO hours as of December 31, 2020, times the executive’s hourly rate.
64
| 2021 Proxy Statement EXECUTIVE COMPENSATION
TABLES
EXECUTIVE COMPENSATION
TABLES
Chief Executive Officer Pay Ratio
Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC
adopted a rule requiring annual disclosure of the ratio of the annual total compensation of the principal
executive officer (“PEO”) to the annual total compensation of its median employee, other than the
principal executive officer. The purpose of the pay ratio disclosure is to provide a quantitative measure
of the equitability of pay within an organization. We believe our compensation philosophy and process
yield an equitable result:
Median employee total annual compensation (other than the PEO)
Total annual compensation of Drake Mills, our PEO
Ratio of PEO to median employee compensation
$ 64,867
$ 1,881,944
1:29
The pay ratio above represents the Company’s reasonable estimate calculated in a manner consistent
with SEC rules based on our internal records and the methodology described below. Applicable rules
and guidance provide flexibility in how companies identify the median employee and other companies
may use different methodologies or make different assumptions.
We completed the following steps to identify the median of the annual total compensation of all our
employees and to determine the annual total compensation of our median employee and CEO:
• The median employee was identified for 2020 based on the employee population of 763 on
December 31, 2020, which consisted of all full-time, part-time, temporary, and seasonal employees
employed on that date.
• To find the median of the annual total compensation of all our employees (other than our CEO), we
used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for
the fiscal year 2020. In making this determination, we annualized the compensation of full-time and
part-time permanent employees who were employed on December 31, 2020, but who did not work
for us the entire year. No full-time equivalent adjustments were made for part-time employees.
• We identified our 2019 median employee using this compensation measure and methodology,
which was consistently applied to all employees who were included in the calculation. In order to
determine the median employee, we then reviewed the employee list based upon a ranking of the
total cash compensation of all employees other than our PEO.
• Based on our decision to use the same median employee identified in 2019, we calculated the
2020 total compensation for this employee, by adding together all elements of this employee’s
compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K,
resulting in annual total compensation of $64,867. We then calculated the median employee’s
total annual compensation figure by aggregating the value of all wages, cash incentives, equity
incentives, 401(k) Plan employer contributions and any applicable perquisites earned or paid in
2020 in the same manner as we calculated the total annual compensation of our CEO for purposes
of the Summary Compensation Table.
• With respect to the annual total compensation of our CEO, we used the amount reported in the
“Total” column of our 2020 Summary Compensation Table.
65
2021 Proxy Statement | PROPOSAL 2: ADVISORY VOTE
ON THE SAY-ON-PAY PROPOSAL
PROPOSAL 2: ADVISORY VOTE ON THE SAY-ON-PAY PROPOSAL
Proposal Snapshot
What am I voting on?
Stockholders are being asked, as required by Section 14A of the Exchange Act, to approve, on
an advisory basis, the compensation of the NEOs for 2020 as described in the “Compensation
Discussion and Analysis” section beginning on page 37 and the “Executive Compensation Tables”
section beginning on page 50.
Voting recommendation:
FOR the advisory vote to approve executive compensation. The Compensation Committee
takes very seriously its stewardship responsibility to oversee the Company’s compensation
programs and values thoughtful input from stockholders. The Compensation Committee will take
into account the outcome of the advisory vote when considering future executive compensation
decisions.
This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity
to express their views on our NEO compensation as a whole. This vote is not intended to address any
specific item of compensation or any specific NEO, but rather the overall compensation of all of our
NEOs and the philosophy, policies and practices described in this proxy statement.
The compensation of our NEOs subject to the vote is disclosed in the Executive Compensation Tables
and the related narrative disclosure contained in this proxy statement. As discussed in those disclosures,
we believe that our compensation policies and decisions are focused on ensuring management’s
interests are aligned with our stockholders’ interests to support long-term stockholder value creation.
Compensation of our NEOs is designed to enable us to attract and retain talented and experienced
executives to lead us successfully in a competitive environment.
Accordingly, we ask our stockholders to indicate their support for the compensation of our NEOs
as described in this proxy statement by casting a non-binding advisory vote “FOR” the following
resolution at the Annual Meeting:
“RESOLVED, that the stockholders hereby approve, on a non-binding advisory basis, the
compensation of our named executive officers as reflected in this proxy statement and as disclosed
pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, the
compensation tables, narratives and all related material.”
Because your vote is advisory, it will not be binding upon the Board. However, the views expressed
by our stockholders, whether through this vote or otherwise, are important to our management and
Board. Our Compensation Committee intends to consider results of this vote when evaluating our
compensation policies and practices in the future.
66
| 2021 Proxy Statement PROPOSAL 2: ADVISORY VOTE
ON THE SAY-ON-PAY PROPOSAL
Advisory approval of this Proposal 2 requires that the proposal receive “For” votes from the holders of
a majority of the shares present virtually or represented by proxy and entitled to vote on the matter at
the Annual Meeting that cast votes with respect to this Proposal 2. Abstentions and broker non-votes
will count towards a quorum, but will have no effect on the outcome of this Proposal 2.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION.
67
2021 Proxy Statement | PROPOSAL 3: APPROVAL OF THE ORIGIN BANCORP, INC. 2021 EMPLOYEE
STOCK PURCHASE PLAN
Proposal Snapshot
What am I voting on?
Voting recommendation:
Stockholders are being asked to approve the Origin Bancorp, Inc. 2021 Employee Stock Purchase Plan.
FOR the approval of the Employee Stock Purchase Plan.
On March 15, 2021, our Board adopted the Origin Bancorp, Inc. 2021 Employee Stock Purchase Plan
(the “Employee Stock Purchase Plan” or the “ESPP”), subject to the approval of our stockholders. If
approved, the ESPP will become effective on March 15, 2021.
Purpose of the 2021 Employee Stock Purchase Plan
The Employee Stock Purchase Plan is intended to provide eligible employees of the Company and its
subsidiaries, including Origin Bank and Davison Insurance Agency, LLC, with an opportunity to share in
the success of Origin through the purchase of shares of our common stock at a discount and possibly
with favorable tax consequences, and thereby provide an additional incentive for such employees to
contribute to the prosperity of the Company. Our Board believes that the ESPP promotes the interests
of the Company and its stockholders by attracting, retaining, and motivating talented employees and
aligning the interests of participating employees with those of our stockholders. The ESPP is intended
to qualify as an “Employee Stock Purchase Plan” under Section 423 of the IRS Code and will be treated
as such for U.S. federal tax purposes. The ESPP is not intended to be subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended. The rights to purchase shares of Origin
common stock granted under the ESPP, referred to as “Purchase Rights,” are intended to qualify as
options issued under an “Employee Stock Purchase Plan,” as that term is defined in Section 423(b) of the
IRS Code.
Summary of the Employee Stock Purchase Plan
Described below is a summary of the material features of the ESPP. This summary does not purport to
be a complete description of all of the provisions of the ESPP. It is qualified in its entirety by reference
to the full text of the ESPP, a copy of which is attached as Appendix A to this proxy statement and is
incorporated herein by reference. Capitalized terms used but not otherwise defined herein have the
respective meanings ascribed to such terms in the ESPP.
Purpose. The purpose of the ESPP is to provide a means by which eligible employees of Origin and its
subsidiaries, including Origin Bank and Davison Insurance Agency, LLC, may be given an opportunity
to share in the success of Origin through the purchase of shares of our common stock at a discount, to
assist the Company in attracting and retaining employees, and in incentivizing our employees through
participation in our stock performance. Our Board believes that the ESPP promotes the interests of
the Company and its stockholders by attracting, retaining, and motivating talented employees and
aligning the interests of participating employees with those of our stockholders. The rights to purchase
68
shares of Origin common stock granted under the ESPP, referred to as “Purchase Rights,” are intended
to qualify as options issued under an “Employee Stock Purchase Plan,” as that term is defined in
Section 423(b) of the Internal Revenue Code.
Shares Subject to the ESPP. Subject to the terms of the ESPP, an aggregate of one million (1,000,000)
shares of our common stock, or approximately 4% of the shares of common stock outstanding on a
fully diluted basis as of December 31, 2020, will be reserved for issuance under the ESPP. If Purchase
Rights granted under the ESPP expire, are cancelled or otherwise terminate without being exercised,
the shares of common stock not purchased under such Purchase Rights will again become available for
issuance under the ESPP. The common stock purchasable under the ESPP shall consist of authorized
and unissued or reacquired shares of common stock.
Administration. The ESPP will be administered by the Compensation Committee or such other
committee or subcommittee as may be designated by our Board to administer the ESPP, referred to as
the “Committee.” The Committee will have the power to (i) determine how and when Purchase Rights to
purchase shares of common stock will be granted and the provisions of each Offering of such Purchase
Rights provided, however, that all Participants granted Purchase Rights pursuant to the Plan will have
the same “rights and privileges” within the meaning of Section 423(b)(5) of the Code); (ii) construe and
interpret the ESPP and Purchase Rights, and establish, amend, and revoke rules and regulations for
its administration (the Committee, in the exercise of this power, may correct any defect, omission, or
inconsistency in the ESPP, in a manner and to the extent it deems necessary or expedient to make the
ESPP fully effective); (iii) settle all controversies regarding the ESPP and Purchase Rights granted under
it; (iv) suspend or terminate the ESPP at any time as provided for under the ESPP; and (v) delegate its
authority to perform day-to-day administrative functions; and (vi) exercise such powers and perform
such acts as it deems necessary or expedient to promote the best interests of the Company and to carry
out the intent that the ESPP be treated as an “Employee Stock Purchase Plan” under Section 423 of the
Internal Revenue Code.
All determinations, interpretations, and constructions made by the Committee in good faith in its
discretion will be final, binding, and conclusive on all persons.
Eligibility. Each employee of Origin and its subsidiaries, including Origin Bank and Davison Insurance
Agency, LLC, is eligible to participate if they (a) have been employed continuously for 90 days ending
on or prior to the Offering Date (as defined below) and (b) are not an owner or holder of options to
purchase more than 5% of the total voting power or value of our capital stock. In addition, participants
are prohibited from holding Purchase Rights that enable such participant to purchase shares with Fair
Market Value exceeding $25,000 within any calendar year.
As of December 31, 2020, there were approximately 715 employees eligible to participate in the ESPP,
which is over 90% of our total workforce.
Offerings. Unless the Committee establishes a different period, the ESPP shall be implemented by
sequential “Offering Periods” of approximately 12 months each. The first trading day of each Offering
Period shall be referred to as the “Offering Date.” The last trading day of each Offering Period shall
be referred to as the “Purchase Date.” If the ESPP is approved by stockholders at the Annual Meeting,
the first Offering Period shall begin on June 1, 2021, and shall end on the last trading day of May, 2022.
The grant of Purchase Rights to eligible employees during any Offering Period shall be referred to as
an “Offering.” Each Offering shall be in such form and will contain such terms and conditions as the
Committee deems appropriate, which shall comply with the requirement of Section 423(b)(5) of the
| 2021 Proxy Statement shares of Origin common stock granted under the ESPP, referred to as “Purchase Rights,” are intended
to qualify as options issued under an “Employee Stock Purchase Plan,” as that term is defined in
Section 423(b) of the Internal Revenue Code.
Shares Subject to the ESPP. Subject to the terms of the ESPP, an aggregate of one million (1,000,000)
shares of our common stock, or approximately 4% of the shares of common stock outstanding on a
fully diluted basis as of December 31, 2020, will be reserved for issuance under the ESPP. If Purchase
Rights granted under the ESPP expire, are cancelled or otherwise terminate without being exercised,
the shares of common stock not purchased under such Purchase Rights will again become available for
issuance under the ESPP. The common stock purchasable under the ESPP shall consist of authorized
and unissued or reacquired shares of common stock.
Administration. The ESPP will be administered by the Compensation Committee or such other
committee or subcommittee as may be designated by our Board to administer the ESPP, referred to as
the “Committee.” The Committee will have the power to (i) determine how and when Purchase Rights to
purchase shares of common stock will be granted and the provisions of each Offering of such Purchase
Rights provided, however, that all Participants granted Purchase Rights pursuant to the Plan will have
the same “rights and privileges” within the meaning of Section 423(b)(5) of the Code); (ii) construe and
interpret the ESPP and Purchase Rights, and establish, amend, and revoke rules and regulations for
its administration (the Committee, in the exercise of this power, may correct any defect, omission, or
inconsistency in the ESPP, in a manner and to the extent it deems necessary or expedient to make the
ESPP fully effective); (iii) settle all controversies regarding the ESPP and Purchase Rights granted under
it; (iv) suspend or terminate the ESPP at any time as provided for under the ESPP; and (v) delegate its
authority to perform day-to-day administrative functions; and (vi) exercise such powers and perform
such acts as it deems necessary or expedient to promote the best interests of the Company and to carry
out the intent that the ESPP be treated as an “Employee Stock Purchase Plan” under Section 423 of the
Internal Revenue Code.
All determinations, interpretations, and constructions made by the Committee in good faith in its
discretion will be final, binding, and conclusive on all persons.
Eligibility. Each employee of Origin and its subsidiaries, including Origin Bank and Davison Insurance
Agency, LLC, is eligible to participate if they (a) have been employed continuously for 90 days ending
on or prior to the Offering Date (as defined below) and (b) are not an owner or holder of options to
purchase more than 5% of the total voting power or value of our capital stock. In addition, participants
are prohibited from holding Purchase Rights that enable such participant to purchase shares with Fair
Market Value exceeding $25,000 within any calendar year.
As of December 31, 2020, there were approximately 715 employees eligible to participate in the ESPP,
which is over 90% of our total workforce.
Offerings. Unless the Committee establishes a different period, the ESPP shall be implemented by
sequential “Offering Periods” of approximately 12 months each. The first trading day of each Offering
Period shall be referred to as the “Offering Date.” The last trading day of each Offering Period shall
be referred to as the “Purchase Date.” If the ESPP is approved by stockholders at the Annual Meeting,
the first Offering Period shall begin on June 1, 2021, and shall end on the last trading day of May, 2022.
The grant of Purchase Rights to eligible employees during any Offering Period shall be referred to as
an “Offering.” Each Offering shall be in such form and will contain such terms and conditions as the
Committee deems appropriate, which shall comply with the requirement of Section 423(b)(5) of the
69
2021 Proxy Statement | PROPOSAL 3: APPROVAL OF THE ORIGIN BANCORP,
INC. 2021 EMPLOYEE STOCK PURCHASE PLAN
IRS Code that all employees granted Purchase Rights have the same rights and privileges. The terms
and conditions of an Offering will be incorporated by reference into the ESPP and treated as part of
the ESPP. The provisions of separate Offerings need not be identical, but each Offering shall include
(through incorporation of the provisions of the ESPP by reference in the document comprising the
Offering or otherwise) the period during which the Offering will be effective, which period shall not
exceed 27 months, and the substance of the provisions of the ESPP pertaining to (i) eligibility; (ii) the
grant of Purchase Rights; (iii) the purchase price; (iv) participation, withdrawal, and termination; and
(v) the exercise of Purchase Rights.
Participation in the ESPP. Each eligible employee may elect to participate in the ESPP with respect to
an Offering Period by completing and delivering a Participation Agreement (in a form to be provided
by Origin) on or before the trading day immediately preceding the Offering Date for such Offering
Period (the “Enrollment Date”). Such Participation Agreement shall authorize payroll deductions
expressed as a percentage of the participant’s salary or base compensation (which must be at least 1%
and no more than 5%) during the Offering Period. Each participant’s contributions will be credited to
a bookkeeping account for such participant under the ESPP and be deposited with the general funds
of the Company. After an Offering Period begins, a participant may deliver a revised Participation
Agreement increasing deductions (subject to the 5% limitation), decreasing deductions (but not below
1%), or temporarily stopping deferrals (for at least 90 days); however, only one such change is allowed
during each Offering Period. No contributions may be made other than through payroll deductions.
Grant of Purchase Rights. On each Offering Date of an Offering Period, each eligible employee will be
granted a Purchase Right to purchase up to that number of shares of common stock purchasable with
the payroll withholdings authorized by such participant during the Offering Period, but not to exceed
the lesser of (1) the number of whole shares of common stock determined by dividing $25,000 by the
Fair Market Value of a share of common stock on the Offering Date or (2) five thousand (5,000) shares
of common stock.
Exercise of Purchase Rights. On the Purchase Date with respect to each Offering Period, the Purchase
Rights granted pursuant to that Offering of each participant who has not withdrawn and whose
participation in the Offering has not otherwise terminated will be exercised to purchase shares of
common stock in accordance with such Offering. No fractional shares will be issued upon the exercise
of Purchase Rights. If any amount of accumulated contributions remains in a participant’s account after
the purchase of shares of common stock and such remaining amount is less than the amount required
to purchase one share of common stock on the final Purchase Date of an Offering, then such remaining
amount will be held in such participant’s account for the purchase of shares of common stock under the
next Offering under the ESPP, unless such participant withdraws from such next Offering, as provided
in the ESPP, or is not eligible to participate in such Offering, as provided in the ESPP, in which case such
amount will be distributed to such participant after the final Purchase Date, without interest (unless
required by applicable law).
No Purchase Rights may be exercised unless the shares of common stock to be issued upon such
exercise under the ESPP are covered by an effective registration statement pursuant to the Securities
Act or, in the opinion of our legal counsel, the shares of common stock are issuable pursuant to an
available exemption under the Securities Act. If the ESPP is approved at the Annual Meeting, we plan
to file a registration statement on Form S-8 with respect to the ESPP shares prior to commencement
of the first Offering Period. No Purchase Right shall be granted or exercised in violation of any federal
or state securities laws or other legal requirement.
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| 2021 Proxy Statement PROPOSAL 3: APPROVAL OF THE ORIGIN BANCORP,
INC. 2021 EMPLOYEE STOCK PURCHASE PLAN
If the aggregate purchase of shares of common stock issuable upon exercise of Purchase Rights
granted under the Offering would exceed the number of shares authorized under the ESPP, then, in
the absence of any Committee action otherwise, a pro rata allocation of the shares of common stock
available will be made in as nearly a uniform manner as practicable and equitable.
Purchase Price. The purchase price of shares of common stock acquired pursuant to Purchase Rights
may not be less than the lesser of: (i) an amount equal to 85% of the Fair Market Value of the shares
of common stock on the Offering Date; or (ii) an amount equal to 85% of the Fair Market Value of the
shares of common stock on the applicable Purchase Date, as set forth in the Offering.
Withdrawal. During an Offering, a participant may cease making contributions and withdraw from
the Offering by delivering to the Company a notice of withdrawal in such form as the Company may
provide. Such withdrawal may be elected at any time prior to the end of the Offering Period. Upon
such withdrawal from the Offering by a participant, the Company will distribute to such participant all
of his or her accumulated contributions (reduced to the extent, if any, such contributions have been
used to acquire shares of common stock for the participant) during the Offering Period, and such
participant’s Purchase Rights in that Offering will terminate. A participant’s withdrawal from an Offering
will not affect such participant’s eligibility to participate in any other Offerings under the ESPP, but
such participant will be required to deliver a new Participation Agreement in order to participate in
subsequent Offerings.
Termination of Employment. A participant’s Purchase Rights granted pursuant to an Offering under the
ESPP will terminate immediately upon such participant ceasing to be an employee or upon becoming
otherwise ineligible. The Company will distribute to such terminated or otherwise ineligible employee
all of his or her accumulated contributions (reduced to the extent, if any, such contributions have been
used to acquire shares of common stock) during the Offering Period.
Restrictions on Transfer. Purchase Rights are not transferable by a participant except by will, the laws of
descent and distribution, or by a beneficiary designation as provided in the ESPP. During a participant’s
lifetime, Purchase Rights may be exercised only by such participant. Any attempt to assign, transfer,
pledge, or otherwise dispose of such rights or amounts will be null and void and without effect.
Interest. Unless otherwise specified in an Offering, the Company will have no obligation to pay interest
on contributions.
Effect of Change-in-Control. In the event of a “Change-in-Control” (as defined in the ESPP and including
any merger, asset or stock sale or similar transaction), then any surviving corporation or acquiring
corporation may assume our rights and obligations under the ESPP. If the surviving corporation
or acquiring corporation elects not to assume our rights and obligations under the ESPP, then the
expiration of the current Offering Period shall be accelerated to a date before the date that such
Change-in-Control transaction is consummated.
Amendment and Termination of the ESPP. The Committee may amend or terminate the ESPP at any
time, but no such amendment or termination shall adversely affect Purchase Rights previously granted
without the consent of the affected participant (unless permitted by the ESPP or necessary to satisfy
the requirements of Section 423 of the Internal Revenue Code or to comply with an applicable law,
regulation or rule). Any amendment that would increase the number of shares authorized for purchase
under the ESPP must be approved by Origin stockholders within twelve months of the date of adoption
of such amendment. In the event of any stock dividend, stock split or certain other changes in our
71
2021 Proxy Statement | PROPOSAL 3: APPROVAL OF THE ORIGIN BANCORP,
INC. 2021 EMPLOYEE STOCK PURCHASE PLAN
capital structure, the Committee shall make appropriate and proportionate adjustments to the number
and class of shares subject to the ESPP, each Purchase Right and the purchase price.
Effective Date. The ESPP became effective on March 15, 2021, but no Purchase Rights may be exercised
unless and until the ESPP has been approved by the stockholders of the Company, which approval shall
be within twelve months before or after the date the ESPP was adopted by the Board.
U.S. Federal Income Tax Effects
Tax Effects for Participants. The information set forth in the paragraph below is a summary only and
does not purport to be complete. In addition, the information is based upon current U.S. federal
income tax rules and, therefore, is subject to change if those rules change. Moreover, because the
tax consequences to any participant may depend on his or her particular situation, each participant
should consult his or her tax adviser as to the federal, state, local and other tax consequences of the
acquisition or disposition of common stock under the ESPP. This summary is general in nature and does
not purport to be legal or tax advice.
Purchase Rights granted under the ESPP are intended to qualify for favorable federal income tax treatment
associated with options granted under an “Employee Stock Purchase Plan” under Section 423 of the IRS
Code. A participant will be taxed on amounts withheld by payroll deductions for the purchase of shares
of common stock as if such amounts were actually received. Except as described in the preceding
sentence, no income relating to Purchase Rights granted or shares purchased under the ESPP will be
taxable to a participant until disposition of the acquired shares, and the method of taxation will depend
upon the holding period of the acquired shares.
If the stock is disposed of at least two years after the Offering Date and at least one year after the stock
is transferred to the participant, then the lesser of (i) the excess of the Fair Market Value of the stock at
the time of such disposition over the purchase price of such stock, or (ii) the excess of the Fair Market
Value of the stock as of the grant date of such Purchase Right (typically the Offering Date) over the
purchase price (applied and determined as of the grant date of such Purchase Right), will be treated
as ordinary income in the year of the sale or disposition. Any additional gain upon sale or disposition
will be taxed as a long-term capital gain. However, if the Fair Market Value of the stock on the date of
the sale or disposition is less than the purchase price, there will be no ordinary income and any loss
recognized will be a long-term capital loss.
If the stock is sold or disposed of before the expiration of either of the holding periods described above,
then the excess of the Fair Market Value of the stock on the Purchase Date over the purchase price will
be treated as ordinary income at the time of such sale or disposition. Even if the stock is later disposed
of for less than its Fair Market Value on the Purchase Date, the same amount of ordinary income will
be attributed to the participant, and a capital loss will be recognized equal to the difference between
the sales price and the Fair Market Value of the stock on such Purchase Date. The participant’s basis in
the stock will be equal to the amount paid for such stock, plus any ordinary income included for such
stock. Any capital gain or loss will be short-term or long-term, depending on how long the stock has
been held.
Tax Effects for the Company. There are no federal income tax consequences to the Company by reason
of the grant or exercise of Purchase Rights under the ESPP. The Company will, however, be entitled
to a deduction to the extent amounts are taxed as ordinary income to a participant who disposes
of the stock before the expiration of either of the holding periods described above (subject to the
72
| 2021 Proxy Statement PROPOSAL 3: APPROVAL OF THE ORIGIN BANCORP,
INC. 2021 EMPLOYEE STOCK PURCHASE PLAN
requirement of reasonableness and the satisfaction of tax reporting obligations). Any ordinary income
that is required to be recognized will not be subject to income or payroll tax withholding.
New Plan Benefits
Participation in the ESPP is voluntary and depends on each eligible employee’s election to participate.
Accordingly, the benefits or amounts that will be received with respect to future purchases under the
ESPP are not determinable. For the same reasons, we cannot determine what benefits or amounts
would have been received if the ESPP had been in place during the last completed fiscal year.
Required Vote
The approval of the adoption of the Origin Bancorp, Inc. 2021 Employee Stock Purchase Plan requires
the affirmative vote of a majority of the votes cast by the holders of shares entitled to vote at the
Annual Meeting. For purposes of the approval of the ESPP, abstentions and broker non-votes will
not be counted as votes cast and will have no effect on the result of the vote, although they will be
considered present for purposes of determining a quorum.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE APPROVAL OF THE ORIGIN BANCORP, INC. 2021 EMPLOYEE STOCK
PURCHASE PLAN.
73
2021 Proxy Statement | PROPOSAL 4: RATIFICATION OF
AUDITORS
PROPOSAL 4: RATIFICATION OF AUDITORS
Proposal Snapshot
What am I voting on?
Stockholders are being asked to ratify the appointment of BKD, LLP to serve as the Company’s
independent registered public accounting firm for the fiscal year ending December 31, 2021.
Although the Audit Committee has the sole authority to appoint the independent registered
public accounting firm, as a matter of good corporate governance, the Board submits its selection
of the independent registered public accounting firm to our stockholders for ratification. If our
stockholders should not ratify the appointment of BKD, LLP, the Audit Committee will reconsider
the appointment.
Voting recommendation:
FOR the ratification of the appointment of BKD, LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2021.
BKD, LLP has been approved by the Audit Committee of the Company to be the independent registered
public accounting firm of the Company for the 2021 fiscal year and has served as the Company’s
auditors since 2016. The Company has been advised by BKD, LLP that neither it nor any of its members
had any financial interest, direct or indirect, in the Company nor has BKD, LLP had any connection
with the Company or any of the Company’s subsidiaries in any capacity other than as an independent
registered public accounting firm. Stockholder ratification of the appointment of BKD, LLP as the
Company’s independent registered public accounting firm for the 2021 fiscal year is not required by
the Company’s Bylaws, state law or otherwise. However, the Board is submitting the appointment of
BKD, LLP to the Company’s stockholders for ratification as a matter of good corporate governance.
If our stockholders fail to ratify the appointment, the Audit Committee will consider this information
when determining whether to retain BKD, LLP for future services. Representatives from the firm of
BKD, LLP will be present at the Annual Meeting to respond to stockholders’ questions.
Representatives of BKD, LLP are expected to be in attendance at the Annual Meeting and will be
afforded the opportunity to make a statement. The representatives will also be available to respond
to questions.
The ratification of such appointment will require the affirmative vote of a majority of the votes cast by
the holders of shares entitled to vote at the Annual Meeting.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
“FOR” THE PROPOSAL TO RATIFY THE APPOINTMENT OF BKD, LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2021.
74
| 2021 Proxy Statement OTHER INFORMATION
OTHER INFORMATION
Stock Ownership of Principal Stockholders, Directors and Management
The following table sets forth certain information regarding the beneficial ownership of the Company’s
common stock as of February 26, 2021, by (i) current directors and NEOs of the Company, (ii) each
person who is known by the Company to own beneficially 5% or more of the Company’s common
stock and (iii) all directors and executive officers as a group. Unless otherwise indicated, based on
information furnished by such stockholders, management of the Company believes that each person
has sole voting and dispositive power over the shares indicated as owned by such person.
The table below calculates the percentage of beneficial ownership based on 23,485,084 shares of
common stock outstanding as of February 26, 2021. In computing the number of shares of common
stock beneficially owned by a person and the percentage ownership of that person, we deemed
outstanding shares of common stock subject to options or other convertible or exercisable securities
held by that person that are currently exercisable or convertible or exercisable or convertible within
60 days of February 26, 2021. However, we did not deem these shares outstanding for the purpose of
computing the percentage ownership of any other person.
Common Stock Number
of Shares Beneficially
Owned
(#)
Percent
of Class
(%)
Name and Address of Beneficial Owner
5% Holders
T. Rowe Price Associates, Inc.(1)
BlackRock, Inc.(2)
American Century Investment Management, Inc(3)
Directors and Named Executive Officers
Stephen Brolly(4)
James D’Agostino, Jr.(5) (6)
James Davison, Jr.(5) (7)
Richard Gallot, Jr.(5)
Stacy Goff(5)
M. Lance Hall(8)
Michael Jones(5)
Gary Luffey(5)
Farrell Malone(5)
Drake Mills(9)
Preston Moore(10)
F. Ronnie Myrick(5) (11)
George Snellings, IV(5) (12)
Elizabeth Solender(5) (13)
Steven Taylor(5)
All Directors and Executive Officers, as a group (15 persons)
1,724,879
3,343,267
1,644,805
1,183,641
14,131
58,763
667,844
2,947
2,467
51,191
207,597
152,333
6,558
283,754
50,978
139,987
23,897
13,860
48,572
14.2
7.0
5.0
*
*
2.8
*
*
*
*
*
*
1.2
*
*
*
*
*
75
2021 Proxy Statement | OTHER INFORMATION
* Less than 1%.
(1) Represents shares of the Company’s common stock beneficially owned as of December 31, 2020, based on the Schedule 13G/A filed by T.
Rowe Price Associates, Inc. on February 16, 2021. According to the Schedule 13G/A, T. Rowe Price Associates, Inc. has sole voting power
with respect to 911,653 shares and sole dispositive power with respect to 3,343,267 shares of the Company’s common stock. The mailing
address for T. Rowe Price Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
(2) Represents shares of the Company’s common stock beneficially owned as of December 31, 2020, based on the Schedule 13G/A filed by
BlackRock, Inc. on January 29, 2021. According to the Schedule 13G, BlackRock, Inc. has sole voting power with respect to 1,613,670 shares
and sole dispositive power with respect to 1,644,805 shares of the Company’s common stock. The mailing address for BlackRock, Inc. is
55 East 52nd Street, New York, NY 10055.
(3) Represents shares of the Company’s common stock beneficially owned as of December 31, 2020, based on the Schedule 13G filed by
American Century Investment Management, Inc. on February 11, 2021. According to the Schedule 13G, American Century Investment
Management, Inc. has sole voting power with respect to 1,138,282 shares and sole dispositive power with respect to 1,183,641 shares of the
Company’s common stock. The mailing address for American Century Investment Management, Inc. is 4500 Main Street 9th Floor, Kansas
City, Missouri, 64111.
(4)
(5)
(6)
(7)
(8)
(9)
Includes 2,586 shares of unvested restricted stock and 1,796 shares held in the Origin Bancorp, Inc. Employee Retirement Plan allocated
to Mr. Brolly’s account.
Includes 1,850 shares of unvested restricted stock.
Includes 18,131 shares of common stock held by Houston Trust Company. Mr. D’Agostino, Jr. serves as chairman of the board of directors
and on the Investment Committee of Houston Trust Company and has shared voting and dispositive power over the shares. Mr. D’Agostino,
Jr. disclaims any beneficial ownership in the shares of common stock held by Houston Trust Company, except to the extent of his pecuniary
interest in Houston Trust Company. Pursuant to SEC rules, the inclusion of these securities in this proxy statement shall not be deemed
an admission of beneficial ownership of all of the reported securities by any reporting person for purposes of Section 16 or for any other
purpose. Additionally, his holdings include 26,544 shares held jointly by Mr. D’Agostino, Jr. and his spouse.
Includes 14,816 shares held of record by Mr. Davison’s children.
Includes 5,746 shares of unvested restricted stock and 30,326 shares held in the Origin Bancorp, Inc. Employee Retirement Plan allocated
to Mr. Hall’s account.
Includes 3,466 shares held of record in an individual retirement account for his benefit, fully exercisable options to purchase 170,000 shares
of common stock, 16,465 shares of unvested restricted stock and 49,218 shares held in the Origin Bancorp, Inc. Employee Retirement Plan
allocated to Mr. Mills’ account.
(10) Includes 40,002 shares held jointly by Mr. Moore and his spouse, 9,476 shares held in the Origin Bancorp, Inc. Employee Retirement Plan
allocated to Mr. Moore’s account, and 1,500 shares held of record in an individual retirement account for Mr. Moore’s benefit.
(11) Includes 8,138 shares owned by Mr. Myrick’s spouse, 35,942 shares held in an individual retirement account for his benefit, 21,140 shares
owned by Myrick Investments, LLC over which Mr. Myrick exercises beneficial control, and 11,549 shares held in the Origin Bancorp, Inc.
Employee Retirement Plan allocated to Mr. Myrick’s account.
(12) Includes 3,049 shares held of record in an individual retirement account for Mr. Snellings’ benefit, 599 shares held of record in an individual
retirement account for the benefit of his spouse, 1,620 shares held of record by his spouse, and an aggregate of 3,367 shares held of record
by his children.
(13) Includes 7,000 shares held of record in an individual retirement account for Ms. Solender’s benefit.
Delinquent Section 16(A) Reports
Section 16(a) of the 1934 Act requires the Company’s Directors and certain officers, as well as persons
who beneficially own more than 10% of the outstanding shares of our common stock, to file reports
regarding their initial stock ownership and subsequent changes to their ownership with the SEC. Based
solely on a review of the reports filed for fiscal year 2020 and related written representations, we
believe that all Section 16(a) reports were filed on a timely basis, except for a late filing of a Form 4
required to be filed by Michael Jones and two Forms 3 required to be filed by Preston Moore and Jim
Crotwell, in each case due to administrative errors.
76
| 2021 Proxy Statement ANNUAL REPORT ON
FORM 10-K
ANNUAL REPORT ON FORM 10-K
Our financial statements for the fiscal year ended December 31, 2020, are included in our Annual
Report on Form 10-K, which will be filed with the SEC on or about March 2, 2021. Our annual report
and this proxy statement are posted on our website at www.origin.bank and are available from the SEC
at its website at www.sec.gov. You may also obtain a copy of our annual report and any exhibits
thereto without charge by sending a written request to Investor Relations, Origin Bancorp, Inc.,
500 South Service Road East, Ruston, Louisiana 71270. The annual report on Form 10-K includes
financial statements required to be filed with the SEC pursuant to the Exchange Act for the fiscal
year ended December 31, 2020, and the report thereon of BKD, LLP, the Company’s independent
registered public accounting firm. The annual report is not incorporated into this proxy statement and
is not considered proxy-soliciting material.
77
2021 Proxy Statement | HOUSEHOLDING OF PROXY
MATERIALS
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the
delivery requirements for proxy materials with respect to two or more stockholders sharing the same
address by delivering a single set of proxy materials addressed to those stockholders. This process,
which is commonly referred to as “householding,” potentially means additional convenience for
stockholders and cost savings for companies by reducing printing and postage costs.
This year, we expect that a number of brokers with account holders who are stockholders will be
“householding” the Company’s proxy materials. If you have received a notice from your broker that
they will be “householding” communications to your address, “householding” will continue until you
are notified otherwise or until you revoke your consent. Stockholders should contact their brokers if
they currently receive multiple copies of the Notice or of printed proxy materials at their addresses and
would like to request “householding” of their communications or, alternatively, if such stockholder no
longer wishes to participate in “householding” who would prefer to receive separate copies.
A single Notice or, if applicable, a single set of printed proxy materials will be delivered to multiple
stockholders sharing an address unless contrary instructions have been received by the Company from
the affected stockholders. If, at any time, you no longer wish to participate in “householding” and
would prefer to receive a separate Notice or set of printed proxy materials, please direct your written
request to Corporate Secretary, at 500 South Service Road East, Ruston, Louisiana 71270, or contact
the Company at (318)255-2222.
ORIGIN BANCORP, INC.
Jim Crotwell
Corporate Secretary
Ruston, Louisiana
March 12, 2021
78
| 2021 Proxy Statement APPENDIX A
APPENDIX A
ORIGIN BANCORP, INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
A-1
2021 Proxy Statement | PAGE
A-4
A-4
A-6
A-8
A-8
A-9
A-9
A-10
A-10
A-11
TABLE OF CONTENTS
GENERAL
Purpose of the Plan
Compliance With Code
ERISA
Term of Plan
DEFINITIONS AND CONSTRUCTION
Definitions
Construction
ADMINISTRATION
Administration by the Committee
Policies and Procedures Established by the Committee
Delegation
Indemnification
SHARES SUBJECT TO PLAN
Maximum Number of Shares Issuable
Adjustments for Changes in Capital Structure
ELIGIBILITY
Employees Eligible to Participate
Determination of Eligibility
OFFERING PERIOD
Offering Periods
Maximum Offering Period
PARTICIPATION IN THE PLAN
Initial Participation
Continued Participation
RIGHT TO PURCHASE SHARES
Grant of Purchase Right
Exclusion of Certain Stockholders
Calendar Year Purchase Limitation
PURCHASE PRICE
Purchase Price
Establishment by Committee
PAYMENT OF PURCHASE PRICE
Payroll Deduction Only
Amount of Payroll Deductions
Commencement of Payroll Deductions
Election to Change or Stop Payroll Deductions
Administrative Suspension of Payroll Deductions
Participant Accounts
No Interest Paid
Voluntary Withdrawal from Plan Account
APPENDIX A
ARTICLE I
1.1
1.2
1.3
1.4
ARTICLE II
2.1
2.2
ARTICLE III
3.1
3.2
3.3
3.4
ARTICLE IV
4.1
4.2
ARTICLE V
5.1
5.2
ARTICLE VI
6.1
6.2
ARTICLE VII
7.1
7.2
ARTICLE VIII
8.1
8.2
8.3
ARTICLE IX
9.1
9.2
ARTICLE X
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
A-2
| 2021 Proxy Statement APPENDIX A
ARTICLE XI
11.1
11.2
11.3
11.4
11.5
ARTICLE XII
12.1
12.2
ARTICLE XIII
13.1
13.2
ARTICLE XIV
14.1
14.2
ARTICLE XV
15.1
15.2
ARTICLE XVI
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
16.10
PURCHASE OF SHARES
Exercise of Purchase Right
Pro Rata Allocation of Shares
Delivery of Shares
Return of Cash Balance
Expiration of Purchase Right
WITHDRAWAL FROM PLAN OR OFFERING
Voluntary Withdrawal from the Plan
Return of Payroll Deductions
TERMINATION OF EMPLOYMENT OR ELIGIBILITY
Termination of Participation
Return of Payroll Deductions
CHANGE-IN-CONTROL
Definition
Effect of Change-in-Control on Purchase Rights
DESIGNATION OF BENEFICIARY
Designation Procedure
Absence of Beneficiary Designation
MISCELLANEOUS
Nontransferability of Purchase Rights
Compliance with Securities Law
Rights As a Stockholder and Employee
Notification of Disposition of Shares
Indebtedness to Company
Notices
Amendment or Termination of the Plan
Effective Date
Governing Law
Headings, etc., No Part of Plan
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2021 Proxy Statement | APPENDIX A
ORIGIN BANCORP, INC.
2021 EMPLOYEE STOCK PURCHASE PLAN
ORIGIN BANCORP, INC., a Louisiana corporation (the “Company”) hereby establishes the ORIGIN
BANCORP, INC. 2021 EMPLOYEE STOCK PURCHASE PLAN (the “Plan”) to be effective March 15,
2021.
ARTICLE I
GENERAL
Purpose of the Plan. The purpose of the Plan is to encourage and enable Eligible Employees of
1.1
the Company and its Subsidiaries to acquire proprietary interests in the Company through the ownership
of Stock. The Company, by means of the Plan, seeks to retain the services of Eligible Employees, to
secure and retain the services of new Employees and to provide incentive for such persons to exert
maximum efforts for the success of the Company and its Subsidiaries.
1.2
Compliance With Code. It is the intention of the Company to have this Plan and the Purchase
Rights granted pursuant to this Plan satisfy the requirements for “employee stock purchase plans” that
are set forth under Section 423 of the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder (the “IRS Code”).
ERISA. The Plan is not subject to the provisions of the Employee Retirement Income Security
1.3
Act of 1974, as amended (ERISA).
1.4
Term of Plan. The Plan shall continue in effect until the earlier of its termination by the Board
or the date on which all of the shares of Stock available for issuance under the Plan have been issued.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1
Definitions. Any term not expressly defined in the Plan but defined for purposes of Section
423 of the Code shall have the same definition herein. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) “Board” means the Board of Directors of the Company.
(b) “Committee” means the Compensation Committee or other committee or subcommittee
of the Board to which the Board duly designates administration of the Plan and having such powers
as specified by the Board, or, if no committee or subcommittee is then serving, the Board. Unless the
powers of the Committee have been specifically limited, the Committee shall have all of the powers to
administer the Plan as set forth herein, subject to any applicable limitations imposed by law.
(c) “Company” means Origin Bancorp, Inc., a Louisiana corporation, or any successor
corporation thereto.
(d) “Compensation” means, with respect to any Offering Period, only the base salary or
base compensation of the Participant paid during such period, and shall not include any commissions,
bonuses, overtime, or any deferrals under Sections 401(k) or 125 of the Code. Compensation shall be
limited to amounts actually payable in cash directly to the Participant during the Offering Period.
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APPENDIX A
(e) “Eligible Employee” means an Employee who meets the requirements set forth in ARTICLE
V for eligibility to participate in the Plan.
(f) “Employee” means any person who is employed for purposes of Section 423(b)(4) of the
Code by the Company or a Subsidiary. Services solely as a director of the Company or a Subsidiary,
or payment of a fee for such services, shall not cause a director to be considered an Employee for
purposes of the Plan. A Participant shall be deemed to have ceased to be an Employee upon his or
her actual termination of employment with the Company and all Subsidiaries thereof. For purposes
of the Plan, an employment relationship will be treated as continuing intact while the individual is on
military leave, sick leave, or other bona fide leave of absence that is approved by the Company or
a Subsidiary or that is legally protected under applicable laws. Where the period of leave exceeds
three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated three (3) months and one (1)
day following the commencement of such leave.
(g) “Enrollment Date” means the last Trading Day prior to the Offering Date of an Offering
Period or such earlier date as the Company shall establish.
(h) “Fair Market Value” means, as of any date:
(i)
If the shares of Stock are actively traded on any national securities exchange
or any nationally recognized quotation or market system (including, without limitation Nasdaq), Fair
Market Value shall mean the closing price of the Stock on such date or, if such exchange was not open
for trading on such date, on the trading day immediately preceding such date, as reported by any such
exchange or system selected by the Committee on which the shares of Stock are then traded.
(ii)
If the shares of Stock are not actively traded on any such exchange or system,
Fair Market Value shall mean the average of the closing high bid and low asked prices of the Stock on
the over-the-counter market on such day, or in the absence of closing bids on such day, the closing bids
on the next preceding day on which there were bids.
(iii)
If the shares of Stock are not actively traded or reported on any exchange or
system or over-the-counter markets, Fair Market Value shall mean the fair market value of a share of
Stock as determined in good faith by the Committee taking into account such facts and circumstances
deemed to be material by the Committee to the value of the Stock in the hands of the Participant,
including but not limited to opinions of independent experts, the price at which recent sales have been
made, the book value of the Stock and the Company’s current and future earnings.
(i) “Human Resources” means the [Human Resources Department] of Origin Bank, a Louisiana
state-chartered bank and Subsidiary of the Company.
(j) “Offering” means the grant of Purchase Rights to purchase shares of Stock pursuant to
the Plan to Eligible Employees. The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of the Plan by reference in the document
comprising the Offering or otherwise) the period during which the Offering will be effective, and the
substance of the provisions of the Plan pertaining to (i) eligibility; (ii) the grant of Purchase Rights; (iii)
the Purchase Price; (iv) participation, withdrawal, and termination; and (v) the exercise of Purchase
Rights.
(k) “Offering Date” means, for any Offering, the first day of the Offering Period.
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APPENDIX A
(l) “Offering Period” means the period established in advance by the Committee during
which payroll deductions shall be collected to purchase Stock pursuant to an Offering under the Plan
as provided in ARTICLE VI.
(m) “Participant” means an Eligible Employee who has become a participant in an Offering
Period in accordance with ARTICLE VII and remains a participant in accordance with the Plan.
(n) “Participation Agreement” means a written agreement in such form as specified by
the Company, which states an Employee’s election to participate in the Plan, indicates the level of
contribution expressed in whole percentages of the Employee’s Compensation, and authorizes payroll
deductions under the Plan from the Employee’s Compensation.
(o) “Purchase Date” means, for any Offering Period, the last Trading Day of such period.
(p) “Purchase Price” means the price at which a share of Stock may be purchased under the
Plan, as determined in accordance with ARTICLE IX.
(q) “Purchase Right” means an option granted to a Participant pursuant to the Plan to purchase
such shares of Stock as provided in ARTICLE VIII, which the Participant may or may not exercise during
the Offering Period in which such option is outstanding.
(r) “Stock” means the Five Dollar ($5.00) per share par value common stock of the Company,
as adjusted from time to time in accordance with Section 4.2.
(s) “Subsidiary” means any corporation, bank or other corporate entity (other than the
Company) in an unbroken chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other corporations in such chain.
A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
(t) “Trading Day” means a day on which the national securities exchanges or Nasdaq Stock
Market are open for trading.
Construction. Captions and titles contained herein are for convenience only and shall not affect
2.2
the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall include the singular and the masculine
pronouns shall include the feminine. Use of the term “or” is not intended to be exclusive, unless the
context clearly requires otherwise.
ARTICLE III
ADMINISTRATION
Administration by the Committee. The Plan shall be administered by the Committee. Without
3.1
limiting the authority of the Committee, it shall have the authority to perform the following functions:
(a) Determine how and when Purchase Rights will be granted and the provisions of each
Offering of such Purchase Rights (provided, however, that all Participants granted Purchase Rights
pursuant to the Plan have the same “rights and privileges” within the meaning of Section 423(b)(5) of
the Code);
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APPENDIX A
(b) Construe and interpret the ESPP and Purchase Rights, and establish, amend, and revoke
rules and regulations for the proper administration of the Plan (as described in Section 3.2 below),
and correct any defect, omission, or inconsistency in the Plan, in a manner and to the extent it deems
necessary or expedient to make the Plan fully effective;
(c) Settle all controversies regarding the Plan and Purchase Rights granted under it;
(d) Suspend or terminate the Plan at any time;
(e) Delegate its authority to perform day-to-day functions as prescribed in Section 3.3 below;
and
(f) Exercise such powers and perform such acts as it deems necessary or expedient to promote
the best interests of the Company and to carry out the intent that the Plan satisfy the requirements of
Section 423 of the Code.
Any and all actions, decisions and determinations taken or made by the Committee in the exercise of
its discretion pursuant to the Plan or any agreement thereunder shall be final, binding and conclusive
upon all persons having an interest therein.
Policies and Procedures Established by the Committee. The Committee may, from time
3.2
to time, consistent with the Plan, establish, change or terminate such rules, guidelines, policies,
procedures, limitations, or adjustments as deemed advisable by the Committee, in its discretion, for
the proper administration of the Plan, including, without limitation, (a) a minimum payroll deduction
amount required for participation in an Offering, (b) a limitation on the frequency or number of changes
permitted in the rate of payroll deduction during an Offering, (c) a payroll deduction greater than or
less than the amount designated by a Participant in order to adjust for the Company’s delay or mistake
in processing a Participation Agreement or in otherwise effecting a Participant’s election under the
Plan or as advisable to comply with the requirements of Section 423 of the Code, and (d) determination
of the date and manner by which the Fair Market Value of a share of Stock is determined for purposes
of administration of the Plan. All such actions by the Committee with respect to the Plan shall be
consistent with the requirement under Section 423(b)(5) of the Code that all Participants granted
Purchase Rights pursuant to the Plan shall have the same rights and privileges within the meaning of
such Section.
Delegation. The Committee may, from time to time, delegate certain of its administrative duties
3.3
and authorities to other committees, subcommittees, departments and/or personnel of the Company
or a Subsidiary. Notwithstanding the provisions of Section 3.1, certain day-to-day administrative duties
have been specifically delegated, under the provisions of this Plan document, to Human Resources,
and Human Resources shall perform said duties on behalf of the Committee and in accordance with
the rules and regulations adopted by the Committee. The Committee and Human Resources may use
such other resources, including third party vendors, in performing their duties hereunder.
3.4
Indemnification. In addition to such other rights of indemnification as they may have as members
of the Board, Committee or officers or employees of the Company or a Subsidiary, members of the
Board, the Committee and any officers or employees of the Company or a Subsidiary to whom authority
to act for the Board or the Company is delegated shall be indemnified by the Company against all
reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under or in connection with
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APPENDIX A
the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by the Company) or
paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that such person is liable for
gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty
(60) days after the institution of such action, suit or proceeding, such person shall offer to the Company,
in writing, the opportunity at its own expense to handle and defend the same.
ARTICLE IV
SHARES SUBJECT TO PLAN
4.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in Section 4.2, the
maximum aggregate number of shares of Stock that may be issued pursuant to Purchase Rights under
the Plan shall not exceed, in the aggregate, one million (1,000,000) shares of Stock. Such Stock shall
consist of authorized but unissued or reacquired shares of Stock, or any combination thereof. If an
outstanding Purchase Right for any reason expires or is terminated or canceled, the shares of Stock
allocable to the unexercised portion of that Purchase Right shall again be available for issuance under
the Plan.
Adjustments for Changes in Capital Structure. In the event of any stock dividend, stock
4.2
split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital
structure of the Company, or in the event of any merger (including a merger effected for the purpose
of changing the Company’s domicile), sale of assets or other reorganization in which the Company is
a party, appropriate and proportionate adjustments shall be made in the number and class of shares
subject to the Plan and each Purchase Right, and in the Purchase Price. If a majority of the shares of
the same class as the shares subject to outstanding Purchase Rights are exchanged for, converted
into, or otherwise become shares of another corporation or other corporate entity, the Committee
may unilaterally amend the outstanding Purchase Rights to provide that such Purchase Rights are
exercisable for shares of such other entity. In the event of any such amendment, the number of shares
subject to, and the Purchase Price of, the outstanding Purchase Rights shall be adjusted in a fair and
equitable manner, as determined by the Committee, in its discretion. Notwithstanding the foregoing,
any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down
to the nearest whole number, and in no event may the Purchase Price be decreased to an amount less
than the par value, if any, of the stock subject to the Purchase Right. The adjustments determined by
the Committee pursuant to this Section 4.2 shall be final, binding and conclusive.
ARTICLE V
ELIGIBILITY
Employees Eligible to Participate. Other than those Employees who are ineligible under
5.1
Section 8.2 or other provisions of the Plan, all Employees of the Company and/or its Subsidiaries are
eligible to participate in the Plan (“Eligible Employees”). Eligible Employees must have been employed
by the Company and/or a Subsidiary for a continuous period of at least ninety (90) days ending on
the Offering Date in order to participate in the Plan during the Offering Period beginning on such
date. The Committee may, in its discretion, make any change to the eligibility requirements in this
Section 5.1 so long as such requirements comply with Section 423 of the Code.
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Determination of Eligibility. Unless the Committee makes a contrary determination, Human
5.2
Resources shall determine, in good faith, and in the exercise of its discretion, whether an individual
has become or has ceased to be an Employee or an Eligible Employee and the effective date of
such individual’s attainment or termination of such status, as the case may be. For purposes of an
individual’s participation in or other rights, if any, under the Plan as of the time of such determination,
all such determinations by Human Resources or the Committee shall be final, binding and conclusive,
notwithstanding that any court of law or governmental agency subsequently makes a contrary
determination.
ARTICLE VI
OFFERING PERIOD
6.1 Offering Periods. Unless otherwise established by the Committee, the Plan shall be implemented
by sequential Offering Periods of approximately twelve (12) months duration each. The Committee
may establish staggered Offering Periods to run simultaneously. In no event, however, shall more than
two Offering Periods run simultaneously. The first Offering Period shall begin on June 1, 2021 and end
on the last Trading Day of May, 2022. Subsequent Offering Periods shall begin on the first Trading Day
of the month immediately following the close of each Offering Period and shall end on the last Trading
Day of the twelfth (12th) month thereafter.
6.2 Maximum Offering Period. Notwithstanding the foregoing, the Committee may establish a
different duration for one or more Offering Periods or different commencing or ending dates for such
Offering Periods; provided, however, that no Offering Period may have a duration exceeding twenty-
seven (27) months.
ARTICLE VII
PARTICIPATION IN THE PLAN
Initial Participation. An Eligible Employee may become a Participant in an Offering Period
7.1
by delivering a properly completed Participation Agreement to Human Resources not later than the
close of business on the Enrollment Date with respect to such Offering Period. An Eligible Employee
who does not deliver a properly completed Participation Agreement to Human Resources on or prior
to the Enrollment Date for an Offering Period shall not participate in the Plan for that Offering Period
or for any subsequent Offering Period unless the Eligible Employee subsequently delivers a properly
completed Participation Agreement to Human Resources on or before the Enrollment Date for such
subsequent Offering Period. An Employee who becomes an Eligible Employee within the 90-day
period ending on the Offering Date of an Offering Period shall not be eligible to participate in that
Offering Period but may participate in any subsequent Offering Period provided the Employee is still
an Eligible Employee as of the Offering Date of such subsequent Offering Period. In no event may
an Eligible Employee participate in an Offering Period while simultaneously participating in another
Offering Period that previously commenced under the Plan.
Continued Participation. A Participant shall automatically participate in the next Offering Period
7.2
commencing immediately after the Purchase Date of each Offering Period in which the Participant
participates provided that the Participant remains an Eligible Employee on the Offering Date of the
new Offering Period and has not either (a) withdrawn from the Plan pursuant to Section 12.1, or (b)
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terminated employment as provided in ARTICLE XIII. A Participant who may automatically participate
in a subsequent Offering Period, as provided in this Section, is not required to deliver any additional
Participation Agreement for the subsequent Offering Period in order to continue participation in the
Plan. However, a Participant may deliver a new Participation Agreement for a subsequent Offering
Period in accordance with the procedures set forth in Section 7.1 if the Participant desires to change
any of the elections contained in the Participant’s then effective Participation Agreement.
ARTICLE VIII
RIGHT TO PURCHASE SHARES
Grant of Purchase Right. Except as otherwise specified by the Committee prior to such
8.1
date, on the Offering Date of each Offering Period, each Participant in that Offering Period shall be
automatically granted a Purchase Right consisting of an option to purchase the lesser of (a) that number
of whole shares of Stock determined by dividing Twenty-Five Thousand Dollars ($25,000) by the Fair
Market Value of a share of Stock on such Offering Date or (b) five thousand (5,000) shares of Stock. No
Purchase Right shall be granted on an Offering Date to any person who is not, on such Offering Date,
an Eligible Employee.
Exclusion of Certain Stockholders. Notwithstanding any provision of the Plan to the contrary,
8.2
no Eligible Employee or Participant shall be granted a Purchase Right under the Plan if, immediately
after such grant, the Employee or Participant would own or hold options to purchase stock of the
Company or of any of its Subsidiaries possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company, as determined in accordance with Section
423(b)(3) of the Code. For purposes of this Section 8.2, the attribution rules of Section 424(d) of the
IRC Code shall apply in determining the stock ownership of such Employee or Participant.
Calendar Year Purchase Limitation. Notwithstanding any provision of the Plan to the contrary,
8.3
no Participant shall be granted a Purchase Right which permits his or her right to purchase shares
of Stock under the Plan to accrue at a rate which, when aggregated with such Participant’s rights to
purchase shares under all other employee stock purchase plans of the Company and/or its Subsidiaries
intended to meet the requirements of Section 423 of the Code, exceeds Twenty-Five Thousand Dollars
($25,000) in Fair Market Value (or such other limit, if any, as may be imposed by the Code) for each
calendar year in which such Purchase Right is outstanding at any time. For purposes of the preceding
sentence, the Fair Market Value of shares purchased during a given Offering Period shall be determined
as of the Offering Date for such Offering Period. The limitation described in this Section shall be
applied in conformance with applicable regulations under Section 423(b)(8) of the Code.
ARTICLE IX
PURCHASE PRICE
Purchase Price. Subject to Section 9.2, the Purchase Price of a share of Stock on each Purchase
9.1
Date shall be the lower of (a) eighty-five percent (85%) of the Fair Market Value of a share of Stock on
the Offering Date of the Offering Period in which such Purchase Date occurs, or (b) eighty-five percent
(85%) of the Fair Market Value of a share of Stock on the Purchase Date.
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Establishment by Committee. Notwithstanding Section 9.1, the Purchase Price at which each
9.2
share of Stock may be acquired in an Offering Period upon the exercise of all or any portion of a
Purchase Right shall be established by the Committee; provided, however, that the Purchase Price on
each Purchase Date shall not be less than the amount determined under Section 9.1.
ARTICLE X
PAYMENT OF PURCHASE PRICE
10.1 Payroll Deduction Only. Except as expressly provided herein, shares of Stock acquired pursuant
to the exercise of all or any portion of a Purchase Right may be paid for only by means of payroll
deductions from the Participant’s Compensation accumulated during the Offering Period for which
such Purchase Right was granted. In no event may any portion of the Purchase Price be paid through
any contribution by or on behalf of any Participant other than payroll deductions.
10.2 Amount of Payroll Deductions. Except as otherwise provided herein, the amount to be deducted
from a Participant’s Compensation on each payday during an Offering Period and held for payment
of the Purchase Price hereunder shall be determined by the Participant’s Participation Agreement.
The Participation Agreement shall set forth the percentage of the Participant’s Compensation to be
deducted on each payday during an Offering Period in whole percentages of not less than one percent
(1%) or more than five percent (5%). The Committee may change the foregoing limits on payroll
deductions effective as of any Offering Date.
10.3 Commencement of Payroll Deductions. Payroll deductions shall commence on the first payday
following the Offering Date and shall continue to the end of the Offering Period unless sooner altered
or terminated as provided herein.
10.4 Election to Change or Stop Payroll Deductions. During an Offering Period, a Participant may
elect to increase or decrease the rate of or to temporarily or permanently stop deductions from his or
her Compensation by delivering to the Committee an amended Participation Agreement authorizing
such change. No such change may increase the Participant’s deferral above five percent (5%) or
decrease his or her deferral below one percent (1%) (or such other maximum and/or minimum deferral
limits as have been established by the Committee for the Offering Period) unless such Participant
withdraws from the Plan as provided in Section 12.1. The amended Participation Agreement must be
delivered to Human Resources at least ten (10) days preceding the beginning of the first pay period
for which such election is to be effective, unless a different date is established by the Committee and
announced to the Participants. A Participant shall be allowed to elect to change the amount of his or
her deferrals or temporarily stop deferrals only once during an Offering Period. If a Participant elects
to temporarily stop deferrals, the temporary period for which such deferrals are stopped must be at
least ninety (90) days. The Committee may change the foregoing requirements applicable to payroll
deductions effective as of any Offering Date.
10.5 Administrative Suspension of Payroll Deductions. The Company may, in its sole discretion,
suspend a Participant’s payroll deductions under the Plan as the Company deems advisable to avoid
accumulating payroll deductions or contributions in excess of the amount that could reasonably be
anticipated to purchase the maximum number of shares of Stock permitted (a) under the Participant’s
Purchase Right or (b) during a calendar year under the limit set forth in Section 8.3. Payroll deductions
shall be resumed at the rate specified in the Participant’s then effective Participation Agreement at the
beginning of the next Offering Period the Purchase Date of which falls in the following calendar year,
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provided that the individual is a Participant in such Offering Period, unless the Participant has either
withdrawn from the Plan as provided in Section 12.1 or has ceased to be an Eligible Employee.
10.6 Participant Accounts. Individual bookkeeping accounts shall be maintained for each Participant.
All payroll deductions from a Participant’s Compensation shall be credited to such Participant’s Plan
account and shall be deposited with the general funds of the Company. All payroll deductions received
or held by the Company may be used by the Company for any corporate purpose.
10.7 No Interest Paid. Interest shall not be paid on sums deducted from a Participant’s Compensation
pursuant to the Plan; provided, however, that upon a determination by the Committee, the Company may
elect to pay interest (without an obligation to do so) on sums previously deducted from a Participant’s
Compensation in the event that the Company unilaterally returns such sums to the Participant prior to
the end of an Offering Period.
10.8 Voluntary Withdrawal from Plan Account. A Participant may withdraw all or a portion of the
payroll deductions credited to his or her Plan account and not previously applied toward the purchase
of Stock by delivering to the Human Resources a written notice on a form provided by the Committee
for such purpose. Amounts withdrawn shall be returned without interest to the Participant as soon as
practicable after the Human Resource’s receipt of the notice of withdrawal and may not be redeposited
to the Plan or applied to the purchase of shares in any Offering under the Plan. The Committee may
from time to time establish or change limitations on the frequency of withdrawals permitted under this
Section, establish a minimum dollar amount that must be retained in the Participant’s Plan account, or
terminate the withdrawal right provided by this Section.
ARTICLE XI
PURCHASE OF SHARES
11.1 Exercise of Purchase Right. On each Purchase Date of an Offering Period, each Participant who
has not withdrawn from the Plan and whose participation in the Offering has not otherwise terminated
before such Purchase Date shall automatically acquire, pursuant to the exercise of the Participant’s
Purchase Right, the number of whole shares of Stock determined by dividing (a) the total amount of
the Participant’s payroll deductions accumulated in the Participant’s Plan account by (b) the Purchase
Price. However, in no event shall the number of shares purchased by the Participant during an Offering
Period exceed the number of shares subject to the Participant’s Purchase Right. No shares of Stock
shall be purchased on a Purchase Date on behalf of a Participant whose participation in the Offering or
the Plan has terminated before such Purchase Date.
11.2 Pro Rata Allocation of Shares. If the number of shares of Stock which might be purchased by
all Participants in the Plan on a Purchase Date exceeds the number of shares of Stock available in the
Plan as provided in Section 4.1, the Committee shall make a pro rata allocation of the remaining shares
in as uniform a manner as practicable and as the Committee determines to be equitable. Any fractional
share resulting from such pro rata allocation to any Participant shall be disregarded.
11.3 Delivery of Shares. As soon as practicable after each Purchase Date, the Company shall arrange
for the appropriate entry on the books and records of the Company or of a duly authorized transfer
agent of the Company evidencing such shares of Stock purchased by the Participant on such Purchase
Date; provided that the Company may at its option deliver certificates representing such shares. Shares
to be delivered to a Participant under the Plan shall be registered in the name of the Participant, or if
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requested by the Participant, in the name of the Participant or his or her spouse, or, if applicable, in the
names of the heirs of the Participant.
11.4 Return of Cash Balance. Any cash balance remaining in a Participant’s Plan account following
any Purchase Date shall be refunded to the Participant as soon as practicable after such Purchase Date.
However, if the cash balance to be returned to a Participant pursuant to the preceding sentence is less
than the amount that would have been necessary to purchase an additional whole share of Stock on
such Purchase Date and if such Participant continues to participate in the subsequent Offering Period,
the Company may retain the cash balance in the Participant’s Plan account to be applied toward the
purchase of shares of Stock in the subsequent Offering Period, as the case may be.
11.5 Expiration of Purchase Right. Any portion of a Participant’s Purchase Right remaining
unexercised after the end of the Offering Period to which the Purchase Right relates shall expire
immediately upon the end of the Offering Period.
ARTICLE XII
WITHDRAWAL FROM PLAN OR OFFERING
12.1 Voluntary Withdrawal from the Plan. A Participant may withdraw from the Plan by signing and
delivering to Human Resources a written notice of withdrawal on a form provided by the Company
for this purpose. Such withdrawal may be elected at any time prior to the end of an Offering Period;
provided, however, that if a Participant withdraws from the Plan after a Purchase Date, the withdrawal
shall not affect shares of Stock acquired by the Participant on such Purchase Date. A Participant who
voluntarily withdraws from the Plan is prohibited from resuming participation in the Plan in the same
Offering Period from which he or she withdrew, but may participate in any subsequent Offering Period
by again satisfying the requirements of ARTICLE V and Section 7.1. The Company may impose, from
time to time, a requirement that the notice of withdrawal from the Plan be on file with the Committee
for a reasonable period prior to the effectiveness of the Participant’s withdrawal.
12.2 Return of Payroll Deductions. Upon a Participant’s voluntary withdrawal from the Plan pursuant
to Section 12.1, the Participant’s accumulated payroll deductions which have not been applied toward
the purchase of shares of Stock shall be refunded to the Participant as soon as practicable after the
withdrawal, without the payment of any interest, and the Participant’s interest in the Plan or the Offering,
as applicable, shall terminate. Such accumulated payroll deductions to be refunded in accordance with
this Section may not be applied to any other Offering under the Plan.
ARTICLE XIII
TERMINATION OF EMPLOYMENT OR ELIGIBILITY
13.1 Termination of Participation. Upon a Participant’s ceasing, prior to a Purchase Date, to be an
Employee of the Company and all Subsidiaries for any reason, including retirement, disability or death,
or upon the failure of a Participant to remain an Eligible Employee, the Participant’s participation in the
Plan shall terminate immediately. A Participant whose participation has been so terminated may again
become eligible to participate in the Plan by satisfying the requirements of ARTICLE V and Section 7.1.
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2021 Proxy Statement | APPENDIX A
13.2 Return of Payroll Deductions. In the event of termination as provided under Section 13.1,
the Participant’s accumulated payroll deductions which have not been applied toward the purchase
of shares of Stock shall, as soon as practicable, be returned to the Participant or, in the case of the
Participant’s death, to the Participant’s beneficiary designated in accordance with ARTICLE XV, if any,
or legal representative, and all of the Participant’s rights under the Plan shall terminate. Interest shall
not be paid on sums returned pursuant to this Section 13.2.
ARTICLE XIV
CHANGE IN CONTROL
14.1 Definition. “Change-in-Control” shall mean, with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the stockholders of the Company
of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation
in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the
assets of the Company; or (iv) a liquidation or dissolution of the Company, occurring singly or in a
series of related events (any of the above, a “Transaction”) wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company’s voting stock immediately before
the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting securities of the Company or, in the case of a
Transaction described in Section 14.1(iii), the corporation or other business entity to which the assets
of the Company were transferred (the “Transferee”), as the case may be. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without limitation, an interest resulting from
ownership of the voting securities of one or more corporations or other business entities which own
the Company or the Transferee, as the case may be, either directly or through one or more subsidiary
corporations or other business entities. The Committee shall have the right to determine whether
multiple sales or exchanges of the voting securities of the Company or multiple events are related, and
its determination shall be final, binding and conclusive.
14.2 Effect of Change-in-Control on Purchase Rights. In the event of a Change-in-Control, the
surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof,
as the case may be (the “Acquiring Corporation”), may, without the consent of any Participant, assume
the Company’s rights and obligations under the Plan. If the Acquiring Corporation elects not to
assume the Company’s rights and obligations under the Plan, the Purchase Date of the then current
Offering Period shall be accelerated to a date before the date of the Change-in-Control specified by
the Committee, but the number of shares of Stock subject to outstanding Purchase Rights shall not be
adjusted. All Purchase Rights which are neither assumed by the Acquiring Corporation in connection
with the Change-in-Control nor exercised as of the date of the Change-in-Control shall terminate
and cease to be outstanding effective as of the date of the Change-in-Control and all Participants’
accumulated payroll deductions which have not been applied toward the purchase of shares of Stock
shall, as soon as practicable, be returned to the Participants. Interest shall not be paid on sums returned
pursuant to this Section.
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| 2021 Proxy Statement APPENDIX A
ARTICLE XV
DESIGNATION OF BENEFICIARY
15.1 Designation Procedure. Each Participant may file a written designation of beneficiary with
Human Resources; and, unless restricted by community property law or other state law restricting
distributions at death, such beneficiary will receive (a) shares of Stock and cash, if any, from the
Participant’s Plan account if the Participant dies subsequent to a Purchase Date but prior to delivery to
the Participant of such shares of Stock and cash or (b) cash, if any, from the Participant’s Plan account
if the Participant dies prior to the exercise of the Participant’s Purchase Right. If a married Participant
designates a beneficiary other than the Participant’s spouse, the effectiveness of such designation shall
be subject to the consent of the Participant’s spouse. A Participant may change his or her beneficiary
designation at any time by written notice to the Company.
15.2 Absence of Beneficiary Designation. If a Participant dies without an effective designation
pursuant to Section 15.1 of a beneficiary who is living at the time of the Participant’s death, the
Company shall deliver any shares of Stock and/or cash credited to the Participant’s Plan account to the
Participant’s legal representative.
ARTICLE XVI
MISCELLANEOUS
16.1 Nontransferability of Purchase Rights. Neither payroll deductions credited to a Participant’s Plan
account nor a Participant’s Purchase Right may be assigned, transferred, pledged or otherwise disposed
of in any manner other than as provided by the Plan or by will or the laws of descent and distribution. (A
beneficiary designation pursuant to ARTICLE XV shall not be treated as a disposition for this purpose.)
Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw from the Plan as provided in Section 12.1. A
Purchase Right shall be exercisable during the lifetime of the Participant only by the Participant.
16.2 Compliance with Securities Law. The issuance of shares under the Plan shall be subject to
compliance with all applicable requirements of federal, state, local and foreign law with respect to such
securities. A Purchase Right may not be granted or exercised if the grant of such Purchase Right or
issuance of shares upon exercise would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any securities exchange or market
system upon which the Stock may then be listed. In addition, no Purchase Right may be exercised
unless (a) a registration statement under the Securities Act of 1933, as amended, shall at the time of
exercise of the Purchase Right be in effect with respect to the shares issuable upon exercise of the
Purchase Right, or (b) in the opinion of legal counsel to the Company, the shares issuable upon exercise
of the Purchase Right may be issued in accordance with the terms of an applicable exemption from the
registration requirements of said Act. The inability of the Company to obtain from any regulatory body
having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the
lawful issuance and sale of any shares under the Plan shall relieve the Company of any liability in respect
of the failure to grant such Purchase Right or sell such shares as to which such requisite authority shall
not have been obtained. As a condition to the grant or exercise of a Purchase Right, the Company may
require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation, and to make any representation or warranty with
respect thereto as may be requested by the Company.
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2021 Proxy Statement | APPENDIX A
16.3 Rights As a Stockholder and Employee. A Participant shall have no rights as a stockholder by
virtue of the Participant’s participation in the Plan until the date of the issuance of a certificate for the
shares of Stock purchased pursuant to the exercise of the Participant’s Purchase Right (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other rights for which the
record date is prior to the date such certificate is issued. Nothing herein shall confer upon a Participant
any right to continue in the employ of the Company or any Subsidiary nor interfere in any way, in
compliance with applicable laws, with any right of the Company or any Subsidiary to terminate the
Participant’s employment at any time.
16.4 Notification of Disposition of Shares. The Company may require the Participant to give the
Company prompt notice of any disposition of shares acquired by exercise of a Purchase Right. The
Company may require that until such time as a Participant disposes of shares acquired upon exercise of
a Purchase Right, the Participant shall hold all such shares in the Participant’s name (or, if elected by the
Participant, in the name of the Participant and his or her spouse but not in the name of any nominee)
until the later of two (2) years after the date of grant of such Purchase Right or one (1) year after the
date of exercise of such Purchase Right. The Company may direct that the certificates evidencing
shares acquired by exercise of a Purchase Right refer to such requirement to give prompt notice of
disposition.
Indebtedness to Company. Notwithstanding any provision of this Agreement, if at any time
16.5
a Participant is entitled to a distribution of his or her accumulated payroll deductions for any reason,
whether due to a voluntary withdrawal pursuant to Section 12.1 or termination under Section 13.1 or
otherwise, the Participant is indebted to the Company or a Subsidiary in any amount and for any reason,
including but not limited to embezzlement, such participant’s accumulated payroll deductions shall
first be applied to repay such indebtedness to the Company and/or its Subsidiaries, unless otherwise
prohibited by law. Any excess accumulated payroll deductions shall be refunded to the Participant as
soon as practicable.
16.6 Notices. All notices or other communications by a Participant to the Company under or in
connection with the Plan shall be deemed to have been duly given when received in the form specified
by the Committee at the location, or by the person, designated by the Committee for the receipt
thereof.
16.7 Amendment or Termination of the Plan. The Committee may at any time amend or terminate the
Plan, except that no such amendment or termination may adversely affect a Purchase Right previously
granted under the Plan without the consent of the Participant, except to the extent permitted by the
Plan or as may be necessary to qualify the Plan as an “employee stock purchase plan” pursuant to
Section 423 of the Code, to meet the requirements for the tax benefits provided in Section 423(c)
of the Code, or to comply with any applicable law, regulation or rule. In addition, an amendment to
the Plan must be approved by the stockholders of the Company within twelve (12) months of the
adoption of such amendment if such amendment would authorize the sale of more shares than are then
authorized for issuance under the Plan. This Plan shall automatically terminate on the first anniversary
of its adoption by the Board if not approved by the stockholders of the Company on or prior to such
date.
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| 2021 Proxy Statement APPENDIX A
16.8 Effective Date. The Plan shall become effective on March 15, 2021; however no Purchase Rights
shall be exercised unless and until the Plan has been approved by the stockholders of the Company
pursuant to Section 423 of the Code, which approval shall be within twelve (12) months before or after
the date the Plan is adopted by the Board.
16.9 Governing Law. Except to the extent governed by the provisions of Section 423 of the Code
and the Treasury Regulations and guidance thereunder, the Plan shall be governed by and construed
in accordance with the laws of the State of Louisiana, without regard to conflict of laws principles.
16.10 Headings, etc., No Part of Plan. Headings of Articles and Sections hereof are inserted for
convenience and reference; they do not constitute part of the Plan.
A-17
2021 Proxy Statement | APPENDIX A
IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its officers thereunto
duly authorized and attested as of the date first-noted above.
ATTEST:
By:
ORIGIN BANCORP, INC.
By:
Name:
Title:
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| 2021 Proxy Statement 22 22
ANNUAL REPORT
[This page intentionally left blank]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 001-38487
Origin Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Louisiana
(State or other jurisdiction of
incorporation or organization)
72-1192928
(I.R.S. Employer
Identification Number)
500 South Service Road East
Ruston, Louisiana 71270
(318) 255-2222
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Securities Registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Exchange on which Registered
Common Stock, par value $5.00 per share
OBNK
Nasdaq Stock Market LLC
Securities Registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or
an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth
company" in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer ☐
Accelerated filer
☒ Non-accelerated filer ☐
Smaller reporting
company
☐
Emerging growth
company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. Yes ☒ No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant was $483.0 million as of June 30,
2020, the last business day of the Registrant's most recently completed second fiscal quarter. Solely for the purpose of this computation, it has been
assumed that executive officers and directors of the Registrant are "affiliates".
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:23,510,166 shares of
Common Stock, par value $5.00 per share, were issued and outstanding as of February 17, 2021.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Definitive Proxy Statement for the 2021 Annual Meeting of Stockholders of Origin Bancorp, Inc.
to be held on April 28, 2021, are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated
herein. Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of
the registrant's fiscal year ended December 31, 2020.
ORIGIN BANCORP, INC.
FORM 10-K
DECEMBER 31, 2020
INDEX
Cautionary Note Regarding Forward-Looking Statements
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Signatures
Page
3
4
4
23
42
43
43
43
44
44
46
48
76
78
138
138
140
141
141
141
141
141
141
142
142
144
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements
preceded by, followed by or that otherwise include the words "anticipates," "believes," "estimates," "expects," "foresees,"
"intends," "plans," "projects," and similar expressions or future or conditional verbs such as "could," "may," "might,"
"should," "will," and "would," or variations or negatives of such terms are generally forward-looking in nature and not
historical facts, although not all forward-looking statements include the foregoing words. Forward-looking statements are not
historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and
certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control.
Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are
subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected
in our forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from
the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in
these forward-looking statements, including, but not limited to, the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
business and economic conditions generally and in the financial services industry, nationally and within our
local market areas;
natural disasters and adverse weather events, acts of terrorism, an outbreak of hostilities, regional or national
protests and civil unrest (including any resulting branch closures or property damage), widespread illness or
public health outbreaks or other international or domestic calamities, and other matters beyond our control;
system failures, cybersecurity threats and/or security breaches and the cost of defending against them;
the duration and impacts of the coronavirus ("COVID-19") pandemic and efforts to contain its transmission, as
well as the impact of the actions taken by governmental authorities to address the impact of COVID-19 on the
United States economy, including, without limitation, the Coronavirus Aid, Relief and Economic Security Act
(“CARES Act") and any related future economic stimulus legislation;
deterioration of our asset quality;
factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our
primary market areas, the financial health of our commercial borrowers and the success of construction projects
that we finance, including any loans acquired in acquisition transactions;
changes in the value of collateral securing our loans;
our ability to anticipate interest rate changes and manage interest rate risk;
the effectiveness of our risk management framework and quantitative models;
our inability to receive dividends from our bank subsidiary and to service debt, pay dividends to our common
stockholders, repurchase our shares of common stock and satisfy obligations as they become due;
changes in our operation or expansion strategy or our ability to prudently manage our growth and execute our
strategy;
changes in management personnel;
our ability to maintain important deposit customer relationships, our reputation or otherwise avoid liquidity
risks;
increasing costs as we grow deposits;
operational risks associated with our business;
volatility and direction of market interest rates;
3
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
increased competition in the financial services industry, particularly from regional and national institutions;
our level of nonperforming assets and the costs associated with resolving any problem loans, including litigation
and other costs;
our ability to comply with applicable capital and liquidity requirements, including our ability to generate
liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital
markets;
changes in the utility of our non-GAAP liquidity measurements and their underlying assumptions or estimates;
difficult market conditions and unfavorable economic trends in the United States generally, and particularly in
the market areas in which Origin operates and in which its loans are concentrated;
an increase in unemployment levels and slowdowns in economic growth;
the credit risk associated with the substantial amount of commercial real estate, construction and land
development, and commercial loans in our loan portfolio;
changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, as well as tax,
trade, monetary and fiscal matters;
periodic changes to the extensive body of accounting rules and best practices, may change the treatment and
recognition of critical financial line items and affect our profitability;
further government intervention in the U.S. financial system;
compliance with governmental and regulatory requirements, including the Dodd-Frank Wall Street Reform and
Consumer Protection Act and others relating to banking, consumer protection, securities and tax matters;
uncertainty regarding the future of the London Interbank Offered Rate and the impact of any replacement
alternatives on our business;
system failures, cybersecurity threats and/or security breaches and the cost of defending against them;
other factors that are discussed in the sections titled "Item 1A. Risk Factors" in this report, in our annual report
on Form 10-K for the year ended December 31, 2019, and in our other reports filed with the SEC; and
our ability to manage the risks involved in the foregoing.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary
statements included in this report. If one or more events related to these or other risks or uncertainties materialize, or if our
underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you
should not place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the
date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement,
whether as a result of new information, future developments or otherwise. New risks and uncertainties emerge from time to
time, and it is not possible for us to predict those events or how they may affect us. In addition, we cannot assess the impact
of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
PART I
Item 1.
Business
Our Company
Unless the context otherwise requires, references in this Annual Report on Form 10-K to "we," "us," "our," "our
company," "the Company" or "Origin" refer to Origin Bancorp, Inc., a Louisiana corporation, and its consolidated
subsidiaries. All references to "Origin Bank" or "the Bank" refer to Origin Bank, our wholly owned bank subsidiary.
4
Origin is a financial holding company headquartered in Ruston, Louisiana. Our wholly owned bank subsidiary,
Origin Bank, was founded in 1912. Deeply rooted in our history is a culture committed to providing personalized,
relationship banking to our clients and communities. We provide a broad range of financial services to businesses,
municipalities, high net worth individuals and retail clients. We currently operate 44 banking centers from Dallas/Fort Worth
and Houston, Texas across North Louisiana and into Mississippi. At December 31, 2020, we had total assets of $7.63 billion,
total loans of $5.72 billion, total deposits of $5.75 billion and total stockholders' equity of $647.2 million.
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. 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.
Successful execution of our strategic plan has produced significant growth in our franchise. Since 2005, we have
enhanced our growth by integrating three bank acquisitions, entering several expansion markets, expanding our product
offerings in mortgage lending and servicing as well as in insurance and private banking. To support our growth, we have
raised over $281.8 million of new Tier 1 capital since 2006, including proceeds from our initial public offering completed in
May 2018. Additionally, in two separate transactions conducted in February and October of 2020, Origin Bank and the
Company announced the completion of the offering and subsequent sales of $70.0 million and $80.0 million, respectively, in
aggregate principal amount of subordinated notes that will initially be treated as Tier 2 capital for regulatory purposes. We
have also supported our entry into expansion markets by hiring a number of experienced in-market bankers and banking
teams. Through these efforts, we have successfully increased our market share in our key geographic markets.
5
Our Competitive Strengths and Banking Strategy
Organic Growth Capabilities with Strategic Acquisitions
We have historically been able to demonstrate our ability to grow our loans and deposits organically. Our team of
seasoned bankers has been an important driver of our organic growth by further developing banking relationships with
current and potential clients. 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. Through these relationships, our bankers are able to capitalize on loan
demand across a wide range of industries. This allows us to not only diversify our loan portfolio, but also focus on loans with
quality credit characteristics.
We focus on generating core deposits and, in particular, noninterest-bearing deposits, as our primary funding source
to support loan growth. We believe motivating our relationship bankers to generate strong core, noninterest-bearing deposit
growth enhances our ability to build and strengthen client relationships and provide stable funding for future growth.
We also intend to continue pursuing selective acquisition opportunities that we expect will enhance our business
model in markets across our attractive geographic footprint.
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 recognize that providing a distinguished client service begins with a
commitment to building, training and retaining a customer-focused team that exemplifies our core values. Relationships built
upon trust, encouraging a strong work ethic, innovation, flexibility and forward-thinking, genuine respect for others,
cultivating a commitment to our community and never compromising on integrity are the benchmarks of our values and our
promise is to make every customer feel like our only customer, every time.
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. 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.
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. We provide products and services that compete with large,
national banks, but with the personalized attention and responsiveness of a relationship-focused community bank. Our
offerings include traditional retail deposits, treasury management, commercial deposits, mortgage origination and servicing,
insurance, mobile banking and online banking. Our clients value our ability to provide the sophisticated products and services
of larger banks, but with a local and agile decision-making process, a focus on building personal relationships, and a
commitment to investing in the local economy and community. This allows us to build Origin Bank by focusing on low-cost
core deposit relationships, high credit quality loans, and fee income generated by value-added services. It also allows us to
develop strong relationships across industries, creating a diverse commercial loan portfolio.
We believe we have an attractive mix of loans and deposits. At December 31, 2020, our loans held for investment
("LHFI") portfolio was comprised of 50.7% commercial and industrial loans (including Paycheck Protection Program
("PPP") and mortgage warehouse loans), and 33.5% commercial real estate loans (including construction/land/land
development). This focus on commercial lending increases the asset sensitivity of our balance sheet and provides potential
growth opportunities due to our limited real estate concentrations. At December 31, 2020, approximately 28.0% of our
deposits were noninterest-bearing demand deposits and our cost of total deposits was 0.53% for the year ended December
31, 2020.
6
Our Markets
We currently operate in the markets of Dallas/Fort Worth and Houston, Texas, North Louisiana and Mississippi, all
of which offer attractive combinations of diversity, growth and stability.
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.
The North Louisiana markets offer a stable economic climate with lower cost associated with deposit gathering and
a reduced cost associated with 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.
Our Banking Services
We are focused on delivering a broad range of relationship-driven financial services tailored to meet the needs of
small and medium-sized businesses, municipalities, high net worth individuals and retail clients. We principally operate in
one business segment, community banking. We are primarily engaged in attracting deposits from individuals and businesses
and using these deposits and borrowed funds to originate commercial, residential mortgage, construction and consumer loans.
We have grown our assets, deposits, and business organically and through acquisitions by building on 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.
A general discussion of the range of financial services we offer follows.
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.
Our loan portfolio at the dates indicated was comprised as follows:
(Dollars in thousands)
Real estate:
Commercial real estate (1)
Construction/land/land development
Residential real estate
Total real estate
PPP
Commercial and industrial
Mortgage warehouse lines of credit
Consumer loans
Total LHFI
December 31,
2020
2019
2018
2017
2016
$
1,387,939 $
1,296,847 $
1,228,402 $
1,083,275 $
1,026,752
531,860
885,120
517,688
689,555
429,660
629,714
322,404
570,583
311,279
414,226
2,804,919
2,504,090
2,287,776
1,976,262
1,752,257
546,519
1,271,343
1,084,001
17,991
—
—
1,343,475
1,272,566
274,659
20,971
207,871
20,892
—
989,220
255,044
20,505
—
1,135,683
201,997
22,138
$
5,724,773 $
4,143,195 $
3,789,105 $
3,241,031 $
3,112,075
____________________________
(1)
Includes commercial real estate loans accounted at fair value.
7
Commercial Real Estate Loans and Construction/Land/Land Development Loans. We primarily originate
commercial real estate loans and construction/land/land development loans that are generally secured by real estate located in
our market areas. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized over
20 to 30 years with balloon payments typically due at the end of five years. These loans are generally underwritten by
addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of any
guarantor, the strength of the tenant (if any), the borrower's liquidity and leverage, management experience, ownership
structure, economic conditions, industry specific trends and collateral. Commercial real estate loans have contributed interest
income of $59.1 million and $64.2 million for the years ended December 31, 2020 and 2019, respectively, while
construction/land/land development loans have contributed interest income of $25.3 million and $27.9 million for the years
ended December 31, 2020 and 2019, respectively.
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. The majority of our residential mortgage loans consist of loans secured by owner occupied,
single family residences. These loans are underwritten by giving consideration to the borrower's ability to pay, stability of
employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio. Consumer loans also include
closed-end second mortgages, home equity lines of credit and our mortgage loans held for sale.
Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes,
including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to
seven years. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and
secondary sources of repayment, the financial strength of any guarantor, the borrower's liquidity and leverage, management
experience, ownership structure, economic conditions, industry specific trends and collateral. Commercial and industrial
loans have contributed interest income of $64.6 million and $69.0 million for the years ended December 31, 2020 and 2019,
respectively.
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. 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. Mortgage warehouse loans have contributed
interest income of $22.3 million and $10.7 million for the years ended December 31, 2020 and 2019, respectively.
Paycheck Protection Program Loans. We have been a participating lender in the PPP established under the CARES
Act and administered by the Small Business Administration (“SBA”). At December 31, 2020, there were approximately
$546.5 million in PPP loans outstanding included in our commercial and industrial loan portfolio, net of $9.6 million in net
deferred loan fees. PPP loans have a maximum maturity of two years and earn interest at 1%. PPP loans are fully guaranteed
by the U.S. government and can be forgiven by the SBA if the borrower uses the proceeds to pay specified expenses. We
believe that the majority of our PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the
program.
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. Borrower creditworthiness is affected by general
economic conditions, including interest rates, inflation and in the case of commercial borrowers, demand for the borrower's
products and services, and other factors affecting the borrower's customers, suppliers and employees.
Mortgage Warehouse loan risk is primarily centered in the borrower’s adherence to agency or investor underwriting
guidelines, while the risk associated with the underlying consumer mortgage loan repayment, as similar to other consumer
loans, depends on the borrower's financial stability and are more likely than commercial loans to be adversely affected by
divorce, job loss, illness and other personal hardships.
Risks associated with real estate loans also include fluctuations in the value of real estate, new job creation trends,
tenant vacancy rates, economic downturns that create the need for temporary payment forbearances and, in the case of
commercial borrowers, the quality of the borrower's management. Consumer loan repayments depend on the borrower's
financial stability and are more likely than commercial loans to be adversely affected by divorce, job loss, illness and other
personal hardships.
8
Lending Philosophy. Our lending philosophy is driven by our commitment to centralized underwriting for all loans,
local market knowledge, long-term customer relationships and a conservative credit culture. To implement this philosophy
we have established various levels of authority and review, including our Credit Risk Management Group. In each loan
review, we emphasize cash flow and secondary and tertiary repayment sources, such as guarantors and collateral. We
generally avoid lending to highly cyclical industries and typically avoid making certain types of loans that we consider to be
higher risk.
Lending Policies. We have established common documentation requirements and policies for each type of loan. We
have also established a corporate loan committee with authority to approve loans up to the legal lending limit of Origin Bank.
During 2020, credit relationships of $5.0 million or greater are generally presented to the corporate loan committee for
approval or ratification of approval prior to committing to the loan. The corporate loan committee meets weekly and on an ad
hoc basis as needed.
Origin Bank's board of directors periodically reviews our lending policies and procedures. In addition, there are legal
restrictions on the maximum amount of loans available for each lending relationship. At December 31, 2020, Origin Bank's
legal lending limit under the Louisiana Banking Law and Regulation O of the Federal Reserve was $203.0 million for secured
loans to a single borrower, $81.2 million for unsecured loans to a single borrower and $117.4 million for loans to a single
insider which represents 15% of the Bank's capital and surplus as required by regulation. At December 31, 2020, 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. Due to multiple sources of
repayment, mortgage warehouse lines of credit, has a general in-house lending limit ranging between $30.0 million and $75.0
million to any one borrower,
Deposits and Other Sources of Funds
An important aspect of our business franchise is the ability to gather deposits. At December 31, 2020, we held $5.75
billion of total deposits and have grown deposits at a compound annual growth rate of 19.1% since December 31, 2003. At
December 31, 2020, 87.8% of our total deposits were core deposits (defined as total deposits excluding time deposits greater
than $250,000 and brokered 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. One area of focus has been to create a deposit-focused sales force of business development bankers who have
extensive contacts and connections with targeted clients and centers of influence throughout our communities. 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.
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 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 $29.6 million, $12.3 million and $9.6
million for the years ended December 31, 2020, 2019 and 2018, respectively.
Insurance
We offer a wide variety of personal and commercial property and casualty insurance products through our wholly
owned insurance subsidiary, Davison Insurance Agency, LLC, doing business as Thomas & Farr Agency, Reeves, Coon &
Funderburg ("RCF") and Simoneaux & Wallace Agency. With 30 years of growth in the insurance industry and
approximately 90 experienced professionals, our agencies have primary market locations across Louisiana, but also serve
customers in Texas, Mississippi, Arkansas and other states across the U.S. We also have a 38% interest in the Lincoln
Agency Group, a full-service insurance agency operating in North Louisiana. In July 2018, we completed the acquisition of
RCF, solidifying our presence as one of the larger independent insurance agencies in North Louisiana. Insurance commission
and fee income was $12.7 million, $12.2 million and $9.7 million for the years ended December 31, 2020, 2019 and 2018,
respectively.
9
Other Banking Services
Given customer demand for increased convenience and account access, we offer a wide range of products and
services, including 24-hour internet banking and voice response information, mobile applications, cash management,
overdraft protection, direct deposit, safe deposit boxes, U.S. savings bonds, automatic account transfers and peer-to-peer
electronic pay solutions and personal financial management solutions.
Information Technology Systems
We continue to make significant investments in our information technology systems for our banking operations and
treasury services to enhance our capabilities to offer new products and overall customer experience, to provide scale for
future growth and acquisitions, and to increase controls and efficiencies in our back-office operations. Our core data
processing platform is from a nationally-recognized bank processing vendor and we leverage the capabilities of a third-party
service provider in developing our network design and architecture. We also actively manage our business continuity plan.
The majority of our other systems, including electronic funds transfer and transaction processing, are operated in-house.
Online banking services and other public-facing web services are performed using third-party service providers. We strive to
follow all recommendations outlined by the Federal Financial Institutions Examination Council and we perform regular tests
of the adequacy of our contingency plans for key functions and systems.
Competition
The banking business is highly competitive, and our profitability will depend in large part on our ability to compete
with other banks and non-bank financial service companies located in our markets for lending opportunities, deposit funds,
financial products, bankers and acquisition targets.
We are subject to vigorous competition in all aspects of our business from banks, savings banks, savings and loan
associations, finance companies, credit unions and other financial service providers, such as money market funds, brokerage
firms, consumer finance companies, asset-based non-bank 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.
Many other commercial banks, savings institutions and credit unions have offices in our primary market areas.
These institutions include many of the largest banks operating in Texas, Louisiana and Mississippi, including various leading
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. To offset these competitive disadvantages, we depend on our reputation as having greater
personal service, consistency, flexibility and the ability to make credit and other business decisions quickly.
Human Capital Resources
Our current number of full-time equivalent employees is 749, all of whom are the recipients of a variety of
initiatives designed to retain, grow, and develop them. Please see the Human Capital Management section referenced as part
of Corporate Governance in our Proxy Statement (Schedule 14A) for our 2021 Annual Meeting of Stockholders for more
information on Origin's human capital initiatives.
None of our employees are represented by any collective bargaining unit or are parties to a collective bargaining
agreement. We believe that our relations with our employees are good.
10
Recent Developments: COVID-19 and the CARES Act
The effects of the COVID-19 pandemic and the governmental and societal response to the virus have negatively
impacted overall economic conditions on an unprecedented scale, resulting in the shuttering of businesses and significant job
loss and continues to impact individuals, households and businesses in a multitude of ways. In recent months, a number of
restrictive government initiatives designed to combat the effects of the COVID-19 pandemic have been eased on a national
level and specifically in the Company's markets of Texas, Louisiana and Mississippi, allowing businesses to reopen at
varying capacity levels there, which has bolstered commercial activity to some degree. At the end of 2020, the U.S. Food and
Drug Administration (“FDA”) approved the first two COVID-19 vaccines for deployment and distribution in the United
States and a number of other vaccines are currently in development or awaiting FDA approval. However, the risk of a
resurgence in infections and possible reimplementation of new or additional restrictions at the national and local level to
combat the COVID-19 pandemic remains significant. The duration and severity of the COVID-19 pandemic remain
impossible to predict. As the trend in the number of COVID-19 cases continues to fluctuate nationally, the potential exists for
further resurgences to occur.
We have continued to meet our customers' needs while keeping the safety and well-being of our employees and
customers as our top priority. We implemented a COVID-19 hotline and a temporary pandemic Paid Time Off Policy to
assist our employees, and our offices and branches all remain open with all drive-thrus fully operational. We have maintained
social distancing measures for our employees working in our offices, including appointment-only restricted lobby access and
requiring employees to wear face masks unless working in an office or other location that permits social distancing. We have
also enhanced our sanitation protocols, implemented return to work screening protocols following potential exposures, as
well as other measures consistent with applicable federal, state, and local guidelines to promote the safety and health of our
employees and customers. To allow for more normalized customer operations, we installed thermal kiosks for temperature
checks at the entrance of each location and will evaluate any additional safety protocols to allow unrestricted lobby access in
the future, if the circumstances allow. During the year ended December 31, 2020, we have made $700,900 in donations and
contributions to various institutions as part of our initiative to invest a portion of our PPP loan income within the
communities we serve.
We are proactively offering a range of policies and programs to accommodate customer hardship across our
business. In March and April 2020, former President Trump signed into law two relief bills, the CARES Act and the
Paycheck Protection Program and Health Care Enhancement Act (the “PPP/HCE Act”), which are intended to provide
emergency relief to several groups and individuals impacted by the COVID-19 pandemic. Among the numerous provisions
contained in the CARES Act is the creation of the $349 billion PPP, which provides for small business, including some of our
customers, to receive forgivable SBA-backed loans to pay certain employee compensation and other basic expenses. The
PPP/HCE Act included an additional $310 billion for PPP funding. The Consolidated Appropriations Act, 2021, provided
additional funding for the PPP of approximately $284 billion and allows eligible borrowers, including certain borrowers who
already received a PPP loan, to apply for “second draw” PPP loans through March 31, 2021. We established an SBA
Paycheck Protection Program task force and have approved $546.5 million in loans as of December 31, 2020, under this
program. We also have offered forbearance (90-day extensions) and modification agreements to our customers affected by
the COVID-19 pandemic. We continue to track pandemic-impacted relationships and general economic conditions in our
markets.
Due to the ongoing economic impact of the COVID-19 pandemic and governmental efforts to contain it, we believe
that certain business sectors of the U.S. economy may be more affected than others. Some of the sectors in which we operate
that may experience a more significant impact include hotel, energy, non-essential retail, restaurant and assisted living.
Excluding PPP loans, at December 31, 2020, we had $538.6 million, or 10.4%, of our LHFI invested in these sectors. The
allowance for loan credit losses on these sectors was $17.2 million at December 31, 2020, and the allowance for loan credit
losses on COVID-19 impacted sectors as a percentage of total LHFI in these sectors was 3.19%. While we have increased our
allowance for loan credit losses, the allowance is a current estimate and may be subject to change. We continue to monitor
our loans, particularly in these sectors.
Our allowance for loan credit losses as a percentage of total LHFI was 1.51% at December 31, 2020, compared to
0.91% at December 31, 2019, respectively, primarily due to the deterioration in macroeconomic variables related to the
COVID-19 pandemic. As more information becomes available, including our ongoing evaluation of the economic impact of
the COVID-19 pandemic on us, our employees and our customers, governmental responses to recent increases in COVID-19
infection rates, there could be further increases to our allowance for loan credit losses.
11
Additionally, in light of the volatility and disruptions in the capital and credit markets resulting from the COVID-19
pandemic and its negative impact on the economy, we took a number of precautionary actions to enhance our financial
flexibility by bolstering our liquidity to ensure we have adequate cash readily available to meet both expected and unexpected
funding needs. Origin Bank completed an offering in February 2020 of $70.0 million in aggregate principal amount of 4.25%
fixed-to-floating rate subordinated notes due 2030, and the holding company completed an offering in October 2020 of $80.0
million in aggregate principal amount of 4.50% fixed to floating rate subordinated notes due 2030.
President Biden has indicated that the COVID-19 pandemic will remain a governmental priority in 2021. Currently,
there are ongoing legislative efforts to provide further relief to businesses and financial institutions in response to the
continuing economic effects being caused by the COVID-19 pandemic. However, the nature of any future economic stimulus
legislation as well as the consequences and effects of such legislation cannot be predicted accurately at this time.
There is significant ongoing uncertainty surrounding the course of the COVID-19 pandemic, including the possible
implementation of new or additional restrictions on economic activity, the deployment of the vaccine, and the magnitude and
duration of the continued disruption to economic activity and how this disruption will continue to impact demand for our
products and services. It is difficult to forecast specific performance targets or time frames while the effects of the COVID-19
pandemic continue to be felt. We are actively monitoring and responding to developments across our markets related to
measures designed to stop the spread of COVID-19, including social, financial, legal, regulatory and governmental measures
and the impact on our business, customers and employees.
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 make available at this address, free of charge, our Annual Report on Form
10-K, our annual reports to stockholders, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the
Securities and Exchange Commission ("SEC"). These documents are also available on the SEC's website at www.sec.gov.
The information contained on, or accessible from, our website does not constitute a part of this Annual Report on Form 10-K
and is not incorporated by reference herein.
Regulation and Supervision
General
The U.S. banking industry is highly regulated under federal and state law. Consequently, our growth and earnings
performance will be affected not only by management decisions and general and local economic conditions, but also by the
statutes administered by, and the regulations and policies of, various governmental regulatory authorities. These authorities
include the Federal Reserve, Federal Deposit Insurance Corporation ("FDIC"), Louisiana Office of Financial Institutions,
Consumer Financial Protection Bureau ("Bureau"), Internal Revenue Service and state taxing authorities. The effect of these
statutes, regulations and policies, and any changes to such statutes, regulations and policies, can be significant and cannot be
predicted.
The primary goals of the bank regulatory scheme are to maintain a safe and sound banking system, facilitate the
conduct of sound monetary policy and promote fairness and transparency for financial products and services. The system of
supervision and regulation applicable to us and our subsidiaries establishes a comprehensive framework for their respective
operations and is intended primarily for the protection of the FDIC's Deposit Insurance Fund, the Bank's depositors and the
public, rather than our stockholders or creditors. The description below summarizes certain elements of the bank regulatory
framework applicable to us. This description is not intended to describe all laws and regulations applicable to us and our
subsidiaries, and the description is qualified in its entirety by reference to the full text of the statutes, regulations, policies,
interpretive letters and other written guidance that are described herein.
12
Bank Holding Company Regulation
Because we control Origin Bank, we are subject to regulation under the Bank Holding Company Act of 1956, as
amended, and to supervision, examination and enforcement by the Federal Reserve. The Bank Holding Company Act and
other federal laws subject bank holding companies to particular restrictions on the types of activities in which they may
engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of
laws and regulations. The Federal Reserve's jurisdiction also extends to any company that we directly or indirectly control,
such as any nonbank subsidiaries and other companies in which we own a controlling investment.
Financial Services Industry Reform. The Dodd-Frank Act, which was enacted in 2010, broadly affects the financial
services industry by implementing changes to the financial regulatory landscape aimed at strengthening the sound operation
of the financial services sector. The Dodd-Frank Act, as amended, includes provisions that, among other things:
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apply the same leverage and risk-based capital requirements that cover insured depository institutions to bank
holding companies with total assets in excess of $3 billion;
establish the Bureau to, among other things, establish and implement rules and regulations applicable to all entities
offering consumer financial products or services;
permanently increase FDIC deposit insurance maximum to $250,000 and broaden the base for FDIC insurance
assessments from the amount of insured deposits to average total consolidated assets less average tangible equity
during the assessment period, subject to certain adjustments;
eliminate the upper limit for the reserve ratio designated by the FDIC each year for the Deposit Insurance Fund,
increase the minimum designated reserve ratio of the deposit insurance fund from 1.15% to 1.35% of the estimated
amount of total insured deposits, and eliminate the requirement that the FDIC pay dividends to depository
institutions when the reserve ratio exceeds certain thresholds;
permit banks meeting supervisory and financial criteria to branch across state lines if the laws of the state where the
new branch is to be established would permit the establishment of the branch if it were part of a bank that was
chartered by such state;
repeal previous federal prohibitions on the payment of interest on demand deposits, thereby permitting depository
institutions to pay interest on business transaction and other accounts;
require bank holding companies and banks to be "well capitalized" and "well managed" in order to acquire banks
located outside of their home state and require any bank holding company electing to be treated as a financial
holding company to be "well capitalized" and "well managed;"
direct the Federal Reserve to establish limitations on interchange fees charged by debit card issuers with $10 billion
or more in assets under a "reasonable and proportional cost" per transaction standard;
prohibit a banking entity under a provision known as the Volcker Rule from engaging in proprietary trading or
holding an ownership interest in or sponsoring a hedge fund or a private equity fund;
increase regulation of consumer protections regarding mortgage originations, including originator compensation,
minimum repayment standards, and prepayment consideration;
implement corporate governance revisions, including with regard to executive compensation and proxy access by
stockholders; and
increase the authority of the Federal Reserve to examine us and any nonbank subsidiaries.
13
In May 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act ("EGRRCPA") was signed
into law. While EGRRCPA preserves the fundamental elements of the post-Dodd-Frank Act regulatory framework, it
includes modifications that are intended to result in meaningful regulatory relief both from certain provisions of the Dodd-
Frank Act and from certain regulatory capital rules for smaller and certain regional banking organizations. Among other
things, EGRRCPA exempts certain banking entities with no more than $10 billion in assets from the Volcker Rule, allows
certain banking organizations with less than $10 billion in assets to avoid generally applicable capital requirements if they
maintain a specific "community bank leverage ratio," revises the capital treatment of certain commercial real estate loans, and
amends certain Truth in Lending Act requirements for residential mortgage loans.
Even after the EGRRCPA modifications, the Dodd-Frank Act may impact the profitability of our business activities,
require changes to certain of our business practices, impose upon us more stringent capital, liquidity and leverage
requirements or otherwise adversely affect our business. These changes may also require us to invest significant management
attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory
requirements. Failure to comply with any new requirements may negatively impact our results of operations and financial
condition.
Revised Rules on Regulatory Capital. The Federal Reserve monitors our capital adequacy at the holding company
level by using a combination of risk-based and leverage capital ratios and considers our capital levels when taking action on
various types of applications and when conducting supervisory activities. The risk-based capital standards are designed to
make regulatory capital requirements more sensitive to differences in risk profiles among financial institutions and their
holding companies, to account for off-balance sheet exposure, and to minimize disincentives for holding liquid assets. The
regulatory capital rules applicable to us were revised, effective January 1, 2015, under the Basel III regulatory capital
framework. These rules include a common equity Tier 1 risk-based capital requirement and establish criteria that instruments
must meet to be considered common equity Tier 1 capital, additional Tier 1 capital or Tier 2 capital. These enhancements are
designed to both improve the quality and increase the quantity of capital required to be held by banking organizations, better
equipping the U.S. banking system to cope with adverse economic conditions. Under these rules, we are required to satisfy
four minimum capital ratios: (1) a Tier 1 capital to average total consolidated assets ratio, or "leverage ratio," of at least 4.0%,
(2) a common equity Tier 1 capital to risk-weighted assets ratio, or "common equity Tier 1 risk-based capital ratio," of 4.5%,
(3) a Tier 1 capital to risk-weighted assets ratio, or "Tier 1 risk-based capital ratio," of at least 6.0%, and (4) a total risk-based
capital (Tier 1 plus Tier 2) to risk-weighted assets ratio, or "total risk-based capital ratio," of at least 8.0%.
The capital rules also require bank holding companies to maintain a capital conservation buffer above the minimum
capital requirements composed solely of common equity Tier 1 capital in order to avoid certain restrictions on capital
distributions and discretionary bonus payments to executive officers. Now fully phased in, the capital conservation buffer
requirement effectively requires banking organizations to maintain common equity Tier 1 capital of at least 2.5% above the
minimum risk-based capital requirements set forth above. This buffer is intended to help to ensure that banking organizations
conserve capital when it is most needed, allowing them to better weather periods of economic stress.
The revised regulatory capital rules implement stricter eligibility criteria for regulatory capital instruments, exclude
certain instruments, such as trust preferred securities (other than grandfathered trust preferred securities, such as those that we
have issued), from Tier 1 capital going forward, and require new adjustments to and deductions from capital for minority
interests, mortgage servicing assets, deferred tax assets and certain investments in the capital of unconsolidated financial
institutions. In addition, the rules require that most regulatory capital deductions be made from common equity Tier 1 capital.
Compared to the prior capital rules, the current regulatory capital rules also set forth certain changes in the methods
of calculating certain risk-weighted assets, which in turn will affect the calculation of risk-based capital ratios. Under the
rules, higher or more sensitive risk weights have been assigned to various categories of assets, including, certain credit
facilities that finance the acquisition, development or construction of real property, certain exposures or credits that are 90
days past due or on nonaccrual status, foreign exposures and certain corporate exposures. In addition, these rules include
greater recognition of collateral and guarantees, and revised capital treatment for derivatives and repo-style transactions.
These capital requirements are minimum requirements. The Federal Reserve may also set higher capital
requirements if warranted by our risk profile, economic conditions impacting our market or other circumstances particular to
our organization. For example, holding companies experiencing internal growth or making acquisitions are expected to
maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on
intangible assets. Failure to meet capital guidelines could subject us to a variety of enforcement remedies, including issuance
of a capital directive or restrictions on our operations and expansionary activities.
14
EGRRCPA exempts most banking organizations with less than $10 billion in total consolidated assets from the risk-
based and leverage capital rules and the capital conservation buffer if they maintain a "community bank leverage
ratio" ("CBLR"). In order to qualify for the CBLR exemption, a banking organization may not have off-balance sheet
exposures totaling more than 25% of its assets or trading assets and liabilities totaling more than 5% of its assets. The federal
agencies initially set the CBLR at 9%. The CARES Act temporarily reduced the CBLR to 8% until the earlier of December
31, 2020 or the expiration of the COVID-19-related national emergency declaration, and rules issued by the federal banking
agencies provide a graduated transition back to the 9% threshold by January 1, 2022. We have not elected to use the CBLR
framework.
Imposition of Liability for Undercapitalized Subsidiaries. Federal banking regulations require FDIC-insured banks
that become undercapitalized to submit a capital restoration plan. The capital restoration plan of a bank controlled by a bank
holding company will not be accepted by the regulators unless each company having control of the undercapitalized
institution guarantees the subsidiary's compliance with the capital restoration plan up to a certain specified amount. Any such
guarantee from a bank holding company is entitled to a priority of payment in bankruptcy.
The aggregate liability of the holding company of an undercapitalized bank in such a guarantee is limited to the
lesser of 5% of the bank's assets at the time it became undercapitalized or the amount necessary to cause the institution to be
adequately capitalized. The federal banking agencies have greater power in situations where a bank becomes significantly or
critically undercapitalized or fails to submit a capital restoration plan. For example, a bank holding company controlling such
a bank may be required to obtain prior Federal Reserve approval of proposed dividends or to divest the bank or other
affiliates.
Acquisitions by Bank Holding Companies. We must obtain the prior approval of the Federal Reserve before (1)
acquiring more than 5% of the voting stock of any bank or other bank holding company, (2) acquiring all or substantially all
of the assets of any bank or bank holding company, or (3) merging or consolidating with any other bank holding company. In
evaluating applications with respect to these transactions, the Federal Reserve is required to consider, among other things, the
effect of the acquisition on competition, the financial condition, managerial resources and future prospects of the bank
holding company and the banks concerned, the convenience and needs of the communities to be served (including the record
of performance under the Community Reinvestment Act), the effectiveness of the parties in combating money laundering
activities, and the extent to which the proposed acquisition would result in greater or more concentrated risks to the stability
of the U.S. banking or financial system. The Federal Reserve can deny an application based on the above criteria or other
considerations. In addition, as a condition to receiving regulatory approval, the Federal Reserve can impose conditions on the
acquirer or the business to be acquired, which may not be acceptable or, if acceptable, may reduce the benefit of a proposed
acquisition.
Control Acquisitions. Subject to various exceptions, the Bank Holding Company Act and the Change in Bank
Control Act, together with related regulations, require Federal Reserve approval or non-objection prior to any person or
company acquiring "control" of a bank holding company. Although "control" is based on all of the facts and circumstances
surrounding the investment, control under the Bank Holding Company Act is conclusively presumed to exist if a person or
company acquires 25% of more of any class of voting securities of the bank holding company, controls the election of a
majority of the board of directors, or is able to exercise a controlling influence over the management or policies of the
company. Under the Change in Bank Control Act, control of a bank holding company is presumed to exist (subject to
rebuttal) if the acquiring person or entity will own 10% or more of any class of voting securities immediately following the
transaction and either no other person will hold a greater percentage of that class of voting securities after the acquisition or
the bank holding company has publicly registered securities.
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Regulatory Restrictions on Dividends and Stock Repurchases. As a bank holding company, we are subject to certain
restrictions on dividends under applicable banking laws and regulations. The Federal Reserve has issued a supervisory letter
that provides that a bank holding company should not pay dividends unless: (1) its net income over the last four quarters (net
of dividends paid) has been sufficient to fully fund the dividends; (2) the prospective rate of earnings retention is consistent
with the capital needs, asset quality and overall financial condition of the bank holding company; and (3) the bank holding
company will continue to meet, and is not in danger of failing to meet, minimum regulatory capital adequacy ratios. Failure
to comply with the supervisory letter could result in a supervisory finding that the bank holding company is operating in an
unsafe and unsound manner. In addition, our ability to pay dividends may also be limited if we must maintain the capital
conservation buffer under the regulatory capital rules. In the current financial and economic environment, the Federal
Reserve Board has indicated that bank holding companies should carefully review their dividend policy and has discouraged
payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong. The Federal
Reserve may further restrict the payment of dividends by engaging in supervisory action to restrict dividends or by requiring
us to maintain a higher level of capital then would otherwise be required under the capital rules. Additionally, the Federal
Reserve's Regulation Y generally requires a bank holding company to provide the Federal Reserve with prior notice of any
redemption or repurchase of its own equity securities, if the consideration to be paid, together with the consideration paid for
any repurchases or redemptions in the preceding year, is equal to 10.0% or more of the bank holding company's consolidated
net worth. The Federal Reserve may oppose the transaction if it believes that the transaction would constitute an unsafe or
unsound practice or would violate any law or regulation. In certain circumstances, the Federal Reserve could take the position
that paying a dividend would constitute an unsafe or unsound banking practice.
Source of Strength. Under longstanding Federal Reserve policy, which has been codified by the Dodd-Frank Act,
we are expected to act as a source of financial strength to, and to commit resources to support, Origin Bank. This support may
be required at times when we may not otherwise be inclined to provide it. In addition, any capital loans that we make to
Origin Bank are subordinate in right of payment to deposits and to certain other indebtedness of Origin Bank. As discussed
above, in certain circumstances, we could also be required to guarantee the capital restoration plan of Origin Bank, if it
became undercapitalized for purposes of the Federal Reserve's prompt corrective action regulations. In the event of our
bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of Origin Bank under a capital
restoration plan would be assumed by the bankruptcy trustee and entitled to a priority of payment.
Scope of Permissible Activities. In general, the Bank Holding Company Act limits the activities permissible for bank
holding companies to the business of banking, managing or controlling banks and such other activities as the Federal Reserve
has determined to be so closely related to banking as to be properly incident thereto. Permissible activities for a bank holding
company include, among others, operating a mortgage, finance, credit card or factoring company; performing certain data
processing operations; providing investment and financial advice; acting as an insurance agent for certain types of credit-
related insurance; leasing personal property on a full-payout, nonoperating basis; and providing certain stock brokerage
services. A bank holding company may also make an investment of up to 5% of any class of voting securities of any
company that is otherwise a non-controlling investment.
A bank holding company may elect to become a financial holding company, as we have done, and may thereby
engage in activities that are (1) financial in nature or incidental to such financial activity or (2) complementary to a financial
activity and that do not pose a substantial risk to the safety and soundness of a depository institution or to the financial system
generally. These activities include securities dealing, underwriting and market making, insurance underwriting and agency
activities, merchant banking and insurance company portfolio investments. Expanded financial activities of financial holding
companies generally will be regulated according to the type of such financial activity: banking activities by banking
regulators, securities activities by securities regulators and insurance activities by insurance regulators. A bank holding
company may elect to be treated as a financial holding company if it is "well capitalized" and "well managed" and if each of
its depository institution subsidiaries is "well capitalized" and "well managed," and has received a rating of not less than
Satisfactory on each such institution's most recent examinations under the Community Reinvestment Act ("CRA"). We rely
on our financial holding company status to engage in insurance agency activities.
If we fail to continue to meet any of the requirements for financial holding company status, we may be required to
enter into an agreement with the Federal Reserve to comply with all applicable capital and management requirements within
a certain period of time or lose our financial holding company designation, which could also result in a requirement to divest
any businesses for which financial holding company status was required. In addition, the Federal Reserve may place
limitations on our ability to conduct the broader financial activities permissible for financial holding companies during any
period of noncompliance.
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Volcker Rule. Section 13 of the Bank Holding Company Act, commonly known as the "Volcker Rule," has generally
prohibited insured depository institutions and their affiliates from sponsoring or acquiring an ownership interest in certain
investment funds, including hedge funds and private equity funds. The Volcker Rule also places restrictions on proprietary
trading. EGRRCPA exempts insured depository institutions with $10 billion or less in total consolidated assets and with total
trading assets and liabilities of less than 5% of total consolidated assets from the Volcker Rule, and the Federal Reserve has
effectively extended the exemption to bank holding companies.
Safe and Sound Banking Practices. Bank holding companies are not permitted to engage in unsafe and unsound
banking practices. The Federal Reserve has broad authority to prohibit activities of bank holding companies and their
nonbanking subsidiaries which represent unsafe and unsound banking practices, result in breaches of fiduciary duty or which
constitute violations of laws or regulations, and can assess civil money penalties or take other enforcement action to remedy
such activities, practices or violations.
Bank Regulation
Origin Bank is a commercial bank chartered under the laws of the State of Louisiana and is a member of the Federal
Reserve System. In addition, its deposits are insured by the FDIC to the maximum extent permitted by law. As a result,
Origin Bank is subject to extensive regulation, supervision and examination by the Louisiana Office of Financial Institutions
and the Federal Reserve. As an insured depository institution, the bank is subject to regulation by the FDIC in its capacity as
deposit insurer, although the Federal Reserve is the Bank's primary federal regulator. Origin Bank is also subject to secondary
oversight by state banking authorities in other states in which it maintains banking offices. The bank regulatory agencies have
the power to enforce compliance with applicable banking laws and regulations. These requirements and restrictions include
requirements to maintain reserves against deposits, restrictions on the nature and amount of loans that may be made and the
interest that may be charged thereon and restrictions relating to investments and other activities of Origin Bank. Origin Bank
also is subject to consumer financial protection regulations that are promulgated by the Bureau.
Capital Adequacy Requirements. The Federal Reserve and Louisiana Office of Financial Institutions monitor the
capital adequacy of Origin Bank by using a combination of risk-based and leverage capital ratios similar to those applied at
the holding company level. These agencies consider the bank's capital levels when taking action on various types of
applications and when conducting supervisory activities related to the safety and soundness of the bank and the banking
system. Under the revised capital rules that became effective on January 1, 2015, Origin Bank is required to maintain four
minimum capital ratios: (1) a leverage ratio of at least 4.0%, (2) a common equity Tier 1 risk-based capital ratio of 4.5%, (3)
a Tier 1 risk-based capital ratio of at least 6.0%, and (4) a total risk-based capital ratio of at least 8.0%. The capital rules also
require FDIC-insured banks to maintain a capital conservation buffer of common equity Tier capital of at least 2.5% above
the minimum risk-based capital ratios to avoid certain restrictions on capital distributions and discretionary bonus payments
to executive officers.
These capital requirements are minimum requirements. The Federal Reserve or Louisiana Office of Financial
Institutions may also set higher capital requirements if warranted by the risk profile of Origin Bank, economic conditions
impacting its markets or other circumstances particular to Origin Bank. For example, Federal Reserve guidance provides that
higher capital may be required to take adequate account of, among other things, interest rate risk and the risks posed by
concentrations of credit, nontraditional activities or securities trading activities. In addition, the Federal Reserve's prompt
corrective action regulations discussed below may, in effect, increase the minimum regulatory capital ratios for banking
organizations. Failure to meet capital guidelines could subject Origin Bank to a variety of enforcement remedies, including
issuance of a capital directive, restrictions on business activities and other measures under the Federal Reserve's prompt
corrective action regulations.
The CBLR framework is available to banks with less than $10 billion in total consolidated assets that do not have
more than 25% of its assets in off-balance sheet exposures, nor may it have more than 5% of assets in trading assets and
liabilities. We discuss the CBLR further above under “Bank Holding Company Regulation—Revised Rules on Regulatory
Capital.” Origin Bank has not elected to use the CBLR framework.
Corrective Measures for Capital Deficiencies. The federal banking regulators are required by the Federal Deposit
Insurance Act to take "prompt corrective action" with respect to capital-deficient banks that are FDIC-insured. For the
purpose of this framework, every bank is placed in one of the following five capital tiers: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." The bank's capital tier
depends upon how its capital levels compare with various relevant capital measures and certain other factors, as established
by regulation.
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To be well capitalized, a bank must have a total risk-based capital ratio of at least 10.0%, a Tier 1 risk-based capital
ratio of at least 8.0%, a common equity Tier 1 risk-based capital ratio of at least 6.5%, and a leverage ratio of at least 5.0%,
and must not be subject to any written agreement, order or directive requiring it to maintain a specific capital level for any
capital measure. At December 31, 2020, Origin Bank met the requirements to be categorized as well capitalized under the
prompt corrective action framework currently in effect.
As a bank's capital decreases, the bank comes under increasing scrutiny by its primary federal regulators. Banks that
are adequately, but not well, capitalized may not accept, renew or rollover brokered deposits except with a waiver from the
FDIC and are subject to restrictions on the interest rates that can be paid on their deposits. The Federal Reserve's prompt
corrective action regulations also generally prohibit a bank from making any capital distributions (including payment of a
dividend) or paying any management fee to its parent holding company if an otherwise adequately capitalized bank would
thereafter be undercapitalized. Undercapitalized banks are also subject to growth limitations, may not accept, renew or
rollover brokered deposits, and are required to submit a capital restoration plan. The Federal Reserve may not accept such a
plan without determining, among other things, that the plan is based on realistic assumptions and is likely to succeed in
restoring the bank's capital. Significantly undercapitalized banks may be subject to a number of additional requirements and
restrictions, including orders to sell sufficient shares or obligations to become adequately capitalized, limitations on asset
growth, and cessation of receipt of deposits from correspondent banks. Generally, subject to a narrow exception, the FDIC
must appoint a receiver or conservator for an institution that is critically undercapitalized. The capital classification of a bank
also affects the bank's ability to engage in certain activities and the deposit insurance premiums paid by the bank.
Bank Mergers. Section 18(c) of the Federal Deposit Insurance Act, known as the "Bank Merger Act," requires the
written approval of a bank's primary federal regulator before the bank may (1) acquire through merger or consolidation, (2)
purchase or otherwise acquire the assets of, or (3) assume the deposit liabilities of another bank. The Bank Merger Act
prohibits the reviewing agency from approving any proposed merger transaction that would result in a monopoly, or would
further a combination or conspiracy to monopolize or to attempt to monopolize the business of banking in any part of the
United States. Similarly, the Bank Merger Act prohibits the reviewing agency from approving a proposed merger transaction
the effect of which in any section of the country may be to substantially lessen competition, or to tend to create a monopoly,
or which in any other manner would be in restraint of trade. An exception may be made in the case of a merger transaction
the effect of which would be to substantially lessen competition, tend to create a monopoly, or otherwise restrain trade, if the
reviewing agency finds that the anticompetitive effects of the proposed transaction are clearly outweighed in the public
interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.
In every proposed merger transaction, the reviewing agency must also consider the financial and managerial
resources and future prospects of the existing and proposed institutions, the convenience and needs of the community to be
served, and the effectiveness of each insured depository institution involved in the proposed merger transaction in combating
money-laundering activities.
Branching. Under Louisiana law, Origin Bank is permitted to establish additional branch offices within Louisiana,
subject to the approval of the Louisiana Office of Financial Institutions. As a result of the Dodd-Frank Act, the Bank may
also establish additional branch offices outside of Louisiana, subject to prior regulatory approval, so long as the laws of the
state where the branch is to be located would permit a state bank chartered in that state to establish a branch and the Bank
meets certain supervisory and financial criteria. Any new branch, whether located inside or outside of Louisiana, must also be
approved by the Federal Reserve, as the Bank's primary federal regulator. Origin Bank may also establish offices in other
states by merging with banks or by purchasing branches of other banks in other states, subject to certain restrictions.
Restrictions on Transactions with Affiliates and Insiders. Federal law strictly limits the ability of banks to engage in
transactions with their affiliates, including their bank holding companies. Sections 23A and 23B of the Federal Reserve Act,
and Federal Reserve's Regulation W, impose quantitative limits, qualitative standards and collateral requirements on certain
transactions by a bank with, or for the benefit of, its affiliates. Generally, Sections 23A and 23B (1) limit the extent to which
the bank or its subsidiaries may engage in "covered transactions" with any one affiliate to an amount equal to 10% of the
bank's capital stock and surplus, and limit the aggregate of all such transactions with all affiliates to an amount equal to 20%
of its capital stock and surplus, and (2) require that a broader set of affiliate transactions be on terms substantially the same,
or at least as favorable, to the bank or subsidiary as those that would be offered to a non-affiliate. The term "covered
transaction" includes the making of loans to an affiliate, the purchase of assets from an affiliate, the issuance of a guarantee
on behalf of an affiliate, and several other types of transactions.
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The Dodd-Frank Act expanded the coverage and scope of the limitations on affiliate transactions within a banking
organization, including an expansion of what types of transactions are covered transactions to include credit exposures related
to derivatives, repurchase agreements and securities lending arrangements and an increase in the amount of time for which
collateral requirements regarding covered transactions must be satisfied.
Federal law also limits a bank's authority to extend credit to its directors, executive officers and 10% stockholders,
as well as to entities controlled by such persons. Among other things, extensions of credit to insiders are required to be made
on terms that are substantially the same as, and follow credit underwriting procedures that are not less stringent than, those
prevailing for comparable transactions with unaffiliated persons. Also, the terms of such extensions of credit may not involve
more than the normal risk of repayment or present other unfavorable features and may not exceed certain limitations on the
amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of
the bank's capital. Loans to senior executive officers of a bank are subject to additional restrictions. Insiders may be subject to
enforcement actions for accepting loans in violation of applicable restrictions.
Regulatory Restrictions on Dividends. Origin Bank is subject to certain restrictions on dividends under federal and
state laws, regulations and policies. In general, Origin Bank may pay dividends to us without the approval of the Louisiana
Office of Financial Institutions so long as the amount of the dividend does not exceed the bank's net profits earned during the
current year combined with its retained net profits of the immediately preceding year. The bank is required to obtain the
approval of the Louisiana Office of Financial Institutions for any amount in excess of this threshold. Additionally, to pay
dividends to us, under Louisiana law Origin Bank must have unimpaired surplus that equals or exceeds fifty percent of its
outstanding capital stock. Further, under federal law, Origin Bank may not pay any dividend to us if it is undercapitalized or
the payment of the dividend would cause it to become undercapitalized. In addition, Origin Bank may not declare or pay a
dividend if the total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of
its net income during the current calendar year and the retained net income of the prior two calendar years, unless the
dividend has been approved by the Federal Reserve. The Federal Reserve may further restrict the payment of dividends by
requiring the bank to maintain a higher level of capital than would otherwise be required to be adequately capitalized for
regulatory purposes. Under the capital rules, the failure to maintain an adequate capital conservation buffer, as discussed
above, may also result in dividend restrictions. Moreover, if, in the opinion of the Federal Reserve, Origin Bank is engaged in
an unsound practice (which could include the payment of dividends), the Federal Reserve may require, generally after notice
and hearing, the bank to cease such practice. The Federal Reserve has indicated that paying dividends that deplete a
depository institution's capital base to an inadequate level would be an unsafe banking practice. The Federal Reserve has also
issued guidance providing that a member bank generally should pay dividends only when (1) the bank's net income available
to common stockholders over the past year has been sufficient to fully fund the dividends and (2) the prospective rate of
earnings retention appears consistent with the bank's capital needs, asset quality, and overall financial condition.
Incentive Compensation Guidance. The federal banking agencies have issued comprehensive guidance on incentive
compensation policies intended to ensure that the incentive compensation policies of banking organizations do not undermine
the safety and soundness of those organizations by encouraging excessive risk-taking. The incentive compensation guidance
sets expectations for banking organizations concerning their incentive compensation arrangements and related risk
management, control and governance processes. The incentive compensation guidance, which covers all employees that have
the ability to materially affect the risk profile of an organization, either individually or as part of a group, is based upon three
primary principles: (1) balanced risk- taking incentives, (2) compatibility with effective controls and risk management and (3)
strong corporate governance. Any deficiencies in compensation practices that are identified may be incorporated into the
organization's supervisory ratings, which can affect its ability to make acquisitions or take other actions. In addition, under
the incentive compensation guidance, a banking organization's federal supervisor may initiate enforcement action if the
organization's incentive compensation arrangements pose a risk to the safety and soundness of the organization. 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. The scope and content of the U.S. banking regulators' policies on
executive compensation are continuing to develop and evolve. The agencies (together with certain other federal agencies)
proposed a regulation in 2016 on incentive compensation (as required by the Dodd-Frank Act) but have not finalized it.
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Deposit Insurance Assessments. FDIC-insured banks are required to pay deposit insurance assessments to the FDIC.
The amount of the assessment is based on the size of the bank's assessment base, which is equal to its average consolidated
total assets less its average tangible equity, and its risk classification under an FDIC risk-based assessment system. The FDIC
has revised its methodology for determining assessments from time to time. The current methodology, which has been in
place since the third quarter of 2016, has a range of assessment rates from 1.5 basis points to 30 basis points on insured
deposits. An institution’s assessment rate is determined by a number of factors and metrics, including the weighted average of
the institution’s CAMELS composite rating. The rate may be adjusted by the institution’s long-term unsecured debt and its
brokered deposits. The FDIC may adjust assessment rates downward as the reserve ratio of the Deposit Insurance Fund
exceeds 2.0% and higher thresholds. The FDIC can also impose special assessments in certain instances. If there are
additional bank or financial institution failures or if the FDIC otherwise determines to increase assessment rates, Origin Bank
may be required to pay higher FDIC insurance premiums.
Community Reinvestment Act. The CRA and its implementing regulations are intended to encourage banks to help
meet the credit needs of their entire assessment area, including low and moderate income neighborhoods, consistent with the
safe and sound operations of such banks. These regulations also provide for regulatory assessment of a bank's CRA
performance record when considering applications to establish branches, merger applications and applications to acquire the
assets and assume the liabilities of another bank. The CRA requires federal banking agencies to make public their ratings of
banks' performance under the CRA. In the case of a bank holding company transaction, the CRA performance record of the
subsidiary banks of the bank holding companies involved in the transaction are reviewed in connection with the filing of an
application to acquire ownership or control of shares or assets of a bank or to merge with any other bank holding company.
An unsatisfactory CRA record could substantially delay approval or result in denial of an application. In addition, a financial
holding company may face limitations on activities and acquisitions if its subsidiary depository institutions do not have a
least a Satisfactory rating. A satisfactory or better CRA rating also is a prerequisite for certain regulatory benefits, such as
expedited processing of applications. Origin Bank received a Satisfactory rating in its most recent CRA examination.
Financial Modernization. Under the Gramm-Leach-Bliley Act, banks may establish financial subsidiaries to engage,
subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting as principal,
insurance company portfolio investment, real estate development, real estate investment, annuity issuance and merchant
banking activities. To do so, a bank must be well capitalized, well managed and have a CRA rating from its primary federal
regulator of Satisfactory or better. Subsidiary banks of financial holding companies or banks with financial subsidiaries must
remain well capitalized and well managed in order to continue to engage in activities that are financial in nature without
regulatory actions or additional restrictions. Such actions or restrictions could include divestiture of the financial subsidiary
or subsidiaries. In addition, a financial holding company or a bank may not acquire a company that is engaged in activities
that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank has a CRA rating
of Satisfactory of better.
Concentrated Commercial Real Estate Lending Regulations. The federal banking regulatory agencies have
promulgated guidance governing financial institutions with concentrations in commercial real estate lending. The guidance
provides that a bank may have a concentration in commercial real estate lending if (1) total reported loans for construction,
land development, and other land represent 100.0% or more of total capital or (2) total commercial real estate loans represent
300.0% or more of the bank's total capital and the outstanding balance of the bank's commercial real estate loan portfolio has
increased 50% or more during the prior 36 months. If a concentration is present, the bank will be subject to further regulatory
scrutiny with respect to its risk management practices for commercial real estate lending. At December 31, 2020, Origin
Bank's total reported loans for construction, land development, and other land represented less than 100% of the bank's total
capital, and its total commercial real estate loans represented less than 300% of the bank's total capital.
Consumer Laws and Regulations. Origin Bank is subject to numerous laws and regulations intended to protect
consumers in transactions with the bank. These laws include, among others, laws regarding unfair, deceptive and abusive acts
and practices, state usury laws and federal consumer protection statutes, including the Electronic Fund Transfer Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Real Estate
Procedures Act of 1974, the S.A.F.E. Mortgage Licensing Act of 2008, the Truth in Lending Act and the Truth in Savings
Act, among others. Many states and local jurisdictions have consumer protection laws analogous and in addition to those
enacted under federal law. These laws and regulations mandate certain disclosure requirements and regulate the manner in
which financial institutions must deal with customers when taking deposits, making loans and conducting other types of
transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission
rights, actions by state attorneys general and civil or criminal liability.
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In addition, the Dodd-Frank Act created the Bureau, which has broad authority to regulate the offering and provision
of consumer financial products. The Bureau has authority to promulgate regulations, issue orders, guidance, interpretations
and policy statements, conduct examinations and bring enforcement actions with regard to consumer financial products and
services. In general, banks with assets of $10 billion or less, such as Origin Bank, will continue to be examined for consumer
compliance, and subject to enforcement actions, by their primary federal regulator, in our case the Federal Reserve. However,
the Bureau may participate in examinations of these smaller institutions on a "sampling basis" and may refer potential
enforcement actions against such institutions to their primary federal regulators. In addition, the Dodd-Frank Act permits
states to adopt consumer protection laws and regulations that are stricter than those regulations promulgated by the Bureau,
and state attorneys general are permitted to enforce certain consumer protection rules adopted by the Bureau against certain
institutions.
Mortgage Lending Rules. The Dodd-Frank Act authorized the Bureau to establish certain minimum standards for the
origination of residential mortgages, including a determination of the borrower's ability to repay. Under the Dodd-Frank Act,
financial institutions may not make a residential mortgage loan unless they make a "reasonable and good faith determination"
that the consumer has a "reasonable ability" to repay the loan. The Dodd-Frank Act allows borrowers to raise certain defenses
to foreclosure but provides a presumption or rebuttable presumption of compliance for loans that are "qualified mortgages."
The Bureau has also issued regulations that, among other things, specify the types of income and assets that may be
considered in the ability-to-repay determination, the permissible sources for income verification, and the required methods of
calculating the loan's monthly payments. These regulations extend the requirement that creditors verify and document a
borrower's income and assets to include a requirement to verify all information that creditors rely on in determining
repayment ability. The rules also define "qualified mortgages" based on adherence to certain underwriting standards and
restrictions on loan terms. Points and fees are subject to a relatively stringent cap, and the terms include a wide array of
payments that may be made in the course of closing a loan. Certain loans, including interest-only loans and negative
amortization loans, cannot be qualified mortgages. Also, the Dodd-Frank Act and the Bureau's final rule on loan originator
compensation prohibit certain compensation payments to loan originators and the steering of consumers to loans not in their
interest, particularly if the loans will result in greater compensation for a loan originator. The Dodd-Frank Act and the
Bureau's implementing regulations also impose additional disclosure requirements with respect to the origination and sale of
residential mortgages. EGRRCPA modifies certain of these requirements by, among other things, creating a safe harbor from
the ability-to-repay standards for certain mortgage loans made by a bank with less than $10 billion in total consolidated
assets.
Anti-Money Laundering and OFAC. The Bank Secrecy Act requires banks and other financial institutions to
establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of
terrorism. The principal requirements for banks include (i) establishment of an anti-money laundering program that includes
training and audit components; (ii) establishment of a "know your customer" program involving due diligence to confirm the
identity of persons seeking to open accounts and to deny accounts to those persons unable to demonstrate their identities; (iii)
the filing of currency transaction reports for deposits and withdrawals of large amounts of cash; (iv) additional precautions
for accounts sought and managed for non-U.S. persons; and (v) verification and certification of money laundering risk with
respect to private banking and foreign correspondent banking relationships. For many of these tasks a bank must keep records
to be made available to its primary federal regulator. Anti-money laundering rules and policies are developed by a bureau
within the U.S. Department of the Treasury, the Financial Crimes Enforcement Network, but compliance by individual
institutions is overseen by its primary federal regulator, in the Bank's case, the Federal Reserve.
The Office of Foreign Assets Control ("OFAC") administers laws and Executive Orders that prohibit U.S. entities
from engaging in transactions with certain prohibited parties. OFAC publishes lists of persons and organizations suspected of
aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons. Generally, if a
bank identifies a transaction, account or wire transfer relating to a person or entity on an OFAC list, it must freeze the account
or block the transaction, file a suspicious activity report and notify the appropriate authorities.
Bank regulators routinely examine institutions for compliance with these obligations and they must consider an
institution's compliance in connection with the regulatory review of applications, including applications for bank mergers and
acquisitions. Failure of a financial institution to maintain and implement adequate programs to combat money laundering and
terrorist financing and comply with OFAC sanctions, or to comply with relevant laws and regulations, could have serious
legal, reputational and financial consequences for the institution.
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Privacy. Federal law and regulations limit the ability of banks and other financial institutions to disclose non-public
information about consumers to non-affiliated third parties. These limitations require disclosure of privacy policies to
consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to a non-
affiliated third party. These regulations affect how consumer information is transmitted through financial services companies
and conveyed to outside vendors. In addition, consumers may also prevent disclosure of certain information among affiliated
companies that is assembled or used to determine eligibility for a product or service, such as that shown on consumer credit
reports and asset and income information from applications. Consumers also have the option to direct banks and other
financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of
marketing products or services. In addition to applicable federal privacy regulations, Origin Bank is subject to certain state
privacy laws.
Cybersecurity. The federal banking agencies pay close attention to the cybersecurity practices of banks, bank
holding companies and their affiliates. The interagency council of the agencies, the Federal Financial Institutions
Examination Council (the "FFIEC"), has issued several policy statements and other guidance for banks as new cybersecurity
threats arise. The FFIEC has recently focused on such matters as compromised customer credentials and business continuity
planning. Examinations by the banking agencies now include review of an institution's information technology and its ability
to thwart cyberattacks.
Federal Home Loan Bank System. Origin Bank is a member of the Federal Home Loan Bank of Dallas, which is one
of the 11 regional Federal Home Loan Banks composing the Federal Home Loan Bank system. The Federal Home Loan
Banks make loans to their member banks in accordance with policies and procedures established by the Federal Home Loan
Bank system and the boards of directors of each regional Federal Home Loan Bank. Any advances from a Federal Home
Loan Bank must be secured by specified types of collateral, and all long-term advances may be obtained only for the purpose
of providing funds for residential housing finance. As a member of the Federal Home Loan Bank of Dallas, Origin Bank is
required to acquire and hold shares of capital stock in the Federal Home Loan Bank of Dallas. 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.
Enforcement Powers. The bank regulatory agencies have broad enforcement powers, including the power to
terminate deposit insurance and impose substantial fines and other civil and criminal penalties. Failure to comply with
applicable laws, regulations and supervisory agreements, breaches of fiduciary duty or the maintenance of unsafe and
unsound conditions or practices could subject us or our subsidiaries, including Origin Bank, as well as their respective
officers, directors, and other institution-affiliated parties, to administrative sanctions and potentially substantial civil money
penalties.
FDIC Conservatorship or Receivership. The bank regulatory agencies may appoint the FDIC as conservator or
receiver for a bank (or the FDIC may appoint itself, under certain circumstances) if any one or more of a number of
circumstances exist, including, without limitation, if the bank is undercapitalized and has no reasonable prospect of becoming
adequately capitalized, fails to become adequately capitalized when required to do so, fails to submit a timely and acceptable
capital restoration plan or materially fails to implement an accepted capital restoration plan.
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. Some of the instruments
of monetary policy available to the Federal Reserve include changes in the discount rate on member bank borrowings, the
fluctuating availability of borrowings at the "discount window," open market operations as directed by the Federal Open
Market Committee, the imposition of and changes in reserve requirements against member banks' deposits and certain
borrowings by banks and their affiliates and assets of foreign branches. 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.
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Impact of Current Laws and Regulations
The cumulative effect of these laws and regulations, while providing certain benefits, adds significantly to the cost
of our operations and thus has a negative impact on our profitability. There has also been a notable expansion in recent years
of financial service providers that are not subject to the examination, oversight, and other rules and regulations to which we
are subject. Those providers, because they are not so highly regulated, may have a competitive advantage over us and may
continue to draw large amounts of funds away from traditional banking institutions, with a continuing adverse effect on the
banking industry in general.
Future Legislation and Regulatory Reform. From time to time, various legislative and regulatory initiatives are
introduced in Congress and state legislatures. New regulations and statutes are regularly proposed that contain wide-ranging
proposals for altering the structures, regulations and competitive relationships of financial institutions operating in the United
States. We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which
our business may be affected by any new regulation or statute. Future legislation, regulation and policies, and the effects of
that legislation and regulation and those policies, may have a significant influence on our operations and activities, financial
condition, results of operations, growth plans or future prospects and the overall growth and distribution of loans, investments
and deposits. Such legislation, regulation and policies have had a significant effect on the operations and activities, financial
condition, results of operations, growth plans and future prospects of commercial banks in the past and are expected to
continue to do so.
Item 1A.
Risk Factors
We face many risks and uncertainties, any one or more of which could have a material adverse effect on our
business, results of operations, financial condition, prospects or the value of, or return on, an investment in our common
stock. You should carefully consider the risks described below, together with all other information included and incorporated
by reference in this report, including our consolidated financial statements and the related notes contained in Item 8 of this
report. We believe the risks described below are material to us as of the date of this report but these risks are not the only
risks that we face. Our business, financial condition, results of operations and prospects could also be affected by additional
risks that apply to all financial services companies or companies operating in the United States and our specific geographic
markets, as well as other risks that are not currently known to us or that we currently consider to be immaterial to our
business, financial condition, results of operations and prospects. If any of these risks actually occur, our business, results of
operations, financial condition and prospects could be adversely affected. Further, to the extent that any of the information in
this report constitutes forward-looking statements, the risk factors below also are cautionary statements identifying important
factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by
us or on our behalf.
Summary
Our business is subject to a number of risks, including risks that may prevent us from achieving our business
objectives or may adversely affect our business, financial condition, results of operations, cash flows and prospects. These
risks are discussed more fully in Item 1A. Risk Factors herein. These risks include, but are not limited to, the following:
• We are subject to various risks associated with COVID-19;
•
The discontinuation of LIBOR could result in financial, operational, legal, reputational or compliance risks to us;
• We may not be able to adequately measure and limit our credit risk;
•
•
•
•
•
Adverse conditions in the general business or economic environment could have a material adverse effect on our
financial condition and results of operations;
Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral
securing certain of our loans;
The loss of executive management or other key employees could adversely impact our business or reputation;
Unauthorized access, cyber-crime and other threats to data security may cause harm to our business;
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;
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•
•
•
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;
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;
Our allowance for loan credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio and
our earnings could decrease;
• 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 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 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;
• We operate in a highly regulated environment and the laws and regulations that govern our operations 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.
Risks Related to Our Business
The ongoing COVID-19 pandemic and measures intended to prevent its spread has had and could continue to
have a material adverse effect on our business, results of operations and financial condition, and such effects will depend
on future developments, which are highly uncertain and are difficult to predict.
Global health concerns relating to the COVID-19 outbreak and related government actions taken to reduce the
spread of the virus have been weighing on the macroeconomic environment, and the outbreak has significantly increased
economic uncertainty and reduced economic activity. The outbreak has resulted in authorities’ implementing numerous
measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place or total lock-down
orders and business limitations and shutdowns. Such measures have significantly contributed to rising unemployment and
negatively impacted consumer and business spending.
The United States and state and local governments have taken steps to attempt to mitigate some of the more severe
anticipated economic effects of the virus, including Congress’s passage of the CARES Act and related stimulus legislation.
The CARES Act, which was enacted on March 27, 2020, provides certain measures to support individuals and businesses in
maintaining solvency through monetary relief, including in the form of financing, loan forgiveness and automatic
forbearance, and the Consolidated Appropriations Act, 2021, extended some of these relief provisions in certain respects as
well as provided other forms of relief. The CARES Act established and provided funding for the PPP, a loan program
administered by the SBA. Under the PPP, small businesses, sole proprietorships, independent contractors and self-employed
individuals may apply for forgivable loans from enrolled lenders, subject to numerous limitations and eligibility criteria.
Beginning in April 2020, we began processing loan applications under the PPP.
Additionally, provisions of the CARES Act, as amended by the Consolidated Appropriations Act, 2021, and
interagency guidance of the federal banking agencies, provide financial institutions the option to temporarily suspend
requirements under GAAP related to classification of certain loan modifications as troubled debt restructurings, or TDRs, to
account for the current and anticipated effects of COVID-19. Further, in response to the COVID-19 outbreak, the Federal
Reserve has implemented or announced a number of facilities to provide emergency liquidity to various segments of the U.S.
economy and financial markets. Many of these facilities expired on December 31, 2020, or were extended for brief periods
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into 2021. The expiration of these facilities could have adverse effect on U.S. economy and ultimately on our business. The
federal government is also considering additional stimulus and support legislation focused on providing aid to various
sectors, including small businesses.
While the steps described above may help reduce the spread of the outbreak and the related economic impact, there
can be no assurance that such steps will be effective or achieve their desired results in a timely fashion. Further, the full
impact on our business activities as a result of new government and regulatory policies, programs and guidelines, as well as
regulators’ reactions to such activities, remains uncertain. Origin Bank’s participation in the PPP could subject us to
increased governmental and regulatory scrutiny, negative publicity or increased exposure to litigation, which could increase
our operational, legal and compliance costs and damage our reputation. Moreover, if the federal stimulus measures are not
effective in mitigating the effect of the COVID-19 pandemic, credit issues for our loan customers may be severe and
adversely affect our businesses, results of operations, and financial condition more substantially over a longer period of time.
The outbreak has also adversely impacted, and is likely to further adversely impact, our workforce and operations and the
operations of our borrowers, customers and business partners. In particular, we have and may continue to experience financial
losses due to a number of operational factors impacting us or our borrowers, customers or business partners, including but not
limited to:
•
•
•
•
•
credit losses resulting from financial stress being experienced by our borrowers as a result of the outbreak and
related governmental actions, particularly in the hotel, energy, non-essential retail, restaurant and assisted living
industries, but across other industries as well;
declines in collateral values;
third-party disruptions, including outages at network providers and other suppliers;
increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased
online and remote activity; and
operational failures due to changes in our normal business practices necessitated by the outbreak and related
governmental actions.
These factors may remain prevalent for a significant period of time and may continue to adversely affect our
business, results of operations and financial condition even after the COVID-19 outbreak has subsided.
The spread of COVID-19 has caused us to modify our business practices (including restricting employee travel, and
developing work from home and social distancing plans for our employees), and we may take further actions as may be
required by government authorities or as we determine are in the best interests of our employees, customers and business
partners. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus or will otherwise
be satisfactory to government authorities.
The extent to which the coronavirus outbreak impacts our business, results of operations and financial condition will
depend on future developments, which are highly uncertain and are difficult to predict, including, but not limited to, the
duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, the rollout and
effectiveness of vaccination programs for the virus, and how quickly and to what extent normal economic and operating
conditions can resume. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse
impacts to our business as a result of the virus’s global economic impact, including the availability of credit, adverse impacts
on our liquidity and any recession that has occurred or may occur in the future.
There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global
pandemic may have, and, as a result, the ultimate impact of the outbreak is highly uncertain and subject to change. We do not
yet know the full extent of the impacts on our business, our operations or the global economy as a whole. However, the
effects could have a material impact on our results of operations and heighten many of our known risks described herein.
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The discontinuation of LIBOR could result in financial, operational, legal, reputational or compliance risks to
us.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates London Interbank Offered
Rate ("LIBOR"), announced that it will no longer persuade or require banks to submit rates for the calculation of LIBOR after
2021. In November 2020, the ICE Benchmark Administration, which administers LIBOR, announced its intention to extend
the publication of most tenors of LIBOR through June 30, 2023. The U.S. federal banking agencies have continued to
encourage banks to transition away from LIBOR as soon as practicable.
The Federal Reserve’s Alternative Reference Rates Committee has selected the Secured Overnight Funding Rate
(“SOFR”) as the preferred alternative rate to LIBOR. SOFR differs from LIBOR in two respects: SOFR is a single overnight
rate, while LIBOR includes rates of several tenors, and SOFR is deemed a credit risk-free rate while LIBOR incorporates an
evaluation of credit risk. In addition, the SOFR methodology has not been tested for an extended period of time, which may
limit market acceptance of the use of SOFR.
It is impossible to predict the effect of any such alternative rates on the value of LIBOR-based securities or other
securities or financial arrangements, given LIBOR's role in determining market interest rates globally. Given LIBOR's
extensive use across financial markets, the transition away from LIBOR presents various risks and challenges to financial
markets and institutions and could have a range of effects on our business, financial condition and results of operations. Our
commercial and consumer businesses issue, trade and hold various products that are currently indexed to LIBOR. Among
other products, at December 31, 2020, we had approximately $2.32 billion of loans indexed to LIBOR, including loans that
mature after 2021. Our products that are indexed to LIBOR are significant, and if not sufficiently planned for, the
discontinuation of LIBOR could result in financial, operational, legal, litigation, reputational or compliance risks to us.
Due to the uncertainty surrounding the future of LIBOR, it is expected that the transition will span several reporting
periods through the end of 2021and may result in increased compliance costs and operational costs. All pre-prepared Origin
notes contain fallback language that allows us to replace the index in the event LIBOR becomes unavailable, unascertainable,
ceases to be published or is otherwise unreliable. Such replacement is to be determined by Origin in our sole discretion and
can include a mathematical adjustment, if deemed necessary by us. However, inadequate fallback language in the various
instruments’ contracts may result in issues establishing an alternative index and adjusting the margin as applicable. We
continue to monitor this activity and evaluate the related risks.
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. 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. In addition, we are exposed to risks with respect to
the period of time over which the loan may be repaid, risks relating to proper loan underwriting, risks resulting from changes
in economic and industry conditions, and risks inherent in dealing with individual loans and borrowers. The creditworthiness
of a borrower is affected by many factors including local market conditions and general economic conditions. If the overall
economic climate in the U.S., generally, or our market areas, specifically, experiences material disruption, our borrowers may
experience difficulties in repaying their loans, the collateral we hold may decrease in value or become illiquid, and the level
of nonperforming loans, charge-offs and delinquencies could rise and require significant additional provisions for credit
losses. Additional factors related to the credit quality of commercial loans include the quality of the management of the
business and the borrower's ability both to properly evaluate changes in the supply and demand characteristics affecting our
market for products and services and to effectively respond to those changes. Additional factors related to the credit quality of
commercial real estate loans include tenant vacancy rates and the quality of management of the property.
Our risk management practices, such as monitoring the concentration of our loans within specific industries and our
credit approval, review and administrative practices may not adequately reduce credit risk, and our credit administration
personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting
customers and the quality of the loan portfolio. A failure to effectively measure and limit the credit risk associated with our
loan portfolio may result in loan defaults, foreclosures and additional charge-offs, and may necessitate that we significantly
increase our allowance for credit losses, each of which could adversely affect our net income. As a result, our inability to
successfully manage credit risk could have an adverse effect on our business, financial condition and results of operations.
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As a business operating in the financial services industry, adverse conditions in the general business or economic
environment could have a material adverse effect on our financial condition and results of operations.
Our business and operations, which primarily consist of lending money to customers in the form of loans, borrowing
money from customers in the form of deposits and investing in securities, are sensitive to general business and economic
conditions in the U.S. Uncertainty about the federal fiscal policymaking process, and the medium and long-term fiscal
outlook of the federal government and U.S. economy, is a concern for businesses, consumers and investors in the U.S. In
addition, economic conditions in foreign countries, including global political hostilities or public health outbreaks and
uncertainty over the stability of foreign currency, could affect the stability of global financial markets, which could hinder
domestic economic growth. The current economic environment is characterized by interest rates at historically low levels,
which impacts our ability to attract deposits and to generate attractive earnings through our investment portfolio and we are
unable to predict changes in market interest rates. Additionally, our business could be adversely affected by the effects of a
widespread outbreak of disease pandemics, such as the recent outbreak of COVID-19, which has spread significantly in the
United States. Any outbreak of disease pandemics and other adverse public health developments could further have an
adverse effect on our business operations. A significant outbreak of disease pandemics or other adverse public health
developments in the population could result in a widespread health crisis that could adversely affect the economies and
financial markets of many countries, resulting in an economic downturn that could adversely affect our customers' businesses
and results of operations. All of these factors are detrimental to our business, and the interplay between these factors can be
complex and unpredictable. Our business is also significantly affected by monetary and related policies of the U.S.
government and its agencies. Changes in any of these policies are influenced by macroeconomic conditions and other factors
that are beyond our control. Adverse economic conditions and government responses to such conditions could have a material
adverse effect on our business, financial condition, results of operations and prospects.
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.
Real estate values in many Texas, Louisiana and Mississippi markets have experienced periods of fluctuation over
the last several years, and the market value of real estate can fluctuate significantly in a short period of time. At December 31,
2020, $2.8 billion, or 49.0%, of our total LHFI was comprised of loans with real estate as a primary component of collateral.
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. Negative changes in
the economy affecting real estate values and liquidity in our market areas could significantly impair the value of property
pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses.
Collateral may have to be sold for less than the outstanding balance of the loan, which could result in losses on such loans.
Such declines and losses could have an adverse effect on our business, financial condition and results of operations. If real
estate values decline, it is also more likely that we would be required to increase our allowance for loan credit losses, which
could have an adverse effect on our business, financial condition and results of operations.
We rely heavily on our executive management team and other key employees, and the loss of any these
individuals could adversely impact our business or reputation.
Our success depends in large part on the performance of our key personnel, as well as on our ability to attract,
motivate and retain highly qualified senior and middle management and other skilled employees. Competition for employees
is intense, and the process of locating key personnel with the combination of skills and attributes required to execute our
business plan may be lengthy. We may not be successful in retaining our key employees, and the unexpected loss of services
of one or more of our key personnel could have an adverse effect on our business because of their skills, knowledge of our
primary markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel. 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.
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Unauthorized access, cyber-crime and other threats to data security may require significant resources, harm our
reputation, and otherwise cause harm to 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 these data processing functions are
not handled by us directly, but are outsourced to third party providers. Our facilities and systems, and those of our third party
service providers, may be vulnerable to threats to data security, security breaches, acts of vandalism and other physical
security threats, computer viruses or compromises, ransomware attacks, misplaced or lost data, programming and/or human
errors or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of
our confidential business, employee or customer information, whether originating with us, our vendors or retail businesses,
could severely damage our reputation, expose us to the risks of civil litigation and liability, require the payment of regulatory
fines or penalties or undertaking of costly remediation efforts with respect to third parties affected by a security breach,
disrupt our operations, and have a material adverse effect on our business, financial condition and results of operations.
It is difficult or impossible to defend against every risk being posed by changing technologies or criminals intent on
committing cyber-crime. Our controls and protections and those of our vendors could prove inadequate. In the last few years,
there have been an increasing number of cyber incidents and cyber criminals continue to increase their sophistication,
including several well-publicized cyber-attacks that targeted other U.S. companies, including financial services companies
much larger than us. These cyber incidents have been initiated from a variety of sources, including terrorist organizations and
hostile foreign governments. As technology advances, the ability to initiate transactions and access data has also become
more widely distributed among mobile devices, personal computers, automated teller machines, remote deposit capture sites
and similar access points, some of which are not controlled or secured by us. 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 the Company.
Further, the probability of a successful cyber-attack against us or one of our third party services providers cannot be
predicted.
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. New or revised laws and regulations may
significantly impact our current and planned privacy, data protection and information security-related practices, the
collection, use, sharing, retention and safeguarding of consumer and employee information, and current or planned business
activities. 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 the Company's 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. If we were to lose the services of any of our bankers, including
profitable bankers employed by banks that we may acquire, to a new or existing competitor or otherwise, we may not be able
to retain valuable relationships and some of our customers could choose to use the services of a competitor instead of our
services.
Our growth strategy also relies on our ability to attract and retain additional profitable bankers. We may face
difficulties in recruiting and retaining bankers of our desired caliber, including as a result of competition from other financial
institutions. In particular, many of our competitors are significantly larger with greater financial resources, and may be able to
offer more attractive compensation packages and broader career opportunities. Additionally, we may incur significant
expenses and expend significant time and resources on training, integration and business development before we are able to
determine whether a new banker will be profitable or effective. 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.
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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.
Unlike larger financial institutions that are more geographically diversified, we are a regional banking franchise
concentrated in the Interstate 20 Corridor between the Dallas/Fort Worth metropolitan area and Jackson, Mississippi, as well
as in Houston, Texas. At December 31, 2020, 52.5% of our total loans (by dollar amount), excluding mortgage warehouse
lines of credit, were made to borrowers who reside or conduct business in Texas, 31.9% attributable to Louisiana and 10.0%
attributable to Mississippi, and substantially all of our real estate loans are secured by properties located in these states. A
deterioration in local economic conditions or in the residential or commercial real estate markets could have an adverse effect
on the quality of our portfolio, the demand for our products and services, the ability of borrowers to timely repay loans, and
the value of the collateral securing loans. 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.
Our commercial real estate loan portfolio exposes us to risks that may be greater than the risks related to our
other mortgage loans.
Our loan portfolio includes non-owner-occupied commercial real estate loans for individuals and businesses for
various purposes, which are secured by commercial properties, as well as real estate construction and development loans. At
December 31, 2020, our non-owner-occupied commercial real estate loans totaled $927.4 million, or 16.2%, of our total loan
portfolio. These loans typically involve repayment dependent upon income generated, or expected to be generated, by the
property securing the loan in amounts sufficient to cover operating expenses and debt service, which may be adversely
affected by changes in the economy or local market conditions. These loans expose us to greater credit risk than loans
secured by residential real estate because the collateral securing these loans typically cannot be liquidated as easily as
residential real estate because there are fewer potential purchasers of the collateral. Additionally, non-owner-occupied
commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers.
Accordingly, charge-offs on non-owner-occupied commercial real estate loans may be larger on a per loan basis than those
incurred with our residential or consumer loan portfolios. 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.
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.
At December 31, 2020, approximately $1.27 billion, or 22.3%, of our total loans were commercial and industrial
loans, excluding PPP loans, to businesses. In general, these loans are collateralized by general business assets, including,
among other things, accounts receivable, inventory and equipment and many are backed by a personal guaranty of the
borrower or principal. These commercial loans are typically larger in amount than loans to individuals and, therefore, have
the potential for larger losses on a single loan basis. 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. In
addition, a portion of our customer base, including customers in the energy and real estate business, may be exposed to
volatile businesses or industries which are sensitive to commodity prices or market fluctuations, such as energy prices.
Accordingly, negative changes in commodity prices and real estate values and liquidity could impair the value of the
collateral securing these loans. Significant adverse changes in the economy or local market conditions in which our
commercial lending customers operate could cause rapid declines in loan collectability and the values associated with general
business assets resulting in inadequate collateral coverage that may expose us to credit losses and could adversely affect our
business, financial condition and results of operations.
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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.
Our growth over the past several years has been partially attributable to our ability to originate and retain relatively
large loans given our asset size. At December 31, 2020, the size of our average loan held for investment was approximately
$308,449. Further, at December 31, 2020, our 20 largest borrowing relationships, excluding mortgage loans held for sale,
represented 19.9% of our outstanding loan portfolio, and 3.1% of our total commitments to extend credit. Along with other
risks inherent in our loans, such as the deterioration of the underlying businesses or property securing these loans, the higher
average size of our loans presents a risk to our lending 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.
Our allowance for loan credit losses may prove to be insufficient to absorb losses inherent in our loan portfolio
and our earnings could decrease.
Our experience in the banking industry indicates that some portion of our loans will not be fully repaid in a timely
manner or at all. Accordingly, we maintain an allowance for loan credit losses that represents management's judgment of
expected losses and risks inherent in our loan portfolio. The level of the allowance reflects management's continuing
evaluation of general economic conditions, diversification and seasoning of the loan portfolio, historic loss experience,
identified credit problems, delinquency levels and adequacy of collateral. The determination of the appropriate level of the
allowance for loan credit losses is inherently highly subjective and requires us to make significant estimates of and
assumptions regarding current credit risks and future trends, all of which may undergo material changes. Inaccurate
management assumptions, deterioration of economic conditions affecting borrowers, new information regarding existing
loans, identification of additional problem loans and other factors, both within and outside of our control, may require us to
increase our allowance for loan credit losses and additional expenses may be incurred. At any time, we are likely to have
loans in our portfolio that will result in losses but that have not been identified as nonperforming or potential problem credits.
We cannot be certain that we will be able to identify deteriorating credits before they become nonperforming assets or that we
will be able to limit or correctly estimate losses on those loans that are identified. In addition, our regulators, as an integral
part of their periodic examination, review the adequacy of our allowance for loan credit losses and may direct us to make
additions to the allowance based on their judgments about information available to them at the time of their examination.
Changes in economic conditions or individual business or personal circumstances affecting borrowers, new information
regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control,
may require an increase in the allowance. Further, if actual charge-offs in future periods exceed the amounts allocated to the
allowance for loan credit losses, we may need additional provision for loan losses to restore the adequacy of our allowance
for loan 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.
In addition, on January 1, 2020, our methodology for determining our allowance for loan credit losses changed due
to the implementation of the Current Expected Credit Losses, or CECL, accounting standard. As a result, we recognized a
one-time, after tax cumulative effect adjustment of $760,000 to retained earnings at the beginning of the first quarter of 2020,
increasing the allowance for credit losses by approximately $1.2 million and decreasing the off-balance sheet reserve by
$381,000. CECL requires recording life-of-loan projected losses in the loan portfolio based on reasonable and supportable
forecasts and related loan portfolio credit performance. At adoption the economic effects resulting from the COVID-19
pandemic were unknown. As such, the economic scenario used to develop our estimate of CECL as of the adoption date
assumed a continued moderate U.S. economic expansion compared to 2019. The prior accounting standard recorded reserves
based on probable losses at the balance sheet date, generally resulting in lower reserve levels at the outset of an economic
downturn.
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We may have exposure to tax liabilities that are larger than we anticipate.
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. The taxing authorities in the jurisdictions in
which we operate may challenge our tax positions, which could increase our effective tax rate and harm our financial position
and results of operations. In addition, our future income taxes could be adversely affected by earnings being higher than
anticipated in jurisdictions that have higher statutory tax rates or by changes in tax laws, regulations or accounting principles.
We are subject to audit and review by U.S. federal and state tax authorities. Any adverse outcome of such a review or audit
could have a negative effect on our financial position and results of operations. In addition, the determination of our provision
for income taxes and other liabilities requires significant judgment by management. Although we believe that our estimates
are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and could have a
material adverse effect on our financial results in the period or periods for which such determination is made.
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 focus our business development and marketing strategy primarily on small to medium-sized businesses. Small to
medium-sized businesses frequently have smaller market shares than their competition, may be more vulnerable to economic
downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in
operating results, any of which may impair a borrower's ability to repay a loan. In addition, the success of a small and
medium-sized business often depends on the management skills, talents and efforts of one or two people or a small group of
people, and the death, disability or resignation of one or more of these people could have an adverse impact on the business
and its ability to repay its loan. 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 face significant competition to attract and retain customers, which could impair our growth, decrease our
profitability or result in loss of market share.
We operate in the highly competitive banking industry and face significant competition for customers from bank and
non-bank competitors, particularly regional and nationwide institutions, in originating loans, attracting deposits and providing
other financial services. Our competitors are generally larger and may have significantly more resources, greater name
recognition, and more extensive and established branch networks or geographic footprints than we do. Because of their scale,
many of these competitors can be more aggressive than we can on loan and deposit pricing. Also, many of our non-bank
competitors have fewer regulatory constraints and may have lower cost structures. We expect competition to continue to
intensify due to financial institution consolidation; legislative, regulatory and technological changes; and the emergence of
alternative banking sources.
Our ability to compete successfully will depend on a number of factors, including, among other things:
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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.
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 failure to compete effectively in our primary markets could cause us to lose market
share and could have an adverse effect on our business, financial condition and results of operations.
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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. Our growth over
the past several years has depended on attracting new customers from competing financial institutions and increasing our
market share, primarily by our reputation in our primary markets and word-of-mouth advertising, rather than on growth in the
market for banking services in our primary markets. As such, we strive to enhance our reputation by recruiting, hiring and
retaining employees who share our core values of being an integral part of the communities we serve and delivering superior
service to our customers. If our reputation is negatively affected by the actions of our employees or otherwise, our existing
relationships may be damaged. We could lose some of our existing customers, including groups of large customers who have
relationships with each other, and we may not be successful in attracting new customers. Any of these developments could
have an adverse effect on our business, financial condition and results of operations.
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.
Our business has grown rapidly. Financial institutions that grow rapidly can experience significant difficulties as a
result of rapid growth. 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. For example, we may be unable to generate sufficient new loans
and deposits within acceptable risk and expense tolerances, obtain the personnel or funding necessary for additional growth
or find suitable banking teams or acquisition candidates. Various factors, such as economic conditions and competition, may
impede or prohibit the growth of our operations, the opening of new branches, and the consummation of acquisitions. Further,
we may be unable to attract and retain experienced bankers, which could adversely affect our growth. The success of our
strategy also depends on our ability to effectively manage growth, which is dependent upon a number of factors, including
our ability to adapt existing credit, operational, technology and governance infrastructure to accommodate our expanded
operations. If we fail to build infrastructure sufficient to support rapid growth or fail to implement one or more aspects of our
strategy, we may be unable to maintain historical earnings trends, which could have an adverse effect on our business,
financial condition and results of operations. 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.
Our business strategy includes evaluating strategic opportunities to grow through de novo branching, and we believe
that banking location expansion has been meaningful to our growth since inception. De novo branching carries with it certain
potential risks, including significant startup costs and anticipated initial operating losses; an inability to gain regulatory
approval; an inability to secure the services of qualified senior management to operate the de novo banking location and
successfully integrate and promote our corporate culture; poor market reception for de novo banking locations established in
markets where we do not have a preexisting reputation; challenges posed by local economic conditions; challenges associated
with securing attractive locations at a reasonable cost; and the additional strain on management resources and internal
systems and controls. Failure to adequately manage the risks associated with our anticipated growth through de novo
branching could have an adverse effect on our business, financial condition and results of operations. De novo branches
require regulatory approval or non-objection, which may not be forthcoming.
Our financial condition and results of operations may be adversely affected by changes in accounting policies,
standards and interpretations.
The Financial Accounting Standards Board ("FASB") and other bodies that establish accounting standards
periodically change the financial accounting and reporting standards governing the preparation of our financial statements.
Additionally, those bodies that establish and interpret the accounting standards (such as the FASB, SEC and banking
regulators) may change prior interpretations or positions on how these standards should be applied. Changes resulting from
these new standards may result in materially different financial results and may require that we change how we process,
analyze and report financial information and that we change financial reporting controls.
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We may pursue acquisitions in the future, which could expose us to financial, execution and operational risks.
Although we plan to continue to grow our business organically, we may from time to time consider acquisition
opportunities that we believe complement our activities and have the ability to enhance our profitability. Our acquisition
activities could be material to our business and involve a number of risks, including those associated with:
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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; and
the maintenance of adequate regulatory capital.
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. Our ability to compete in acquiring target institutions will depend on our available financial resources
to fund the acquisitions, including the amount of cash and cash equivalents we have and the liquidity and value of our
common stock. In addition, increased competition may also drive up the acquisition consideration that we will be required to
pay in order to successfully capitalize on attractive acquisition opportunities. To the extent that we are unable to find suitable
acquisition targets, an important component of our growth strategy may not be realized.
Acquisitions of financial institutions also involve operational risks and uncertainties, such as unknown or contingent
liabilities with no available manner of recourse, exposure to unexpected problems such as asset quality, the retention of key
employees and customers, and other issues that could negatively affect our business. We may not be able to complete future
acquisitions after dedicating substantial resources or, if completed, we may not be able to successfully integrate the
operations, technology platforms, management, products and services of the entities that we acquire or to realize our expected
benefits or our attempts to eliminate redundancies. The integration process may also require significant time and attention
from our management that would otherwise be directed toward servicing existing business and developing new business.
Failure to successfully integrate the entities we acquire into our existing operations in a timely manner may increase our
operating costs significantly and could have an adverse effect on our business, financial condition and results of operations.
Further, acquisitions typically involve the payment of a premium over book and market values and, therefore, some dilution
of our book value and net income per common share may occur in connection with any future acquisition, and the carrying
amount of any goodwill that we currently maintain or may acquire may be subject to impairment in future periods.
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The markets in which we operate are susceptible to hurricanes and other natural disasters and adverse weather,
which could result in a disruption of our operations and increases in loan losses.
A significant portion of our business is generated from markets that have been, and may continue to be, damaged by
major hurricanes, floods, tropical storms, tornadoes and other natural disasters and adverse weather. Natural disasters can
disrupt our operations, cause widespread property damage, and severely depress the local economies in which we operate. If
the economies in our primary markets experience an overall decline as a result of a natural disaster, adverse weather, or other
disaster, demand for loans and our other products and services could be reduced. In addition, the rates of delinquencies,
foreclosures, bankruptcies and loan losses may increase substantially, as uninsured property losses or sustained job
interruption or loss may materially impair the ability of borrowers to repay their loans. Moreover, the value of real estate or
other collateral that secures the loans could be materially and adversely affected by a disaster. 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.
The financial services industry is undergoing rapid technological changes with frequent introductions of new
technology-driven products and services and a 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. 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. Our future success will depend, at least in part, upon our ability to address the needs of our customers by
using technology to provide products and services that will satisfy customer demands for convenience as well as to create
additional efficiencies in our operations as we continue to grow and expand our products and service offerings. We may
experience operational challenges as we implement these new technology enhancements or products, which could result in us
not fully realizing the anticipated benefits from such new technology or require us to incur significant costs to remedy any
such challenges in a timely manner.
These changes may be more difficult or expensive than we anticipate. Many of our larger competitors have
substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or
superior products compared to those that we will be able to provide, which would put us at a competitive disadvantage.
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.
From time to time, we implement new lines of business, or offer new products and product enhancements as well as
new services within our existing lines of business, and we will continue to do so in the future. There are substantial risks and
uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In
implementing, developing or marketing new lines of business, products, product enhancements or services, we may invest
significant time and resources, although we may not assign the appropriate level of resources or expertise necessary to make
these new lines of business, products, product enhancements or services successful or to realize their expected benefits.
Further, initial timetables for the introduction and development of new lines of business, products, product enhancements or
services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance
with regulations, competitive alternatives and shifting market preferences, may also impact the ultimate implementation of a
new line of business or offerings of new products, product enhancements or services. Furthermore, any new line of business,
product, product enhancement or service could have a significant impact on the effectiveness of our system of internal
controls. Failure to successfully manage these risks in the development and implementation of new lines of business or
offerings of new products, product enhancements or services could have an adverse impact on our business, financial
condition or results of operations.
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We are dependent on the use of data and modeling in our management's decision-making and faulty data or
modeling approaches could negatively impact our decision-making ability or possibly subject us to regulatory scrutiny in
the future.
The use of statistical and quantitative models and other quantitative analyses is endemic to bank decision-making,
and the employment of such analyses is becoming increasingly widespread in our operations. Liquidity stress testing, interest
rate sensitivity analysis, and the identification of possible violations of anti-money laundering regulations are all examples of
areas in which we are dependent on models and the data that underlies them. The use of statistical and quantitative models is
also becoming more prevalent in regulatory compliance. 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.
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 believe these quantitative techniques and approaches improve our decision-making, they
also create the possibility that faulty data or flawed quantitative approaches could negatively impact our decision-making
ability or, if we become subject to regulatory stress-testing in the future, adverse regulatory scrutiny. We seek to mitigate this
risk by performing back-testing to analyze the accuracy of these techniques and approaches. Secondarily, because of the
complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal
decision-making. Failure to successfully manage these risks could have an adverse impact on our business, financial
condition or results of operations.
We may be required to repurchase mortgage loans in some circumstances, which could diminish our liquidity.
Historically, we have originated whole mortgage loans for sale in the secondary market. When mortgage loans are
sold in the secondary market, we are required to make customary representations and warranties to the purchasers about the
mortgage loans and the manner in which they were originated. The mortgage loan sale agreements require us to repurchase or
substitute mortgage loans or indemnify buyers against losses, in the event we breach these representations and warranties. In
addition, we may be required to repurchase mortgage loans as a result of early payment default of the borrower on a mortgage
loan. With respect to loans that are originated by us through our broker or correspondents, the remedies available against the
originating broker or correspondent, if any, may not be as broad as the remedies available to a purchaser of mortgage loans
against us or the originating broker or correspondent, if any, may not have the financial capacity to perform remedies that
otherwise may be available. Therefore, if a purchaser enforces their remedies against us, we may not be able to recover losses
from the originating broker or correspondent. If repurchase and indemnity demands increase and such demands are valid
claims, it could diminish our liquidity, which could have an adverse effect on our business, financial condition and results of
operations. We were not required to repurchase any material amount of mortgage loans sold into the secondary market during
2020, 2019 or 2018.
Interest rate shifts could reduce net interest income.
The majority of our banking assets are monetary in nature and subject to risk from changes in interest rates. Like
most financial institutions, our earnings and cash flows depend to a great extent upon the level of our net interest income, or
the difference between the interest income we earn on loans, investments and other interest-earning assets, and the interest we
pay on interest-bearing liabilities, such as deposits and borrowings. 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. When interest-bearing liabilities mature or reprice more quickly, or to a greater degree than interest-earning
assets in the same period, an increase in interest rates could reduce net interest income. Similarly, when interest-earning
assets mature or reprice more quickly, or to a greater degree than interest-bearing liabilities, falling interest rates could reduce
net interest income. At December 31, 2020, $3.75 billion, or 51.4%, of our interest-earning assets and $3.64 billion, or
66.9%, of our interest-bearing liabilities were variable rate. Our interest sensitivity profile was asset sensitive at December
31, 2020, meaning that we estimate our net interest income would increase from rising interest rates and decline with falling
interest rates.
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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. A decrease in the general level of interest rates may affect us through,
among other things, increased prepayments on our loan portfolio and increased competition for deposits. Accordingly,
changes in the level of market interest rates affect our net yield on interest-earning assets, loan origination volume, loan
portfolio and our overall results. Although our asset-liability management strategy is designed to control and mitigate
exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our
control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money
supply, international disorder and instability in domestic and foreign financial markets.
Changes in interest rates may change the value of our mortgage servicing rights portfolio, which may increase
the volatility of our earnings.
As a result of our mortgage servicing business, we have a portfolio of mortgage servicing rights on unpaid principal
balances of $1.93 billion at December 31, 2020. A mortgage servicing right is the right to service a mortgage loan - collect
principal, interest and escrow amounts - for a fee. We measure and carry our entire 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.
The primary risk associated with mortgage servicing rights is that in a declining interest rate environment, they will
likely lose a substantial portion of their value as a result of higher than anticipated prepayments. Moreover, if prepayments
are greater than expected, the cash we receive over the life of the mortgage loans would be reduced. Conversely, these assets
generally increase in value in a rising interest rate environment to the extent that prepayments are slower than previously
estimated. An increase in the size of our mortgage servicing rights portfolio may increase our interest rate risk. At December
31, 2020, our mortgage servicing rights had a fair value of $13.7 million, compared to $20.7 million at December 31, 2019.
Changes in fair value of our mortgage servicing rights are recorded to earnings in each period. Depending on the interest rate
environment, it is possible that the fair value of our mortgage servicing rights may be reduced in the future. If such changes in
fair value significantly reduce the carrying value of our mortgage servicing rights, our business, financial condition and
results of operations could be adversely affected.
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. 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. An inability to raise funds through deposits, borrowings, the sale of our investment securities, the sale of loans,
and other sources could have a substantial negative effect on our liquidity. Our most important source of funds is deposits.
Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff. If
customers move money out of bank 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.
Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities,
and proceeds from the issuance and sale of our equity and debt securities to investors. Additional liquidity is provided by the
ability to borrow from the Federal Reserve Bank of Dallas and the Federal Home Loan Bank of Dallas. We also may borrow
funds from third-party lenders, such as other financial institutions. Our access to funding sources in amounts adequate to
finance or capitalize our activities, or on terms that are acceptable to us, could be impaired by factors that affect us directly or
the financial services industry or economy in general, such as disruptions in the financial markets or negative views and
expectations about the prospects for the financial services industry. Our access to funding sources could also be affected by a
decrease in the level of our business activity as a result of a downturn in our primary market area or by one or more adverse
regulatory actions against us.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our
expenses, or to fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which
could have a material adverse impact on our liquidity and could, in turn, have an adverse effect on our business, financial
condition and results of operations. In addition, because our primary asset at the holding company level is the bank, our
liquidity at the holding company level depends primarily on our receipt of dividends from the bank. 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.
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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.
We face significant capital and other regulatory requirements as a financial institution. We may need to raise
additional capital in the future to provide us with sufficient capital resources and liquidity to meet our commitments and
business needs, which could include the possibility of financing acquisitions. In addition, we, on a consolidated basis, and
Origin Bank, on a stand-alone basis, must meet certain regulatory capital requirements and maintain sufficient liquidity in
such amounts as the regulators may require from time to time. Importantly, regulatory capital requirements could increase
from current levels, which could require us to raise additional capital or reduce our operations. Even if we satisfy all
applicable regulatory capital minimums, our regulators could ask us to maintain capital levels which are significantly in
excess of those minimums. Our ability to raise additional capital depends on conditions in the capital markets, economic
conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions
and governmental activities, and on our financial condition and performance. 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.
By engaging in derivative transactions, we are exposed to additional credit and market risk.
We use interest rate swaps to help manage our interest rate risk from recorded financial assets and liabilities when
they can be demonstrated to effectively hedge a designated asset or liability and the asset or liability exposes us to interest
rate risk or risks inherent in customer related derivatives. We use other derivative financial instruments to help manage other
economic risks, such as liquidity and credit risk, including exposures that arise from business activities that result in the
receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our
derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected
cash receipts principally related to our fixed rate loan assets. Hedging interest rate risk is a complex process, requiring
sophisticated models and routine monitoring, and is not a perfect science. As a result of interest rate fluctuations, hedged
assets and liabilities will appreciate or depreciate in market value. The effect of this unrealized appreciation or depreciation
will generally be offset by income or loss on the derivative instruments that are linked to the hedged assets and liabilities. By
engaging in derivative transactions, we are exposed to credit and market risk. If the counterparty fails to perform, credit risk
exists to the extent of the fair value gain in the derivative. Market risk exists to the extent that interest rates change in ways
that are significantly different from what we expected when we entered into the derivative transaction. 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 fair value of our investment securities can fluctuate due to factors outside of our control.
At December 31, 2020, the fair value of our portfolio of available for sale investment securities was approximately
$1.00 billion, which included a net unrealized gain of approximately $33.1 million. Factors beyond our control can
significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of
these securities. These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by the
issuer or with respect to the underlying securities, and changes in market interest rates and continued instability in the capital
markets. Any of these factors, among others, could cause an increase in the amount of the allowance for credit losses as it
pertains to available for sale or held-to-maturity debt securities, which could have an adverse effect on our business, results of
operations, financial condition and future prospects. 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.
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If we fail to maintain an effective system of disclosure controls and procedures and internal control over
financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Ensuring that we have adequate disclosure controls and procedures, including internal control over financial
reporting, in place so that we can produce accurate financial statements on a timely basis, is costly and time-consuming and
needs to be reevaluated frequently. Under applicable law, we must provide annual management assessments of the
effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over
financial reporting is not effective due to our failure to cure any identified material weakness or otherwise. Moreover, even if
our management concludes that our internal control over financial reporting is effective, our independent registered public
accounting firm may not conclude that our internal control over financial reporting is effective. In the future, our independent
registered public accounting firm may not be satisfied with our internal control over financial reporting or the level at which
our controls are documented, designed, operated or reviewed, or it may interpret the relevant requirements differently from
us. In addition, during the course of the evaluation, documentation and testing of our internal control over financial reporting,
we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the SEC, for
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. Any deficiencies in our internal control over
financial reporting may also subject us to adverse regulatory consequences. If we fail to achieve and maintain the adequacy of
our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we
may be unable to report our financial information on a timely basis, we may not be able to conclude on an ongoing basis that
we have effective internal control over financial reporting in accordance with applicable law, and we may suffer adverse
regulatory consequences or violate applicable listing standards. In addition, if we fail to achieve and maintain the adequacy of
our internal control over financial reporting, we could experience a loss of investor confidence in the reliability of our
financial statements.
Material weaknesses in our financial reporting or internal controls could result in a material misstatement in our
financial statements and negatively affect investor confidence.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis.
The identification of any material weakness could also result in investors losing confidence in our internal control
systems and questioning our reported financial information, which, among other things, could have a negative impact on the
trading price of our common stock. Additionally, we could become subject to increased regulatory scrutiny and a higher risk
of stockholder litigation, which could result in significant additional expenses and require additional financial and
management resources.
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 and account analysis. Our business depends on the
successful and uninterrupted functioning of our information technology and telecommunications systems and third-party
servicers. 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. Because our information technology and telecommunications
systems interface with and depend on third-party systems, we could experience service denials if demand for such services
exceeds capacity or such third-party systems fail or experience interruptions. Replacing vendors or addressing other issues
with our third-party service providers could entail significant delay and expense. 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.
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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. We may be held liable to a
governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by
these parties in connection with environmental contamination or may be required to investigate or clean up hazardous or toxic
substances or chemical releases at a property. The costs associated with investigation or remediation activities could be
substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law
claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.
Any significant environmental liabilities could cause an adverse effect on our business, financial condition and results of
operations.
We are subject to claims and litigation pertaining to intellectual property.
Banking and other financial services companies, such as ours, rely on technology companies to provide information
technology products and services necessary to support their day-to-day operations. Technology companies frequently enter
into litigation based on allegations of patent infringement or other violations of intellectual property rights. In addition, patent
holding companies seek to monetize patents they have purchased or otherwise obtained. Competitors of our vendors, or other
individuals or companies, may from time to time claim to hold intellectual property sold to us by our vendors. Such claims
may increase in the future as the financial services sector becomes more reliant on information technology vendors. The
plaintiffs in these actions frequently seek injunctions and substantial damages.
Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by
potential or actual litigants, we may have to engage in protracted litigation. Such litigation is often expensive, time-
consuming, disruptive to our operations and distracting to management. If we are found to infringe one or more patents or
other intellectual property rights, we may be required to pay substantial damages or royalties to a third party. In certain cases,
we may consider entering into licensing agreements for disputed intellectual property, although no assurance can be given
that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also significantly
increase our operating expenses. If legal matters related to intellectual property claims were resolved against us or settled, we
could be required to make payments in amounts that could have an adverse effect on our business, financial condition and
results of operations.
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. We have exposure to different industries and counterparties, and through transactions
with counterparties in the financial services industry, including broker-dealers, commercial banks, investment banks, and
other financial intermediaries. In addition, we participate in loans originated by other institutions, and we participate in
syndicated transactions (including shared national credits) in which other lenders serve as the lead bank. As a result, defaults
by, declines in the financial condition of, or even rumors or questions about, one or more financial institutions, financial
service companies or the financial services industry generally, may lead to market-wide liquidity, asset quality or other
problems and could lead to losses or defaults by us or by other institutions. These problems, losses or defaults could have an
adverse effect on our business, financial condition and results of operations.
39
Risks Related to the Regulation of Our Industry
We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate
governance, executive compensation and accounting principles, or changes in them, or our failure to comply with them,
could subject us to regulatory action or penalties.
We are subject to extensive regulation, supervision and legal requirements that govern almost all aspects of our
operations. These laws and regulations are not intended to protect our stockholders. Rather, these laws and regulations are
intended to protect customers, depositors, the Deposit Insurance Fund and the overall financial stability of the U.S., and not
stockholders or counterparties. These laws and regulations, among other matters, prescribe minimum capital requirements,
impose limitations on the business activities in which we can engage, limit the dividends or distributions that Origin Bank can
pay to us, and that we can pay to our stockholders, and impose certain specific accounting requirements on us that may be
more restrictive and may result in greater or earlier charges to earnings or reductions in our capital than United States
generally accepted accounting principles ("U.S. GAAP") alone would generally require. Compliance with laws and
regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. Our
failure to comply with these laws and regulations, even if the failure follows good faith effort or reflects a difference in
interpretation, could subject us to restrictions on our business activities, fines and other penalties, any of which could
adversely affect our results of operations, capital base and the price of our securities. Further, any new laws, rules and
regulations could make compliance more difficult or expensive. All of these laws and regulations, and the supervisory
framework applicable to our industry, could have a material adverse effect on our business, financial condition, and results of
operations.
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.
Beginning January 1, 2015, we became subject to regulatory capital rules that generally require us to maintain
greater amounts of regulatory capital than we were required to maintain prior to implementation of such rules and may also
limit or restrict how we utilize our capital. Increased regulatory capital requirements (and the associated compliance costs)
whether due to the adoption of new laws and regulations, changes in existing laws and regulations, or more expansive or
aggressive interpretations of existing laws and regulations, may require us to raise additional capital, or impact our ability to
repurchase shares of capital stock, pay dividends or pay compensation to our executives, which could have a material and
adverse effect on our business, financial condition, results of operations and the value of our common stock. 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. Even if we meet minimum capital requirements, it is possible that our
regulators may ask us to raise additional capital.
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 federal Financial Crimes Enforcement Network, established by the Treasury
to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those
requirements and has recently engaged in coordinated enforcement efforts with the individual federal bank regulatory
agencies, as well as the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service. Federal
bank regulatory agencies and state bank regulators also have begun to focus on compliance with Bank Secrecy Act and anti-
money laundering regulations. If our policies, procedures and systems are deemed deficient, we would be subject to liability,
including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain
regulatory approvals to proceed with certain aspects of our business plan, which would negatively impact our business,
financial condition and results of operations.
40
Failure by Origin Bank to perform satisfactorily on its Community Reinvestment Act evaluations could make it
more difficult for our business to grow.
The performance of a bank under the CRA, in meeting the credit needs of its community is a factor that must be
taken into consideration when the federal banking agencies evaluate applications related to mergers and acquisitions, as well
as branch opening and relocations. If Origin Bank is unable to maintain at least a "Satisfactory" CRA rating, our ability to
complete the acquisition of another financial institution or open a new branch will be adversely impacted. If Origin Bank
received an overall CRA rating of less than "Satisfactory", the Federal Reserve would not re-evaluate its rating until its next
CRA examination, which may not occur for several more years, and it is possible that a low CRA rating would not improve
in the future.
Increases in Federal Deposit Insurance Corporation insurance premiums could adversely affect our earnings
and results of operations.
The deposits of Origin Bank are insured by the Federal Deposit Insurance Corporation ("FDIC") up to legal limits
and, accordingly, subject it to the payment of FDIC deposit insurance assessments. The bank's regular assessments are
determined by the level of its assessment base and its risk classification, which is based on its regulatory capital levels and the
level of supervisory concern that it poses. Moreover, the FDIC has the unilateral power to change deposit insurance
assessment rates and the manner in which deposit insurance is calculated and also to charge special assessments to FDIC-
insured institutions. The FDIC utilized all of these powers during the financial crisis for the purpose of restoring the reserve
ratios of the Deposit Insurance Fund. 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.
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.
The market price of our common stock may be highly volatile, which may make it difficult for you to resell your
shares at the volume, prices and times desired. 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 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;
41
•
•
•
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.
In particular, the realization of any of the risks described in this "Risk Factors" section of this report or other
unknown risks could have a material adverse effect on the market price of our common stock and cause the value of your
investment to decline. The stock market and, in particular, the market for financial institution stocks have experienced
substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects
of particular companies. In addition, significant fluctuations in the trading volume of our common stock may cause
significant price variations to occur. 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, and our future ability to pay dividends is subject to restrictions,
and we may not pay dividends in the future. We are dependent on dividends from the Bank to meet our financial
obligations and pay dividends to our stockholders.
Holders of our common stock are entitled to receive only such cash dividends as our board of directors may declare
out of funds legally available for the payment of dividends. Our board of directors may, in its sole discretion, change the
amount or frequency of dividends or discontinue the payment of dividends entirely at any time without notice to our
stockholders. Our ability to pay dividends may also be limited on account of our outstanding indebtedness as we generally
must make payments on our junior subordinated debentures and our outstanding indebtedness before any dividends can be
paid on our common stock.
Additionally, because our primary asset is our investment in the stock of Origin Bank, we are dependent upon
dividends from the bank to pay our operating expenses, satisfy our obligations and pay dividends on our common stock, and
the bank's ability to pay dividends on its common stock will substantially depend upon its earnings and financial condition,
liquidity and capital requirements, the general economic and regulatory climate and other factors deemed relevant by its
board of directors. In addition, our and the Bank's ability to declare and pay dividends depends on numerous laws and
banking regulations and guidance that limit our and Origin Bank's ability to pay dividends, including the guidelines of the
Federal Reserve regarding capital adequacy and dividends. 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.
Securities analysts may not continue coverage on us.
The trading market for our common stock will depend, in part, on the research and reports that securities analysts
publish about us and our business. We do not have any control over these securities analysts, and they may not continue to
cover us. If one or more of these analysts cease to cover us or fail to publish regular reports on us, we could lose visibility in
the financial markets, which could cause the price or trading volume of our common stock to decline. If we are covered by
securities analysts and are the subject of an unfavorable report, the price of our common stock may decline.
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 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.
42
Item 2.
Properties
At December 31, 2020, our executive offices and those of Origin Bank were located at 500 South Service Road East,
Ruston, Louisiana 71270 and we operated through 43 banking centers in Texas, Louisiana and Mississippi. At December 31,
2020, our primary offices outside of Louisiana were located in Dallas, Texas, Houston, Texas and Ridgeland, Mississippi. At
December 31, 2020, Origin Bank owned its main office building and 24 of its banking centers, as well as a controlling
interest in its operations center. The remaining facilities were occupied under lease agreements, terms of which range from
month to month to 19 years. We believe that our banking and other offices are in good condition and are suitable and
adequate to our needs.
Item 3.
Legal Proceedings
We are subject to various legal actions that arise from time to time in the ordinary course of business. While the
ultimate outcome of pending proceedings cannot be predicted with certainty, at this time management does not expect any
such proceedings, either individually or in the aggregate, would have a material adverse effect on our consolidated financial
position or results of operations. However, one or more unfavorable outcomes in any legal action against us could have a
material adverse effect for the period in which they are resolved. In addition, regardless of their merits or their ultimate
outcomes, such matters are costly, divert management's attention and may materially adversely affect our reputation, even if
resolved in our favor.
Item 4.
Mine Safety Disclosures
Not applicable.
43
PART II
Item 5.
Equity Securities
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
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.
At February 16, 2021, there were approximately 1,974 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. Any declarations
of dividends, and the amount and timing thereof, will be at the discretion of our board of directors. In determining the amount
of any future dividends, our board of directors will take into account our earnings, capital requirements, financial condition
and any other relevant factors. The primary source for dividends paid to stockholders are dividends or capital distributions
paid to the Company from the Bank. There are regulatory restrictions on the ability of the Bank to pay dividends. Therefore,
there can be no assurance that we will pay any dividends to holders of our stock or the amount of any such dividends. See
"Item 1. Business - Regulation and Supervision" above and see Note 17 - Capital and Regulatory Matters contained in Item 8
of this report.
Equity Compensation Plans
See "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters"
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 SNL Index for U.S. Banks with net assets between $1.0 billion
and $5.0 billion 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, 2020. The following reflects index values as of close of
trading, assumes $100.00 invested on May 9, 2018, in our common stock, the Nasdaq Composite Index, the SNL Index for
U.S. Banks total assets of $1.00 billion to $5.00 billion and the SNL Index for U.S. Banks total assets of $5.00 billion to
$10.00 billion 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. We neither make nor endorse any
predictions as to our stock performance.
44
Comparison of Cumulative Total Stockholder ReturnOrigin Bancorp, Inc.Nasdaq Composite IndexSNL U.S. Banks $1B - $5BSNL U.S. Banks $5B - $10B05/09/1806/30/1809/30/1812/31/1803/31/1906/30/1909/30/1912/31/1903/31/2006/30/2009/30/2012/31/20$60$90$120$150$180 May 9,
2018
Jun 30,
2018
Sep 30,
2018
Dec 31,
2018
Mar 31,
2019
Jun 30,
2019
Sep 30,
2019
Dec 31,
2019
Mar 31,
2020
Jun 30,
2020
Sep 30,
2020
Dec 31,
2020
Origin Bancorp,
Inc.
$ 100.00 $ 120.51 $ 110.91 $ 100.48 $ 100.49 $ 97.49 $ 99.96 $ 112.41 $ 60.31 $ 65.87 $ 64.20 $ 83.80
Nasdaq
Composite Index 100.00
102.32
109.62
90.40
105.31
109.08
108.98
122.24
104.91
137.04
152.15
175.34
SNL Index for
U.S. Banks
$1B - $5B
SNL Index for
U.S. Banks $5B
- $10B
100.00
95.30
96.48
80.02
85.74
89.04
88.97
97.69
63.10
67.41
60.52
80.75
100.00
99.12
97.82
83.46
88.67
93.39
91.65
101.18
65.96
70.31
64.15
89.45
Unregistered Sales of Equity Securities and Use of Proceeds
Stock Repurchases
In July 2019, our board of directors authorized a stock buyback program pursuant to which we may, from time to
time, purchase up to $40 million of our outstanding common stock. The shares may be repurchased in the open market or in
privately negotiated transactions from time to time, depending upon market conditions and other factors, and in accordance
with applicable regulations of the Securities and Exchange Commission. The stock buyback program is intended to expire in
three years, but may be terminated or amended by our board of directors at any time.
At December 31, 2020, approximately $29.2 million may yet be purchased under the stock buyback program. The
following table summarizes the Company's stock repurchase activity for the years ended December 31, 2020 and 2019.
(Dollars in thousands, except per share amounts)
Period
July 1, 2019 - July 31, 2019
August 1, 2019 - August 31, 2019
September 1, 2019 - September 30, 2019
Total third quarter 2019
Total fourth quarter 2019
Total 2019
January 1, 2020 - January 31, 2020
February 1,2020 - February 29, 2020
March 1, 2020 - March 31, 2020
Total first quarter 2020
Total second quarter 2020
Total third quarter 2020
Total fourth quarter 2020
Total 2020
Total
Number of
Shares
Purchased
Average
Price Paid
per Share
Total Number of
Shares Purchased as
Part of Publicly
Announced Plan
Approximate Dollar
Value of Shares That
May Yet Be Purchased
Under the Plan at the
End of the Period
— $
300,000
—
300,000
—
300,000
—
—
30,868
30,868
—
—
—
—
33.53
—
33.53
—
33.53
—
—
23.44
23.44
—
—
—
— $
300,000
—
300,000
—
300,000
—
—
30,868
30,868
—
—
—
30,868 $
23.44
30,868 $
40,000
29,941
29,941
29,941
29,941
29,941
29,941
29,941
29,217
29,217
29,217
29,217
29,217
29,217
45
Item 6.
Selected Financial Data
The following tables set forth certain selected historical consolidated financial data as of and for each of the years
ended December 31, 2020, 2019, 2018, 2017 and 2016, and is derived from our audited consolidated financial statements.
You should read this information in conjunction with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contained in Item 7 of this report and our consolidated financial statements and related notes
contained in Item 8 of this report.
(Dollars in thousands, except per share amounts)
At and for the Years Ended December 31,
2020
2019
2018
2017
2016
Statement of income data:
Total interest income
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit
losses
Noninterest income
Noninterest expense
Income before income taxes
Income tax expense
Net income
Pre-tax, pre-provision earnings ("PTPP")(1)
Common stock dividends
Balance sheet data (period end):
$
$
$
228,702
$
227,082
$
188,096
$
152,593
$
139,151
37,166
191,536
59,900
131,636
64,652
151,935
44,353
7,996
36,357
104,253
8,870
53,370
173,712
9,568
164,144
46,478
144,074
66,548
12,666
53,882
76,116
5,887
34,644
153,452
1,014
152,438
41,240
131,236
62,442
10,837
51,605
63,456
2,937
$
$
22,288
130,305
8,336
121,969
29,187
130,674
20,482
5,813
14,669
28,818
2,535
18,468
120,683
30,078
90,605
41,868
116,707
15,766
2,916
12,850
45,844
2,331
$
$
$
$
$
$
Total assets
Securities
Loans, net (2)
Allowance for credit losses
Goodwill and other intangible assets, net
Noninterest-bearing deposits
Total deposits
Total stockholders' equity (3)
SBLF preferred stock
Series D preferred stock
Earnings per share data:
Net income
Preferred stock dividends
Net income allocated to participating
stockholders
Net income available to common stockholders
Common shares outstanding at end of period (4)
Weighted average common shares outstanding (4)
Weighted average diluted common shares
outstanding (4)
Basic earnings per share (4)
Diluted earnings per share (4)
$ 7,628,268
$ 5,324,626
$ 4,821,576
$ 4,153,995
$ 4,071,455
1,054,356
5,638,103
86,670
30,480
1,607,564
5,751,314
647,150
—
—
541,203
606,174
436,753
408,738
4,105,675
3,754,902
3,203,948
3,061,544
37,520
31,540
1,077,706
4,228,612
599,262
—
—
34,203
32,861
951,015
37,083
24,336
832,853
50,531
24,854
780,065
3,783,138
3,512,014
3,443,266
549,779
—
—
455,342
48,260
16,998
448,657
48,260
16,998
$
36,357
$
53,882
$
51,605
$
14,669
$
12,850
—
—
—
—
1,923
1,029
4,461
4,398
377
316
$
36,357
$
53,882
$
48,653
$
9,831
$
8,136
23,506,312
23,480,945
23,726,559
19,518,752
19,483,718
23,367,221
23,470,746
21,995,990
19,418,278
17,545,655
23,511,952
23,674,065
22,194,429
19,634,412
17,733,061
$
$
1.56
1.55
$
2.30
2.28
$
2.21
2.20
$
0.51
0.50
0.46
0.46
46
(Dollars in thousands, except per share amounts)
At and for the Years Ended December 31,
2020
2019
2018
2017
2016
Performance ratios:
Return on average assets (5)
Return on average equity (5)
Net interest margin, fully tax equivalent (6)
Efficiency ratio (7)
Dividend payout ratio
Asset quality ratios:
Nonperforming assets to total assets
Nonperforming LHFI to LHFI
Allowance for credit losses to nonperforming
LHFI
Allowance for credit losses to LHFI
Net charge-offs as a percentage of average
LHFI (5)
Capital ratios:
Book value per common share
Tangible book value per common share, (1) (as
converted for periods prior to 2018)
Equity to assets
Tier 1 leverage ratio
Common equity tier 1 capital to risk-weighted
assets
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets
0.56 %
1.06 %
1.16 %
0.36 %
0.33 %
5.82
3.18
59.31
24.40
9.27
3.69
65.43
10.93
10.07
3.75
67.41
6.04
3.19
3.52
81.93
25.79
3.11
3.38
71.80
28.65
0.38 %
0.46
0.69 %
0.75
0.75 %
0.84
0.59 %
0.73
1.67 %
2.14
331.45
1.51
120.46
0.91
107.37
0.90
155.80
1.14
0.22
0.15
0.13
0.69
75.92
1.62
0.71
$
27.53
$
25.52
$
23.17
$
19.99
$
19.68
26.23
8.48 %
8.62
9.95
10.11
13.79
24.18
11.25 %
10.91
11.74
11.94
12.76
21.79
11.40 %
11.21
11.94
12.16
12.98
18.74
10.96 %
10.53
9.35
11.25
12.26
18.42
11.02 %
10.67
9.42
11.33
12.58
____________________________
(1)
PTPP earnings and tangible book value per common share, (as converted for periods prior to 2018), are non-GAAP financial measures. For a
reconciliation of these non-GAAP financial measures to their comparable GAAP measures, please see Non-GAAP financial measures under Item 7 of
this report.
Balances are shown net of the allowance for credit losses and exclude loans held for sale.
Includes shares owned by our Employee Retirement Plan ("Retirement Plan") for periods prior to December 31, 2018.
Presentation of share and per share amounts has been adjusted to reflect a 2-for-1 stock split that occurred on October 5, 2016.
All average balances are calculated using average daily balances.
Tax equivalent yields are calculated by applying a 21% estimated tax rate to tax-exempt interest earnings for the years ended December 31, 2020,
2019, and 2018. A 35% estimated tax rate is used for all periods prior to December 31, 2018.
(2)
(3)
(4)
(5)
(6)
(7) We calculate the efficiency ratio by dividing noninterest expense by the sum of net interest income and noninterest income. The efficiency ratio is not
calculated on a fully tax equivalent basis.
47
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis presents our financial condition and results of operations on a consolidated
basis. However, we conduct all of our material business operations through our wholly owned bank subsidiary, Origin Bank,
and the discussion and analysis that follows primarily relates to activities conducted at the Bank level.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and
related notes contained in Item 8 of this report. To the extent that this discussion describes prior performance, the
descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to
historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions
that could cause results to differ materially from management's expectations. Factors that could cause such differences are
discussed in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Item 1A. Risk Factors." 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 2020 and 2019 and year-
over-year comparisons between 2020 and 2019. For discussion on results of operations and financial condition pertaining to
2019 and 2018 and year-over-year comparisons between 2019 and 2018, 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, 2019 filed with the SEC on February 28, 2020.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with U.S. GAAP and with general practices within
the financial services industry. Application of these principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under current circumstances. These
assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available
from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may
have resulted in significantly different estimates. Actual results may differ from these estimates. Please refer to Note 1 -
Significant Accounting Policies to our consolidated financial statements contained in Item 8 of this report for a full discussion
of our accounting policies, including estimates.
We have identified the following accounting estimates that, due to the difficult, subjective or complex judgments
and assumptions inherent in those estimates and the potential sensitivity of the financial statements to those judgments and
assumptions, are critical to an understanding of our financial condition and results of operations. We believe that the
judgments, estimates and assumptions used in the preparation of the financial statements are appropriate.
Allowance for Credit Losses. Effective January 1, 2020, we adopted CECL, resulting in a change to the our reporting
of credit losses for assets held at amortized cost basis and available for sale debt securities. As a result, we recognized a one-
time, after tax cumulative effect adjustment of $760,000 to retained earnings at the beginning of the first quarter of 2020,
increasing the allowance for credit losses by approximately $1.2 million and decreasing the off-balance sheet reserve by
$381,000.
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. We evaluate loans
held for investment on a pool basis with pools of loans characterized by loan type, collateral, industry, internal credit risk
rating and FICO score. 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. 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. 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 credit losses when management believes the loss is confirmed.
48
In the first quarter of 2020, U.S. federal regulatory authorities issued an interim final rule that provides banking
organizations that adopt CECL during the 2020 calendar year with the option to delay the regulatory capital impact for up to
two years (beginning January 1, 2020), followed by a three-year transition period. We have elected to use the two-year delay
of CECL’s impact on our regulatory capital (from January 1, 2020 through December 31, 2021) followed by the three-year
transition period of CECL’s initial impact on our regulatory capital (from January 1, 2022 through December 31, 2024).
Goodwill. Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business,
is not amortized but tested for impairment on an annual basis, which is typically October 1 for the Company, or more often if
events or circumstances indicate that there may be impairment. Because of the volatile market conditions during which the
Company's market value fell below book value, the Company performed a qualitative assessment of whether it was more
likely than not that the fair value was less than carrying value during each quarter of 2020 including a goodwill impairment
assessment performed by a third party valuation specialist during the second quarter of 2020. Based on these assessments, it
was determined that the Company's fair value exceeded carrying value and no goodwill impairment was recorded during
2020.
Mortgage Servicing Rights. We recognize the rights to service mortgage loans based on the estimated fair value of
the Mortgage Servicing Right ("MSR") when loans are sold and the associated servicing rights are retained. We elected to
account for the MSR at fair value.
The fair value of the MSR is determined using a valuation model administered by a third party that calculates the
present value of estimated future net servicing income. The model incorporates assumptions that market participants use in
estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service
(including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income and other ancillary
income such as late fees. Management reviews all significant assumptions quarterly. Mortgage loan prepayment speeds, a key
assumption in the model, is the annual rate at which borrowers are forecasted to repay their mortgage loan principal. The
discount rate used to determine the present value of estimated future net servicing income, another key assumption in the
model, is an estimate of the rate of return investors in the market would require for an asset with similar risk. Both
assumptions can, and generally will, change as market conditions and interest rates change.
An increase in either the prepayment speed or discount rate assumption will result in a decrease in the fair value of
the MSR, while a decrease in these assumptions will result in an increase in the fair value of the MSR. In recent years, there
have been significant market-driven fluctuations in loan prepayment speeds and discount rates. 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. Our wholly owned bank subsidiary, Origin
Bank, was founded in 1912. Deeply rooted in our history is a culture committed to providing personalized, relationship
banking to its clients and communities. We provide a broad range of financial services to businesses, municipalities, high net-
worth individuals and retail clients. We currently operate 44 banking centers located from Dallas/Fort Worth and Houston,
Texas across North Louisiana and into Mississippi. As a financial holding company operating through one segment, we
generate the majority of our revenue from interest earned on loans and investments, service charges and fees on deposit
accounts.
We incur interest expense on deposits and other borrowed funds and noninterest expense, such as salaries and
employee benefits and occupancy expenses. We analyze our ability to maximize 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. 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.
49
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. Fluctuations in market interest rates are driven by many factors, including governmental monetary policies,
inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international
conditions and conditions in domestic and foreign financial markets. Periodic changes in the volume and types of loans in our
loan portfolio are affected by, among other factors, economic and competitive conditions, as well as developments affecting
the real estate, technology, financial services, insurance, transportation and manufacturing sectors within our target markets.
Comparison of Results of Operations for the Years Ended December 31, 2020 and 2019
Net Interest Income
Year ended December 31, 2020, compared to year ended December 31, 2019
Net interest income for the year ended December 31, 2020, was $191.5 million, an increase of $17.8 million over the
year ended December 31, 2019. The increase was primarily due to a $17.6 million reduction in total deposit interest expenses,
coupled with a $11.6 million increase in income from mortgage warehouse lines of credit, offset by a $10.9 million total
decrease in interest earned on loans held for investment ("LHFI") portfolio, excluding mortgage warehouse loans, during the
year ended December 31, 2020, compared to the year ended December 31, 2019.
Deposit interest expense decreased to $27.2 million during the current year, compared to $44.7 million during the
year ended December 31, 2019, primarily due to a reduction in deposit rates during the year. The average rate on interest-
bearing deposit accounts was 0.52% for the current year, down from 1.30% for the year ended December 31, 2019,
accounting for $22.6 million of the decrease in interest expense from the year ended December 31, 2019. The average rate on
time deposits decreased to 1.62% for the current year ended December 31, 2020, down from 2.10% for the year ended
December 31, 2019, providing an additional decrease of $3.5 million in interest expense. These two rate-driven interest
expense declines were offset by a $10.5 million increase in interest expense due to an increase in the average balances of
savings and interest-bearing transaction accounts when comparing the year ended December 31, 2020, to December 31, 2019.
Interest income on mortgage warehouse lines of credit increased by $11.6 million during the year ended December
31, 2020, compared to the year ended December 31, 2019, due to higher mortgage activity driven by the low interest rate
environment, coupled with additional mortgage warehouse clients being onboarded and funding loans during 2020. There
was a 57.7% increase in mortgage warehouse clients at December 31, 2020, when compared to December 31, 2019. Interest
income earned on commercial and industrial loans, excluding Paycheck Protection Program ("PPP") loans, decreased by
$14.1 million during the year ended December 31, 2020, compared to December 31, 2019, primarily due to the impact of
lower interest rates. The lower interest rates contributed a $24.5 million decrease, which was partially offset by a $10.4
million increase due to higher average commercial and industrial loan balances. PPP loans, which were funded beginning in
the second quarter of the 2020 year as part of the CARES Act, contributed an additional $9.8 million in interest income
during the year ended December 31, 2020. Please see Item 1 - Lending Activities in the Business section of the this report for
more information on the CARES Act.
50
Construction/land/land
development
Residential real estate
PPP
Commercial and industrial
excl. PPP
Mortgage warehouse lines
of credit
Consumer
LHFI
The following table presents average balance sheet information, interest income, interest expense and the
corresponding average yields earned and rates paid for the years ended December 31, 2020, 2019 and 2018.
(Dollars in thousands)
Assets
Average
Balance(1)
2020
Income/
Expense
Yield/
Rate
Average
Balance(1)
2019
Income/
Expense
Yield/
Rate
Average
Balance(1)
2018
Income/
Expense
Yield/
Rate
Commercial real estate
$ 1,322,477 $
59,059
4.47 % $ 1,247,941 $
64,214
5.15 % $ 1,119,184 $
54,777
4.89 %
Years Ended December 31,
554,038
769,838
388,736
25,255
34,147
9,759
4.56
4.44
2.51
505,795
661,581
—
27,918
32,634
—
5.52
4.93
—
369,999
585,545
—
19,579
27,331
—
5.29
4.67
—
1,321,912
54,860
4.15
1,324,002
68,991
5.21
1,100,560
54,633
4.96
574,837
18,707
22,320
1,195
4,950,545
206,595
3.88
6.39
4.17
3.07
4.16
212,733
20,809
10,698
1,426
3,972,861
205,881
29,656
1,018
4,002,517
206,899
5.03
6.85
5.18
3.43
5.17
199,952
20,941
10,630
1,410
3,396,181
168,360
22,959
1,024
3,419,140
169,384
5.32
6.73
4.96
4.46
4.95
Loans held for sale
82,178
2,519
Loans receivable
5,032,723
209,114
Investment securities-
taxable
Investment securities-non-
taxable
Non-marketable equity
securities held in other
financial institutions
Interest-bearing deposits in
banks
Total interest-earning
assets
536,816
11,302
2.11
469,100
11,975
2.55
404,280
9,843
2.43
214,224
5,428
2.53
102,258
3,327
3.25
124,907
4,465
3.57
42,782
1,055
2.47
46,233
1,421
3.07
29,615
897
3.03
276,423
1,803
0.65
145,090
3,460
2.38
177,349
3,507
1.98
6,102,968
228,702
3.75
4,765,198
227,082
4.77
4,155,291
188,096
4.53
Noninterest-earning assets(2)
339,560
Total assets
$ 6,442,528
327,773
$ 5,092,971
307,847
$ 4,463,138
Liabilities and
Stockholders' Equity
Liabilities
Interest-bearing liabilities
Savings and interest-
bearing transaction
accounts
Time deposits
Total interest-bearing
deposits
FHLB advances & other
borrowings
Securities sold under
agreements to repurchase
Subordinated debentures
Total interest-bearing
liabilities
Noninterest-bearing
deposits
Other liabilities(2)
Total liabilities
Stockholders' Equity
Total liabilities and
stockholders' equity
Net interest spread
Net interest income and
margin
Net interest income and
margin - (tax equivalent)(3)
$ 2,904,587 $
15,215
0.52 % $ 2,098,393 $
27,330
1.30 % $ 1,996,364 $
19,002
0.95 %
735,297
11,935
1.62
827,720
17,386
2.10
712,913
10,669
1.50
3,639,884
27,150
0.75
2,926,113
44,716
1.53
2,709,277
29,671
1.10
456,586
5,868
1.29
397,739
7,746
1.95
179,359
4,138
2.31
12,388
88,358
27
4,121
0.22
4.66
29,256
9,658
351
557
1.20
5.69
32,604
9,631
282
553
0.86
5.67
4,197,216
37,166
0.89
3,362,766
53,370
1.59
2,930,871
34,644
1.18
1,499,936
120,796
5,817,948
624,580
1,054,903
94,357
4,512,026
580,945
948,585
71,451
3,950,907
512,231
$ 6,442,528
$ 5,092,971
$ 4,463,138
2.86 %
3.18 %
3.35 %
$ 191,536
3.14
$ 173,712
3.65
$ 153,452
3.69
$ 194,196
3.18
$ 175,814
3.69
$ 155,856
3.75
____________________________
51
(1)
(2)
(3)
Nonaccrual loans are included in their respective loan category for the purpose of calculating the yield earned. All average balances are daily average
balances.
Includes Government National Mortgage Association ("GNMA") repurchase average balances of $37.7 million, $26.0 million and $30.1 million for the
years ended December 31, 2020, 2019 and 2018, 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 9 - Mortgage Banking in the notes to our consolidated financial statements.
In order to present pre-tax income and resulting yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent
adjustment has been computed. This adjustment also includes income tax credits received on Qualified School Construction Bonds and income from
tax-exempt investments and tax credits were computed using a Federal income tax rate of 21%.
52
Rate/Volume Analysis
The following tables present the dollar amount of changes in interest income and interest expense for major
components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to
outstanding balances and those due to changes in interest rates. The change in interest attributable to rate changes has been
determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change
in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances
outstanding between periods. For purposes of this table, changes attributable to both rate and volume that cannot be
segregated, including the difference in day count, have been allocated to rate.
(Dollars in thousands)
Interest-earning assets
Loans:
Commercial real estate
Construction/land/land development
Residential real estate
PPP
Commercial and industrial excl. PPP
Mortgage warehouse lines of credit
Consumer
Loans held for sale
Loans receivable
Investment securities-taxable
Investment securities-non-taxable
Non-marketable equity securities held in other financial institutions
Interest-bearing deposits in banks
Total interest-earning assets
Interest-bearing liabilities
Savings and interest-bearing transaction accounts
Time deposits
FHLB advances & other borrowings
Securities sold under agreements to repurchase
Subordinated debentures
Total interest-bearing liabilities
Net interest income
Year Ended December 31, 2020 vs. Year Ended
December 31, 2019
Increase (Decrease) due to Change
in
Volume
Yield/Rate
Total Change
$
3,835 $
(8,990) $
2,663
5,340
9,759
10,388
18,211
(144)
1,804
51,856
1,729
3,642
(106)
3,132
60,253
10,500
(1,941)
1,146
(202)
4,475
13,978
(5,326)
(3,827)
—
(24,519)
(6,589)
(87)
(303)
(49,641)
(2,402)
(1,541)
(260)
(4,789)
(58,633)
(22,615)
(3,510)
(3,024)
(122)
(911)
(30,182)
$
46,275 $
(28,451) $
(5,155)
(2,663)
1,513
9,759
(14,131)
11,622
(231)
1,501
2,215
(673)
2,101
(366)
(1,657)
1,620
(12,115)
(5,451)
(1,878)
(324)
3,564
(16,204)
17,824
53
(Dollars in thousands)
Interest-earning assets
Loans:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Loans held for sale
Loans receivable
Investment securities-taxable
Investment securities-non-taxable
Non-marketable equity securities held in other financial institutions
Interest-bearing deposits in banks
Federal funds sold
Total interest-earning assets
Interest-bearing liabilities
Savings and interest-bearing transaction accounts
Time deposits
FHLB advances & other borrowings
Securities sold under agreements to repurchase
Junior subordinated debentures
Total interest-bearing liabilities
Net interest income
Provision for Credit Losses
Year Ended December 31, 2019 vs. Year Ended
December 31, 2018
Increase (Decrease) due to Change
in
Volume
Yield/Rate
Total Change
$
6,302 $
3,135 $
7,186
3,549
11,092
679
(9)
299
29,098
1,578
(810)
503
(631)
—
29,738
971
1,718
5,038
(29)
2
7,700
1,153
1,754
3,266
(611)
25
(305)
8,417
554
(328)
21
592
(8)
9,248
7,357
4,999
(1,430)
98
2
11,026
$
22,038 $
(1,778) $
9,437
8,339
5,303
14,358
68
16
(6)
37,515
2,132
(1,138)
524
(39)
(8)
38,986
8,328
6,717
3,608
69
4
18,726
20,260
The provision for credit losses, which includes the provisions for loan losses, off-balance sheet commitments and
security credit losses, is based on management's assessment of the adequacy of our allowance for credit losses ("ACL") for
loans, securities and our reserve for off-balance sheet lending commitments. Factors impacting the provision include inherent
risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, local
economic and credit conditions, the direction of the change in collateral values, reasonable and supportable forecasts, and the
funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to
maintain our ACL, which reflects management's best estimate of life of loan credit losses inherent in our loan portfolio at the
balance sheet date, and our reserve for off-balance sheet lending commitments, which reflects management's best estimate of
losses inherent in our legally binding lending-related commitments. The allowance is increased by the provision for loan
credit losses and decreased by charge-offs, net of recoveries.
Year ended December 31, 2020, compared to year ended December 31, 2019
On January 1, 2020, we adopted CECL and recognized a one-time cumulative effect adjustment to the allowance for
loan credit losses of $1.2 million. CECL requires recording life-of-loan projected losses in the loan portfolio based on
reasonable and supportable forecasts and related loan portfolio credit performance. At adoption on January 1, 2020, the
economic effects resulting from the COVID-19 pandemic were unknown. As such, the economic scenario used to develop
our estimate of CECL as of the adoption date assumed a continued moderate U.S. economic expansion compared to 2019.
The prior accounting standard recorded reserves based on probable losses at the balance sheet date, generally resulting in
lower reserve levels at the outset of an economic downturn.
54
Our earnings for the year ended December 31, 2020, were significantly impacted by the COVID-19 pandemic and
the uncertainty surrounding the economic outlook and ongoing COVID-19 pandemic, which shaped the forecast we used in
our calculation of the CECL estimate at December 31, 2020, and caused us to significantly increase our allowance for loan
credit losses. If the pandemic worsens and drives further deterioration in the economic outlook we could continue to see an
impact on earnings related to an increase in the provision for the allowance for loan credit losses.
Excluding PPP loans, at December 31, 2020, we had $538.6 million, or 10.4%, of our LHFI invested in key sectors
that appear to be heavily affected by COVID-19 including: hotel, energy, non-essential retail, restaurant and assisted living.
While we have recorded significant loss reserves, the reserves are an estimate and subject to change. Nonperforming LHFI in
these key sectors impacted by COVID-19 was $5.9 million at December 31, 2020, while past due LHFI, defined as loans 30
days or more past due, as a percentage of LHFI, excluding PPP loans, in these key sectors impacted by COVID-19, was 1.0%
at December 31, 2020.
We recorded provision expense of $59.9 million for the year ended December 31, 2020, an increase of $50.3 million
from $9.6 million for the year ended December 31, 2019. The increase in provision expense from the year ended December
31, 2019, was primarily driven by an increase in the allowance for loan credit losses within the loan portfolio, primarily due
to the COVID-19 impact on the economy and the adoption of CECL. Net charge-offs were $11.1 million during the year
ended December 31, 2020, compared to $5.9 million during the year ended December 31, 2019. The increase was driven by
$6.6 million in charge-offs from two lending relationships in 2020. The remaining balance, after charge-offs, of these two
relationships as of December 31, 2020, were $1.5 million and $2.6 million included in the commercial and industrial and
commercial real estate categories, respectively.
Pursuant to rules of the federal banking agencies, we have elected to use a two-year delay of CECL’s impact on our
regulatory capital (from January 1, 2020 through December 31, 2021) followed by a three-year transition period of CECL’s
initial impact on our regulatory capital (from January 1, 2022 through December 31, 2024).
We continue to gather the latest information available, and as more information becomes available concerning the
economic impact and duration of the COVID-19 pandemic, we will update our forecast and related qualitative factors, which
could lead to further increases to our allowance for loan credit losses.
55
Noninterest Income
Our primary sources of recurring noninterest income are service charges on deposit accounts, mortgage banking
revenue, insurance commission and fee income, and other fee income.
The table below presents the various components of and changes in our noninterest income for the periods indicated.
(Dollars in thousands)
Noninterest income:
Years Ended December 31,
2020 vs. 2019
2019 vs. 2018
2020
2019
2018
$ Change % Change
$ Change % Change
Service charges and fees
$
12,998 $
13,859 $
12,754 $
(861)
(6.2) % $
Mortgage banking revenue
29,603
12,309
9,620
17,294
140.5
1,105
2,689
8.7 %
28.0
Insurance commission and fee
income
Gains (loss) on sales of securities,
net
(Loss) on sales and disposals of
other assets, net
Limited partnership investment
income
Swap fee income
Change in fair value of equity
investments
Other fee income
Other income
12,746
12,177
9,720
580
20
(8)
569
560
(1,213)
(333)
(170)
(880)
78
2,546
—
2,253
5,061
(6)
2,185
367
1,490
4,410
823
927
1,977
1,811
3,786
84
361
(367)
763
651
Total noninterest income
$
64,652 $
46,478 $
41,240 $
18,174
4.7
2,457
25.3
N/M
N/M
N/M
28
N/M
(163)
95.9
(829)
(100.7)
16.5
1,258
135.7
N/M
(1,610)
51.2
14.8
39.1
(321)
624
$
5,238
(81.4)
(17.7)
16.5
12.7
____________________________
N/M = Not meaningful.
Year ended December 31, 2020, compared to year ended December 31, 2019
Noninterest income for the year ended December 31, 2020, increased by $18.2 million, or 39.1%, to $64.7 million,
compared to $46.5 million for the year ended December 31, 2019. The increase in noninterest income during the year ended
December 31, 2020, was largely driven by a $17.3 million increase in mortgage banking revenue, with less significant
changes in other categories.
Mortgage banking revenue. The $17.3 million increase in mortgage banking revenue compared to the year ended
December 31, 2019, was primarily driven by a $18.7 million increase in volume-related gains and income due to higher
volumes of purchases and refinance activity during the year driven by falling interest rates, and a $4.0 million hedge gain,
partially offset by a $5.7 million decrease in MSR valuation adjustment, net of amortization. After the historic purchase and
re-finance market that we experienced in 2020, we expect refinance activity to decrease in 2021 which could reduce our
mortgage banking revenue from the 2020 historic high levels.
56
Noninterest Expense
The following table presents the significant components of noninterest expense for the periods indicated:
(Dollars in thousands)
Noninterest expense:
Years Ended December 31,
2020 vs. 2019
2019 vs. 2018
2020
2019
2018
$ Change % Change
$ Change % Change
Salaries and employee benefits
$
91,105 $
88,974 $
80,487 $
2,131
2.4 % $
Occupancy and equipment, net
17,022
16,759
15,445
Data processing
Electronic banking
Communications
Advertising and marketing
Professional services
Regulatory assessments
Loan related expenses
Office and operations
Intangible asset amortization
Franchise tax expense
Other
8,321
3,686
1,767
3,710
3,975
3,826
6,316
5,624
1,060
2,186
3,337
6,961
3,441
2,098
3,808
3,577
1,694
4,174
6,674
1,321
2,160
2,433
6,182
2,883
2,028
4,275
3,269
2,457
3,039
5,881
961
1,485
2,844
263
1,360
245
(331)
(98)
398
2,132
2,142
(1,050)
(261)
26
904
Total noninterest expense
$ 151,935 $ 144,074 $ 131,236 $
7,861
Year ended December 31, 2020, compared to year ended December 31, 2019
1.6
19.5
7.1
(15.8)
(2.6)
11.1
125.9
51.3
(15.7)
(19.8)
1.2
37.2
5.5
8,487
1,314
779
558
70
(467)
308
(763)
1,135
793
360
675
(411)
$
12,838
10.5 %
8.5
12.6
19.4
3.5
(10.9)
9.4
(31.1)
37.3
13.5
37.5
45.5
(14.5)
9.8
Noninterest expense increased by $7.9 million, or 5.5%, in 2020 to $151.9 million, primarily due to increases of
$2.1 million each in loan related expenses, regulatory assessments, salaries and employee benefits, and a $1.4 million
increase in data processing expenses, partially offset by a $1.1 million decrease in office and operations expenses.
Loan related expenses. The increase in loan related expenses was primarily driven by a $1.5 million increase in loan
subservicing costs. In the fourth quarter of 2019, we discontinued internal mortgage loan servicing operations and transferred
our mortgage loan servicing to a sub-servicer reducing salaries and benefits as discussed below.
Regulatory assessments. The $2.1 million increase in regulatory assessments was primarily due to the recognition of
a $1.0 million benefit from the Federal Deposit insurance Corporation ("FDIC") insurance fund, which reduced the total
expenses for the year ended December 31, 2019. Additionally, significant growth in our assets during the last 12 months also
contributed to the increase.
Salaries and employee benefits. The $2.1 million increase in salaries and employee benefits was primarily due to a
$2.2 million increase in mortgage commissions due to the increased mortgage loan production and sale volumes. Bonuses
also increased by $718,000 for mortgage warehouse and mortgage departments due to their increased production. Medical
self-insurance costs also increased $458,000 due to higher medical claims during the year ended December 31, 2020. These
increases were partially offset by a $1.2 million decrease in compensation due to the discontinuation of internal mortgage
loan servicing operations.
Data processing. The $1.4 million increase in data processing was driven by various technology enhancements in
2020 including PPP loan origination platform, human resource system conversion and CECL software enhancements, none of
which were individually significant factors in the change.
Office and operations. Office and operations expenses decreased by $1.1 million during the year ended December
31, 2020, compared to the year ended December 31, 2019, primarily due to reductions in travel and entertainment spending
due to the COVID-19 pandemic and related restrictions.
57
Income Tax Expense
For the year ended December 31, 2020, we recognized income tax expense of $8.0 million, compared to $12.7
million for the year ended December 31, 2019. Our effective tax rate for the year ended December 31, 2020, was 18.0%,
compared to 19.0% for the year ended December 31, 2019. The decrease in our effective tax rate for the year ended
December 31, 2020, was primarily due to the decrease in our pre-tax income compared to 2019, which made the proportional
effect on the tax-exempt items larger on the effective income tax rate.
Our effective income tax rates have differed from the applicable U.S. statutory rates of 21% at December 31, 2020,
2019, due to the effect of tax-exempt income from securities, low income housing and qualified school construction bond tax
credits, tax-exempt income from life insurance policies and income tax effects associated with stock-based compensation.
Because of these items, we expect our effective income tax rate to continue to remain below the applicable U.S. statutory
rate. These tax-exempt items can have a larger than proportional effect on the effective income tax rate as net income
decreases. Any increases to the statutory tax rate would increase income taxes in the future.
Comparison of Financial Condition at December 31, 2020, and December 31, 2019
General
Total assets increased by $2.30 billion, or 43.3%, to $7.63 billion at December 31, 2020, from $5.32 billion at
December 31, 2019. The increase was primarily attributable to $1.58 billion increase in LHFI and $503.6 million increase in
securities available for sale.
Loan Portfolio
Our loan portfolio is our largest category of interest-earning assets and interest income earned on our loan portfolio
is our primary source of income. At December 31, 2020, 74.9% of the loan portfolio held for investment was comprised of
commercial and industrial loans, including PPP loans, mortgage warehouse lines of credit and commercial real estate loans,
which were primarily originated within our market areas of Texas, North Louisiana, and Mississippi.
58
The following table presents the ending balance of our loan portfolio held for investment at the dates indicated.
December 31,
(Dollars in thousands)
Real estate:
2020
2019
2020 vs. 2019
Amount
Percent
Amount
Percent
$ Change
% Change
Commercial real estate
Construction/land/land development
Residential real estate
Total real estate
PPP
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total LHFI
$ 1,387,939
24.2 % $ 1,296,847
31.3 % $
531,860
885,120
2,804,919
546,519
1,271,343
1,084,001
17,991
9.3
15.5
49.0
9.5
22.3
18.9
0.3
517,688
689,555
2,504,090
—
1,343,475
274,659
20,971
12.5
16.6
60.4
—
32.5
6.6
0.5
91,092
14,172
195,565
300,829
546,519
(72,132)
809,342
(2,980)
7.0 %
2.7
28.4
12.0
N/A
(5.4)
294.7
(14.2)
$ 5,724,773
100.0 % $ 4,143,195
100.0 % $ 1,581,578
38.2 %
(Dollars in thousands)
Real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total LHFI
2018
December 31,
2017
2016
Amount
Percent
Amount
Percent
Amount
Percent
$ 1,228,402
32.4 % $ 1,083,275
33.5 % $ 1,026,752
33.0 %
429,660
629,714
2,287,776
1,272,566
207,871
20,892
11.3
16.6
60.3
33.6
5.5
0.6
322,404
570,583
1,976,262
989,220
255,044
20,505
9.9
17.6
61.0
30.5
7.9
0.6
311,279
414,226
1,752,257
1,135,683
201,997
22,138
10.0
13.3
56.3
36.5
6.5
0.7
$ 3,789,105
100.0 % $ 3,241,031
100.0 % $ 3,112,075
100.0 %
At December 31, 2020, total LHFI were $5.72 billion, an increase of $1.58 billion, or 38.2%, compared to $4.14
billion at December 31, 2019. The increase reflected growth in all significant loan categories except for commercial and
industrial loans. The largest increases are primarily reflected in mortgage warehouse lines of credit and PPP loans, which
increased $809.3 million and $546.5 million, respectively. The increase in mortgage warehouse lines of credit is primarily
due to increased mortgage activity driven by the continued low interest rate environment, coupled with additional mortgage
warehouse clients being onboarded and funding loans during 2020. This increased mortgage related activity, as well as
market disruption following merger activity by our peers and competitors, has allowed us to add new customers in the
warehouse lines of credit portfolio, and caused us to increase limits to support the record volume of loan purchase and
refinance activity. Our lending focus is on operating companies, including commercial loans and lines of credit as well as
owner-occupied commercial real estate loans. We currently do not plan to significantly alter the real estate concentrations
within our loan portfolio, however, we believe the volume within our mortgage warehouse lines of credit portfolio will
decline over the next year.
Under the CARES Act, Congress allocated funds to the PPP, which is designed to provide short-term loans to
certain qualifying businesses who retain employees during the COVID-19 pandemic. These loans, totaling $546.5 million for
the Company at December 31, 2020, have maximum maturity of two years, and we anticipate many of them will be forgiven
by the Small Business Administration under the terms of the PPP before their maturity date. As of February 18, 2021, $88.8
million of Origin Bank originated PPP loans have been forgiven under this program. The loans will bear a fixed rate of
interest at one percent for the entire term.
59
Loan Portfolio Maturity Analysis
The table below presents the maturity distribution of our LHFI at December 31, 2020. The table also presents the
portion of our loans that have fixed interest rates, rather than interest rates that fluctuate over the life of the loans based on
changes in the interest rate environment.
(Dollars in thousands)
Real estate:
December 31, 2020
One Year
or Less
Over One Year
Through Five
Years
Over Five
Years
Total
Commercial real estate
$
228,706 $
846,217 $
313,016 $
1,387,939
Construction/land/land development
Residential real estate loans
Total real estate
Commercial and industrial loans
Mortgage warehouse lines of credit
Consumer loans
Total LHFI
Amounts with fixed rates
Amounts with variable rates
Total
Loan Portfolio COVID-19 Impact
164,902
108,719
502,327
607,575
1,084,001
6,088
315,024
388,368
1,549,609
1,095,893
—
10,649
51,934
388,033
752,983
114,394
—
1,254
531,860
885,120
2,804,919
1,817,862
1,084,001
17,991
2,199,991 $
2,656,151 $
868,631 $
5,724,773
277,547 $
1,763,816 $
276,292 $
1,922,444
892,335
592,339
2,199,991 $
2,656,151 $
868,631 $
2,317,655
3,407,118
5,724,773
$
$
$
The COVID-19 pandemic has continued to have a severe impact on the U.S. economy leading to severe
unemployment and a recession. Consequently, the deteriorating economic outlook caused us to significantly increase the
allowance for loan credit losses during the year ended December 31, 2020, resulting in additional provision expense and
reduced earnings during the period. Due to the ongoing economic impact of the COVID-19 pandemic and governmental
efforts to contain it, we believe that certain sectors of the U.S. economy may be more affected than others. Some of the
sectors in which we operate that may experience a more significant impact include hotel, energy, non-essential retail,
restaurant and assisted living. At December 31, 2020, we had $538.6 million, or 10.4%, of our LHFI, excluding PPP loans,
invested in these sectors and, while we have recorded significant loss reserves, the reserves are an estimate and subject to
change. Nonperforming LHFI in the sectors impacted by COVID-19 was $5.9 million at December 31, 2020, while past due
LHFI, defined as loans 30 days or more past due, as a percentage of LHFI in these sectors, excluding PPP loans, was 1.0% at
December 31, 2020. Loans in COVID-19 related forbearance totaled $97.7 million and represented 1.9% of LHFI, excluding
PPP loans, at December 31, 2020. It is difficult to predict the future impact of the COVID-19 pandemic as there is significant
ongoing uncertainty surrounding the course of the COVID-19 pandemic, including the possible implementation of new or
additional restrictions on economic activity.
60
Certain key data regarding the sectors that may experience a more significant impact due to COVID-19 at December
31, 2020, is reflected in the table below. The information presented excludes PPP loans.
(Dollars in thousands)
Selected sectors
Hotel
Energy
Non-essential retail
Restaurant
Assisted living
Selected sectors
All other LHFI
Total LHFI
Nonperforming Assets
Outstanding
Balance
Loans Under
Forbearance
Past Due
NPL
$
63,218 $
21,959 $
— $
39,346
176,522
117,844
141,657
538,587
4,639,667
676
25,177
7,761
11,470
67,043
30,609
1,451
2,587
—
1,500
5,538
20,225
$
5,178,254 $
97,652 $
25,763 $
—
1,451
2,979
—
1,500
5,930
20,219
26,149
Nonperforming assets consist of nonperforming loans and property acquired through foreclosures or repossession, as
well as bank-owned property not currently in use and listed for sale.
Loans are considered past due when principal and interest payments have not been received at the date such
payments are contractually due. We discontinue accruing interest on loans when we determine the borrower's financial
condition is such that collection of interest and principal payments in accordance with the terms of the loan are not reasonably
assured. Loans may be placed on nonaccrual status even if the contractual payments are not past due if information becomes
available that causes substantial doubt about the borrower's ability to meet the contractual obligations of the loan. All interest
accrued but not collected for loans that are placed on nonaccrual status is reversed against interest income. Interest income is
subsequently recognized only to the extent cash payments are received in excess of principal outstanding. Loans are returned
to accrual status when all principal and interest amounts contractually due are brought current and future payments are
reasonably assured. If a loan is determined by management to be uncollectible, regardless of size, the portion of the loan
determined to be uncollectible is then charged to the allowance for loan credit losses.
We manage the quality of our lending portfolio in part through a disciplined underwriting policy and through
continual monitoring of loan performance and borrowers' financial condition. There can be no assurance, however, that our
loan portfolio will not become subject to losses due to declines in economic conditions or deterioration in the financial
condition of our borrowers.
Although we have seen an impact from the COVID-19 pandemic, the ultimate impact is still unknown. The ongoing
economic uncertainty, possibility of additional governmental restrictions on economic activity and relatively high
unemployment rate has created conditions that could cause an increase in nonperforming loans in future periods. At
December 31, 2020, we have granted COVID-19 forbearances in the form of principal or interest deferments, rate
concessions or principal deferments to 49 loans with outstanding loan amounts totaling $97.7 million.
61
The following table shows our nonperforming loans and nonperforming assets at the dates indicated:
2020
2019
2018
2017
2016
December 31,
$
8,281
$
$
1,975
(Dollars in thousands)
Nonperforming LHFI
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Consumer
Total nonperforming LHFI
Nonperforming loans held for sale
Total nonperforming loans
Other real estate owned
Commercial real estate, construction/land/land
development
Residential real estate
Total other real estate owned
Other repossessed assets owned
Total repossessed assets owned
Total nonperforming assets
Troubled debt restructuring loans - nonaccrual
Troubled debt restructuring loans - accruing
$
$
$
3,704
2,962
6,530
12,897
56
26,149
681
26,830
266
1,318
1,584
343
1,927
28,757
5,671
3,314
$
$
$
6,994
4,337
5,132
14,520
163
31,146
927
32,073
4,165
487
4,652
101
4,753
36,826
6,609
1,843
935
6,668
15,792
180
31,856
741
32,597
2,993
746
3,739
—
3,739
36,336
5,793
2,054
$
$
1,745
1,097
7,166
13,512
282
23,802
—
23,802
390
109
499
75
574
$
$
24,376
2,622
14,234
$
$
816
7,188
56,372
210
66,561
—
66,561
794
779
1,573
—
1,573
68,134
10,900
4,225
Total LHFI
5,724,773
4,143,195
3,789,105
3,241,031
3,112,075
Ratio of nonperforming LHFI to total LHFI
Ratio of nonperforming assets to total assets
0.46 %
0.38
0.75 %
0.69
0.84 %
0.75
0.73 %
0.59
2.14 %
1.67
At December 31, 2020, total nonperforming LHFI decreased by $5.0 million, or 16.0%, from December 31, 2019.
The decrease in nonperforming commercial real estate loans is due to a $5.0 million charge-offs for one relationship during
the year ended December 31, 2020. The decrease in other real estate owned was primarily due to the fact that we sold one of
our branch properties during the year ended December 31, 2020. Please see Note 4 - Loans within our consolidated financial
statements for more information on nonperforming loans.
Potential Problem Loans
From a credit risk standpoint, we classify loans in one of five categories: pass, special mention, substandard,
doubtful or loss. The classifications of loans reflect a judgment about the risks of default and loss associated with the loan.
We review the ratings on loans and adjust them to reflect the degree of risk and loss that is felt to be inherent in each loan.
The methodology is structured so that reserve allocations are increased in accordance with deterioration in credit quality (and
a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a
corresponding decrease in risk and loss). Loans rated special mention reflect borrowers who exhibit credit weaknesses or
downward trends deserving close attention. If left uncorrected, these potential weaknesses may result in deterioration of the
repayment prospects for the asset or in the bank's credit position at some future date. While potentially weak, no loss of
principal or interest is envisioned and these borrowers currently do not pose sufficient risk to warrant adverse classification.
Loans rated substandard are those borrowers with deteriorating trends and well-defined weaknesses that jeopardize the
orderly liquidation of debt. A substandard loan is inadequately protected by the current sound worth and paying capacity of
the obligor or by the collateral pledged, if any. Normal repayment from the borrower might be in jeopardy.
Loans rated as doubtful have the weaknesses of substandard assets with the additional characteristic that the
weaknesses make collection or liquidation in full questionable and there is a high probability of loss based on currently
existing facts, conditions and values. Loans classified as loss are charged-off and we have no expectation of the recovery of
any payments in respect to loans rated as loss. Information regarding the internal risk ratings of our loans at December 31,
2020, is included in Note 4 - Loans in the notes to our consolidated financial statements contained in Item 8 of this report.
62
Allowance for Loan Losses
Effective January 1, 2020, the Company adopted CECL resulting in a change to the Company's reporting of credit
losses for assets held at amortized cost basis and available for sale debt securities. Please see the discussion in Note 1 -
Significant Accounting Policies in the notes to our consolidated financial statements titled "Effect of Recently Adopted
Accounting Standards" for a description of policy revisions resulting from the Company's adoption of ASU 2016-13.
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. The Company
evaluates LHFI on a pool basis with pools of loans characterized by loan type, collateral, industry, internal credit risk rating
and FICO score. The Company applied a probability of default, loss given default loss methodology to the loan pools at
January 1 and December 31, 2020. Historical loss rates for each pool are calculated based on charge-off and recovery data
beginning with the second quarter of 2012. These loss rates are adjusted for differences between current period conditions,
including the ongoing effects of COVID-19 on the U.S. economy, and the conditions existing during the historical loss
period. Historical losses are additionally adjusted for the effects of certain economic variables forecast over a one-year
period. Subsequent to the forecast effects, historical loss rates are used to estimate losses over the estimated remaining lives
of the loans. The estimated remaining lives consist of the contractual lives, adjusted for estimated prepayments. Loans that
exhibit characteristics different from their pool characteristics are evaluated on an individual basis. Certain of these loans are
considered to be collateral dependent with the borrower experiencing financial difficulty. For these loans, the fair value of
collateral practical expedient is elected whereby the allowance is calculated as the amount by which the amortized cost
exceeds the fair value of collateral, less costs to sell (if applicable). Those individual loans that are not collateral dependent
are evaluated based on a discounted cash flow methodology.
The amount of the 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. 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.
As a general rule, when it becomes evident that the full principal and accrued interest of a loan may not be collected,
or at 90 days past due, we will reflect that loan as nonperforming. It will remain nonperforming until it performs in a manner
that it is reasonable to expect that we will collect principal and accrued interest in full. When the amount or likelihood of a
loss on a loan has been confirmed, a charge-off will be taken in the period it is determined.
We establish general allocations for each major loan category and credit quality. The general allocation is based, in
part, on historical charge-off experience and loss given default methodology, derived from our internal risk rating process.
Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on
credit quality that are not fully reflected in the historical loss or risk rating data. We give consideration to trends, changes in
loan mix, delinquencies, prior losses, reasonable and supportable forecasts and other related information.
In connection with the review of our loan portfolio, we consider risk elements attributable to particular loan types or
categories in assessing the quality of individual loans. Some of the risk elements we consider include:
•
•
•
for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of
owner occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of
income, property value and future operating results typical of properties of that type;
for construction, land and land development loans, the perceived feasibility of the project, including the ability
to sell developed lots or improvements constructed for resale or the ability to lease property constructed for
lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer
and loan to value ratio;
for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to
income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and
marketability of the collateral; and
63
•
for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of
operating expenses compared to loan repayment requirements), the operating results of the commercial,
industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the
specific risks and volatility of income and operating results typical for businesses in that category and the value,
nature and marketability of collateral.
The following table presents the allowance for credit loss by loan category:
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
2020
December 31,
2019
2018
Amount
%(1)
Amount
%(1)
Amount
%(1)
$
15,430
24.2 % $
10,013
31.3 % $
8,191
9,418
51,857
856
918
9.3
15.5
31.8
18.9
0.3
3,711
6,332
16,960
262
242
12.5
16.6
32.5
6.6
0.5
8,999
3,331
5,705
15,616
316
236
32.4 %
11.3
16.6
33.6
5.5
0.6
$
86,670
100.0 % $
37,520
100.0 % $
34,203
100.0 %
December 31,
2017
2016
Amount
%(1)
Amount
%(1)
$
8,998
2,950
5,807
18,831
214
283
33.5 % $
9.9
17.6
30.5
7.9
0.6
8,718
2,805
5,003
33,590
139
276
33.0 %
10.0
13.3
36.5
6.5
0.7
$
37,083
100.0 % $
50,531
100.0 %
____________________________
(1)
Represents the ratio of each loan type to total LHFI.
Our allowance for credit losses increased by $49.2 million, or 131.0%, to $86.7 million at December 31, 2020, from
$37.5 million at December 31, 2019. The ratio of allowance for credit losses to total LHFI at December 31, 2020 and 2019,
was 1.51% and 0.91%, respectively. The increase in the total allowance for loan credit losses was primarily driven by the
impact of the COVID-19 pandemic after the adoption of CECL. Our allowance for loan credit losses may increase in the
future as the continuing impact of the COVID-19 is currently unknown and difficult to forecast. Please see the section titled
Loan Portfolio COVID-19 Impact included above in this section for additional information and metrics related to the impact
of the COVID-19 pandemic.
We recognized a one-time after tax cumulative effect adjustment of $760,000 to retained earnings at the beginning
of the first quarter of 2020, increasing the allowance for credit losses by approximately $1.2 million and decreasing the off-
balance sheet reserve by $381,000 due to the adoption of Accounting Standards Update ("ASU") No. 2016-13, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Our investment securities
were not materially affected by the adoption of this ASU due to the nature of the portfolio.
64
The following table presents an analysis of the allowance for credit losses and other related data at the periods
indicated.
(Dollars in thousands)
Allowance for credit losses
Years Ended December 31,
2020
2019
2018
2017
2016
Balance at beginning of period
$
37,520
$
34,203
$
37,083
$
50,531
$
41,230
Impact of adopting ASC 326
Provision for loan losses
Charge-offs:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total charge-offs
Recoveries:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total recoveries
Net charge-offs
1,248
59,028
4,924
—
692
6,702
—
76
—
9,207
1,420
38
265
8,231
29
148
12,394
10,131
19
1
202
1,022
—
24
1,268
11,126
341
40
185
3,627
2,206
—
48
4,241
5,890
—
92
2,663
4,461
—
1,581
1,300
228
407
5,068
—
121
7,124
226
6
133
—
8,219
463
3
1,446
21,767
—
198
—
31,165
422
24
505
24,851
—
604
23,877
26,406
93
5
125
1,918
—
69
2,210
21,667
25
7
185
4,199
—
126
4,542
21,864
Balance at end of period
$
86,670
$
37,520
$
34,203
$
37,083
$
50,531
Ratio of allowance for credit losses to:
Nonperforming LHFI
LHFI
Net charge-offs as a percentage of:
Provision for loan credit losses
Allowance for credit losses
Average LHFI
Securities
331.45 %
120.46 %
107.37 %
155.80 %
75.92 %
1.51
0.91
0.90
1.14
1.62
18.85
12.84
0.22
63.97
15.70
0.15
282.16
13.04
0.13
263.62
58.43
0.69
70.16
43.27
0.71
Our securities portfolio is the second largest component of earning assets and provides a significant source of
revenue. We use the securities portfolio to provide a source of liquidity, provide an appropriate return on funds invested,
manage interest rate risk and meet collateral as well as regulatory capital requirements. We manage the securities portfolio to
optimize returns while maintaining an appropriate level of risk. Securities within the portfolio are classified as either held-to-
maturity, available-for-sale or at fair value through income, based on the intent and objective of the investment and the ability
to hold to maturity. Unrealized gains and losses arising in the available for sale portfolio as a result of changes in the fair
value of the securities are reported on an after-tax basis as a component of accumulated other comprehensive income in
stockholders' equity while securities classified as held to maturity are carried at amortized cost. For further discussion of the
valuation components and classification of investment securities, see Note 1 - Significant Accounting Policies in the
consolidated financial statements contained in Item 8 of this report.
65
Our securities portfolio totaled $1.05 billion at December 31, 2020, representing an increase of $513.2 million, or
94.8%, from $541.2 million at December 31, 2019. The increase was a result of increased liquidity on hand and our
continued focus on maintaining an appropriately positioned asset mix and earnings profile. For additional information
regarding our securities portfolio, please see Note 3 - Securities in the consolidated financial statements contained in Item 8
of this report.
The following table sets forth the composition of our securities portfolio at the dates indicated.
(Dollars in thousands)
Available for sale:
2020
December 31,
2019
2018
Amount % of Total
Amount % of Total
Amount % of Total
State and municipal securities
$ 442,185
44.0 % $
99,184
19.8 % $ 100,883
17.5 %
Corporate bonds
U.S. government and agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Commercial collateralized mortgage obligations
Residential collateralized mortgage obligations
Asset-backed securities
Total
Held to maturity:
65,938
849
11,080
214,951
—
195,343
74,328
6.6
0.1
1.1
21.4
—
19.4
7.4
16,817
5,238
12,144
207,506
4,394
155,787
—
3.4
1.0
2.4
41.4
0.9
31.1
—
11,034
61,150
16,766
186,315
—
199,496
—
1.9
10.6
2.9
32.4
—
34.7
—
$ 1,004,674
100.0 % $ 501,070
100.0 % $ 575,644
100.0 %
State and municipal securities, net of allowance
$
38,128
$
28,620
$
19,169
Securities carried at fair value through income:
State and municipal securities
$
11,554
$
11,513
$
11,361
66
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, 2020. The securities are grouped by contractual maturity and use
amortized cost for all yield calculations. Mortgage backed securities, collateralized mortgage obligations and asset-backed
securities, which do not have contractual payments due at a single maturity date, are shown at the date the last underlying
mortgage matures.
(Dollars in thousands)
Available for sale:
State and municipal
securities (1)
Corporate bonds
U.S. government and
agency securities
Commercial mortgage-
backed securities
Residential mortgage-
backed securities
Residential collateralized
mortgage obligations
Asset-backed securities
Total securities available
for sale
Held to maturity:
State and municipal
securities (1)
Securities carried at fair value
through income:
State and municipal
securities (1)
Total
December 31, 2020
Within One Year
After One Year
but Within Five
Years
After Five Years
but Within Ten
Years
After Ten Years
Total
Amount Yield Amount Yield Amount Yield Amount Yield
Amount
Yield
$ 3,237
2.44 % $ 39,267
1.46 % $ 61,799
2.02 % $ 337,882
2.20 % $ 442,185
2.11 %
—
—
12,305
4.10
53,130
4.58
503
4.50
65,938
4.49
—
—
—
—
277
2.38
572
2.18
849
2.25
—
—
1,715
3.31
9,365
1.77
—
—
11,080
2.01
—
—
371
3.41
36,179
2.31
178,401
1.94
214,951
2.00
—
—
—
—
—
—
—
—
—
—
—
—
195,343
1.37
195,343
1.37
74,328
1.16
74,328
1.16
$ 3,237
2.44
$ 53,658
2.14
$ 160,750
2.92
$ 787,029
1.84
$ 1,004,674
2.03
12,999
3.03
—
—
25,195
3.07
—
—
38,194
3.06
—
—
—
—
—
—
11,554
4.28
11,554
4.28
$ 16,236
2.91
$ 53,658
2.14
$ 185,945
2.94
$ 798,583
1.88
$ 1,054,422
2.09
____________________________
(1)
Tax-exempt security yields are calculated without consideration of their tax benefit status.
The contractual maturity of mortgage-backed securities and collateralized mortgage obligations is not a reliable
indicator of their expected life because borrowers have the right to prepay their obligations at any time. Mortgage-backed
securities and collateralized mortgage obligations are typically issued with stated principal amounts and are backed by pools
of mortgage loans and other loans with varying maturities. The term of the underlying mortgages and loans may vary
significantly due to the ability of a borrower to prepay outstanding amounts. Monthly pay downs on mortgage-backed
securities tend to cause the average life of the securities to be much different than the stated contractual maturity. During a
period of increasing interest rates, fixed rate mortgage-backed securities do not tend to experience heavy prepayments of
principal, and, consequently, the average life of this security is typically lengthened. If interest rates begin to fall,
prepayments may increase, thereby shortening the estimated average life of these securities.
Other than securities issued by government agencies or government sponsored enterprises, we did not own securities
of any one issuer for which aggregate adjusted cost exceeded 10.0% of consolidated stockholders' equity at December 31,
2020 or 2019. 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.
Securities Carried at Fair Value through Income
At December 31, 2020 and 2019, we held two fixed-rate community investment bonds totaling $11.6 million and
$11.5 million, respectively. We elected the fair value option on these securities to offset corresponding changes in the fair
value of related interest rate swap agreements.
67
Deposits
Deposits are the primary funding source used to fund our loans, investments and operating needs. We offer a variety
of products designed to attract and retain both consumer and commercial deposit customers. These products consist of
noninterest and interest-bearing checking accounts, savings deposits, money market accounts and time deposits. Deposits are
primarily gathered from individuals, partnerships and corporations in our market areas. We also obtain deposits from local
municipalities and state agencies. Increases of $529.9 million, $512.9 million and $278.6 million in noninterest-bearing,
money market and brokered deposits, respectively, drove the increase in total deposits compared to December 31, 2019,
partially due to depositors moving into a statistically higher percentage of personal savings rates during the year and also due
to the funding of PPP loans into noninterest-bearing demand deposit accounts during the year ended December 31, 2020.
Additionally, short-term brokered deposits were utilized to fund the growth in mortgage warehouse lines of credit during the
2020 year.
We manage our interest expense on deposits through specific deposit product pricing that is based on competitive
pricing, economic conditions and current and anticipated funding needs. We may use interest rates as a mechanism to attract
or deter additional deposits based on our anticipated funding needs and liquidity position. We also consider potential interest
rate risk caused by extended maturities of time deposits when setting the interest rates in periods of future economic
uncertainty.
The following table presents our deposit mix at the dates indicated:
December 31, 2020
December 31, 2019
December 31, 2018
(Dollars in thousands)
Balance
% of Total
Balance
% of Total
Balance
% of Total
Noninterest-bearing demand
$
1,607,564
28.0 % $
1,077,706
25.5 % $
951,015
25.1 %
Interest-bearing demand
Money market
Time deposits
Brokered (1)
Savings
Total deposits
1,052,639
1,789,914
664,766
431,180
205,252
18.3
31.0
11.6
7.5
3.6
776,037
1,277,053
790,810
152,556
154,450
18.4
30.2
18.7
3.6
3.6
738,725
815,997
796,552
332,341
148,508
19.5
21.6
21.1
8.8
3.9
$
5,751,315
100.0 % $
4,228,612
100.0 % $
3,783,138
100.0 %
____________________________
(1)
Brokered time deposits of $7.9 million are included in the brokered category for December 31, 2018. There were no brokered time deposits at
December 31, 2020 or 2019.
Increases of $529.9 million, $512.9 million and $278.6 million in noninterest-bearing, money market and brokered
deposits, respectively, drove the increase in total deposits compared to December 31, 2019, partially due to depositors
moving into a statistically higher percentage of personal savings rates during the year. Additionally, due to the high volume
of mortgage loans funded under the mortgage warehouse lines of credit, we utilized short term brokered deposits to partially
fund the growth in warehouse lines, which drove the increase in brokered deposits from December 31, 2019.
The following schedule reflects the classification of our average deposits and the average rate paid on each deposit
category for the periods indicated:
68
Year Ended December 31,
2020
2019
2018
Average
Balance
Interest
Expense
Average
Rate
Paid
Average
Balance
Interest
Expense
Average
Rate
Paid
Average
Balance
Interest
Expense
Average
Rate
Paid
$ 860,877 $
4,170
0.48 % $ 697,540 $
6,026
0.86 % $ 690,061 $
3,951
0.57 %
1,526,510
9,776
735,297
336,902
180,298
11,935
1,049
220
0.64
1.62
0.31
0.12
1,028,556
15,996
827,720
218,714
153,583
17,284
5,157
253
1.56
2.09
2.36
0.16
887,817
712,913
270,109
148,377
9,328
10,669
5,530
193
1.05
1.50
2.05
0.13
3,639,884
27,150
0.75
2,926,113
44,716
1.53
2,709,277
29,671
1.10
(Dollars in
thousands)
Interest-bearing
demand
Money market
Time deposits
Brokered
Savings
Total interest-
bearing
Noninterest-
bearing demand
1,499,936
—
1,054,903
—
948,585
—
Total average
deposits
$ 5,139,820 $ 27,150
0.53
$ 3,981,016 $ 44,716
1.12
$ 3,657,862 $ 29,671
0.81
Our average deposit balance was $5.14 billion for the year ended December 31, 2020, an increase of $1.16 billion,
or 29.1%, from $3.98 billion for the year ended December 31, 2019. The average annualized rate paid on our interest-bearing
deposits for the year ended December 31, 2020, was 0.75%, compared to 1.53% for the year ended December 31, 2019. The
decrease in the average cost of our deposits was primarily the result of steadily falling interest rates that occurred since
December 31, 2019. The Federal Reserve lowered the federal funds target rate twice from January 1, 2020, to December 31,
2020, resulting in an aggregate 150 basis point decrease in the target rate. When the target rate reductions began, we took
action to lower deposit rates on nonmaturity deposits. Our Louisiana market deposits also increased $531.8 million compared
to December 30, 2019, which historically carry lower cost of deposits than those in Texas, helping to lower our overall cost
of deposits.
Average noninterest-bearing deposits at December 31, 2020, were $1.5 billion, compared to $1.1 billion at
December 31, 2019, an increase of $445.0 million, or 42.2%, and represented 29.2% and 26.5% of average total deposits for
the years ended December 31, 2020 and 2019, respectively.
The following table presents the maturity distribution of our time deposits at December 31, 2020:
(Dollars in thousands)
Remaining maturity:
3 months or less
Over 3 through 6 months
Over 6 through 12 months
Over 12 months
Total
Borrowings
Time Deposits
Certificates less
than $100,000
Certificates of
$100,000 or more
$
$
33,884 $
29,584
35,142
47,471
146,081 $
122,621
132,223
144,062
119,779
518,685
Short-term FHLB advances increased $550.0 million at December 31, 2020 compared to December 31, 2019, as a
result of our decision to fund PPP loans and the increase in mortgage warehouse lines of credit with non-core funding
sources. Additionally, long-term advances from the FHLB decreased by $1.9 million, or 0.7%, at December 31, 2020,
compared to December 31, 2019.
69
Borrowed funds are summarized as follows:
(Dollars in thousands)
Overnight repurchase agreements with depositors
Short-term FHLB advances (1)
GNMA repurchase liability
Long-term FHLB advances (2)
Total FHLB advances and other borrowings
Subordinated debentures
2020
December 31,
2019
2018
$
$
$
8,408 $
16,717 $
650,000
55,485
270,715
984,608 $
157,181 $
100,000
27,860
272,613
417,190 $
9,671 $
40,314
100,000
30,649
274,261
445,224
9,644
____________________________
(1)
Short-term FHLB advances at December 31, 2020, carried a fixed interest rate of 0.10% and matured on January 4, 2021; at December 31, 2019, short-
term FHLB advances carried a fixed interest rate of 1.35%, and matured on January 2, 2020; at December 31, 2018, short-term FHLB advances carried
a fixed interest rate of 2.70%, and matured on January 2, 2019.
Includes a FHLB advance of $250.0 million at December 31, 2020, 2019, and 2018, callable quarterly with a final maturity in 2033, carrying a rate of
1.65%.
(2)
Overnight repurchase agreements with depositors consist of obligations of ours to depositors and mature on a daily
basis. These obligations to depositors carried a daily average interest rate of 0.22% and 1.20% for the years ended December
31, 2020 and 2019, respectively.
Our long-term debt consists of advances from the FHLB with original maturities greater than one year. Interest rates
for FHLB long-term advances outstanding at December 31, 2020, ranged from 1.65% to 5.72% and were subject to
restrictions or penalties in the event of prepayment.
At December 31, 2020, we held 35 unfunded letters of credit from the FHLB totaling $527.4 million with expiration
dates ranging from January 20, 2021, to November 4, 2022. 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. Security for all indebtedness and
outstanding commitments to the FHLB consists of a blanket floating lien on all of our first mortgage loans, commercial real
estate and other real estate loans, as well as our investment in capital stock of the FHLB and deposit accounts at the FHLB.
The net amounts available under the blanket floating lien at December 31, 2020 and 2019, were $456.9 million and
$601.9 million, respectively.
Additionally, at December 31, 2020, we had the ability to borrow $793.2 million from the discount window at the
Federal Reserve Bank of Dallas ("FRB"), with $999.7 million in commercial and industrial loans pledged as collateral. There
were no borrowings against this line at December 31, 2020.
Subordinated Debentures
In February 2020, Origin Bank completed an offering of $70.0 million in aggregate principal amount of 4.25%
fixed-to-floating rate subordinated notes due 2030 (the "Notes") to certain accredited investors in a transaction exempt from
registration under Section 3(a)(2) of the Securities Act of 1933, as amended. The Notes initially bear interest at a fixed annual
rate of 4.25%, payable semi-annually in arrears, to but excluding February 15, 2025. From and including February 15, 2025,
to but excluding the maturity date or earlier redemption date, the interest rate will equal three-month LIBOR (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. Origin Bank is entitled to redeem the Notes, in whole or in part, on or after February 15,
2025, and to redeem the Notes at any time in whole upon certain other specified events. The Notes qualify as Tier 2 capital
for regulatory capital purposes for Origin Bank.
In October 2020, we completed of an offering of $80.0 million in aggregate principal amount of 4.50% fixed-to-
floating rate subordinated notes due 2030 (the “4.50% Notes”). The 4.50% Notes bear a fixed interest rate of 4.50% payable
semi-annually in arrears, to but excluding November 1, 2025. From and including November 1, 2025, to but excluding the
maturity date or earlier redemption date, the 4.50% Notes bear a floating interest rate expected to equal the three-month term
Secured Overnight Financing Rate plus 432 basis points, payable quarterly in arrears. We may redeem the 4.50% Notes at
any time upon certain specified events or in whole or in part on or after November 1, 2025. The 4.50% Notes qualify as Tier
2 capital for regulatory capital purposes for the Company and $51.0 million was transferred to Origin Bank during the fourth
quarter of 2020, which qualifies as Tier 1 capital for regulatory capital purposes for the Bank.
70
Liquidity
Management oversees our liquidity position to ensure adequate cash and liquid assets are available to support our
operations and satisfy current and future financial obligations, including demand for loan funding and deposit withdrawals.
Management continually monitors, forecasts and tests our liquidity and non-core dependency ratios to ensure compliance
with targets established by our Asset-Liability Management Committee and approved by our board of directors.
Management measures our liquidity position by giving consideration to both on-balance sheet and off-balance sheet
sources of and demands for funds on a daily and weekly basis. At December 31, 2020 and 2019, our cash and liquid
securities totaled 13.6% and 8.4% of total assets, respectively, providing liquidity to support our existing operations.
The Company, which is a separate legal entity apart from the Bank, must provide for its own liquidity, including
payment of any dividends that may be declared for our common stockholders and interest and principal on any outstanding
debt or trust preferred securities incurred by the Company. The Company had available cash balances of $42.9 million and
$5.9 million at December 31, 2020 and 2019, respectively. This cash is available for the general corporate purposes described
above, as well as providing capital support to the Bank and financing potential future acquisitions. In addition, the Company
has up to $50.0 million available under a line of credit. See Note 11 - Borrowings contained in Item 8 of this report for more
information.
There are regulatory restrictions on the ability of the Bank to pay dividends under federal and state laws, regulations
and policies. See "Item 1. Business - Regulation and Supervision" above for more information.
As previously discussed, in light of the volatility and disruptions in the capital and credit markets resulting from the
COVID-19 pandemic and its negative impact on the economy, we took a number of precautionary actions to enhance our
financial flexibility by bolstering our liquidity to ensure we have adequate cash readily available to meet both expected and
unexpected funding needs. We have accessed and repaid liquidity both under the PPPLF and FHLB advance window during
the year ended December 31, 2020, and currently have access to $2.91 billion of contingent liquidity sources including FHLB
availability and PPPLF availability. We believe we currently have sufficient liquidity from the available on- and off-balance
sheet liquidity sources. We continue to review actions that we may take to further enhance our financial flexibility in the
event that market conditions deteriorate further or for an extended period.
In addition to cash generated from operations, we utilize a number of funding sources to manage our liquidity,
including core deposits, investment securities, cash and cash equivalents, loan repayments, federal funds lines of credit
available from other financial institutions, as well as advances from the FHLB. We may also use the discount window at the
FRB as a source of short-term funding.
Core deposits, which are total deposits excluding time deposits greater than $250,000 and brokered deposits, are a
major source of funds used to meet cash flow needs. Maintaining the ability to acquire these funds as needed in a variety of
markets is the key to assuring our liquidity.
The investment portfolio is another source for meeting our liquidity needs. Monthly payments on mortgage-backed
securities are used for short-term liquidity, and our investments are generally traded in active markets that offer a readily
available source of cash through sales, if needed. Securities in our investment portfolio are also used to secure certain deposit
types, such as deposits from state and local municipalities, and can be pledged as collateral for other borrowing sources.
Other sources available for meeting liquidity needs include long- and short-term advances from the FHLB, and
federal funds lines of credit. Long-term funds obtained from the FHLB are primarily used as an alternative source to fund
long-term growth of the balance sheet by supporting growth in loans and other long-term interest-earning assets. We typically
rely on such funding when the cost of such borrowings compares favorably to the rates that we would be required to pay for
other funding sources, including certain deposits. See Note 11 - Borrowings contained in Item 8 of this report for additional
borrowing capacity and outstanding advances at the FHLB.
We also had unsecured federal funds lines of credit available to us, with no amounts outstanding at either December
31, 2020, or December 31, 2019. 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. 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, 2020.
71
In February 2020, Origin Bank completed an offering of $70.0 million in aggregate principal amount of 4.25%
fixed-to-floating rate subordinated notes due 2030 (the “Notes”) to certain investors in a transaction exempt from registration
under Section 3(a)(2) of the Securities Act of 1933, as amended. The Notes provided us with $68.8 million in additional
liquidity.
In October 2020, we completed an offering of $80.0 million in aggregate principal amount of 4.50% fixed-to
floating rate subordinated notes due 2030 (the “4.50% Notes”).
In July 2019, our board of directors authorized a stock buyback program pursuant to which we may, from time to
time, purchase up to $40 million of our outstanding common stock. Please see the stock repurchases paragraphs under the
Stockholders' Equity section of this Part II, Item 7 for more information on our stock buyback program.
Off-Balance Sheet Arrangements and Contractual Obligations
In the normal course of business as a financial services provider, we enter into financial instruments, such as certain
contractual obligations and commitments to extend credit and letters of credit, to meet the financing needs of our customers.
These commitments involve elements of credit risk, interest rate risk and liquidity risk. Some instruments may not be
reflected in our consolidated financial statements until they are funded, and a significant portion of commitments to extend
credit may expire without being drawn, although they expose us to varying degrees of credit risk and interest rate risk in
much the same way as funded loans.
The table below presents the funding requirements of our most significant financial commitments, excluding interest
and purchase discounts, at the date indicated:
(Dollars in thousands)
December 31, 2020
Operating lease obligations
FHLB advances
Subordinated debentures
Time deposits
Limited partnership investments(1)
Low income housing tax credits
Overnight repurchase agreements with depositors
Payments Due by Period
Less than
One Year
One-Three
Years
Three-Five
Years
Greater than
Five Years
Total
$
4,330 $
7,702 $
4,624 $
11,165 $
27,821
651,090
—
6,447
—
497,515
134,428
3,170
436
8,408
—
165
—
4,661
—
32,823
—
274
—
258,517
160,826
—
—
319
—
920,715
160,826
664,766
3,170
1,194
8,408
Total contractual obligations
$
1,164,949 $
148,742 $
42,382 $
430,827 $
1,786,900
____________________________
(1)
These commitments represent amounts we are obligated to contribute to various limited partnership investments in accordance with the provisions of
the respective limited partnership agreements. The capital contributions may be required at any time, and are therefore reflected in the Less than One
Year category.
Credit Related Commitments
Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments issued
mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal
credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the
borrower continues to meet credit standards established in the underlying contract and has not violated other contractual
conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of
a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower's credit
quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all
before they expire, and the total commitment amounts do not necessarily represent future cash requirements.
A substantial majority of the letters of credit are standby agreements that obligate us to fulfill a customer's financial
commitments to a third party if the customer is unable to perform. We issue standby letters of credit primarily to provide
credit enhancement to our customers' other commercial or public financing arrangements and to help them demonstrate
financial capacity to vendors of essential goods and services.
72
The table below presents our commitments to extend credit by commitment expiration date for the date indicated:
(Dollars in thousands)
Commitments to extend credit(1)
Standby letters of credit
Total off-balance sheet commitments
December 31, 2020
Less than
One Year
One-Three
Years
Three-Five
Years
Greater than
Five Years
Total
$
$
641,951 $
428,893 $
163,520 $
107,137 $
1,341,501
34,212
8,699
—
—
42,911
676,163 $
437,592 $
163,520 $
107,137 $
1,384,412
____________________________
(1)
Includes $504.6 million of unconditionally cancellable commitments at December 31, 2020.
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. At December 31, 2020, stockholders' equity was $647.2 million,
representing an increase of $47.9 million, or 8.0%, compared to $599.3 million at December 31, 2019. Net income of $36.4
million and other comprehensive income of $19.3 million for the year ended December 31, 2020, were the primary drivers of
the increase in stockholders' equity compared to December 31, 2019, and was partially offset by the $8.9 million dividend
paid on the Company's common stock and the $723,000 repurchase of the Company's common stock that occurred during the
period.
Stock Repurchases
In July 2019, our board of directors authorized a stock buyback program pursuant to which we may, from time to
time, purchase up to $40 million of our outstanding common stock. The shares may be repurchased in the open market or in
privately negotiated transactions from time to time, depending upon market conditions and other factors, and in accordance
with applicable regulations of the Securities and Exchange Commission. The stock buyback program is intended to expire in
2022, but may be terminated or amended by our board of directors at any time. The stock buyback program does not obligate
us to purchase any shares at any time.
In three transactions that were consummated in March 2020, we repurchased a total of 30,868 shares of our common
stock pursuant to our stock buyback program at an average price per share of $23.44 for an aggregate purchase price of
$723,000. Prior to 2020, we had repurchased cumulatively $10.1 million of shares under the stock buyback program, and as
of the date of this report, our board of directors has approved approximately $29.2 million additional shares to be purchased
under the stock buyback program.
Regulatory Capital Requirements
Together with the Bank, we are subject to various regulatory capital requirements administered by federal banking
agencies. These requirements are discussed in greater detail in "Item 1. 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. At December 31, 2020 and 2019, we and the Bank were in compliance with all applicable
regulatory capital requirements, and the Bank was classified as "well capitalized" for purposes of the prompt corrective action
regulations of the Federal Reserve. As we deploy capital and continue to grow operations, regulatory capital levels may
decrease depending on the level of earnings. However, we expect to monitor and control growth in order to remain "well
capitalized" under applicable regulatory guidelines and in compliance with all applicable regulatory capital standards. While
we are currently classified as well capitalized, an extended economic recession brought about by COVID-19 could adversely
impact our reported and regulatory capital ratios.
The following table presents our regulatory capital ratios, as well as those of the Bank, at the dates indicated:
73
(Dollars in thousands)
Origin Bancorp, Inc.
Common equity Tier 1 capital (to risk-weighted assets)
$
Tier 1 capital (to risk-weighted assets)
Total capital (to risk-weighted assets)
Tier 1 capital (to average assets)
Origin Bank
Common equity Tier 1 capital (to risk-weighted assets)
$
Tier 1 capital (to risk-weighted assets)
Total capital (to risk-weighted assets)
Tier 1 capital (to average assets)
December 31,
2020
2019
Amount
Ratio
Amount
Ratio
604,306
613,682
837,058
613,682
637,863
637,863
782,503
637,863
9.95 % $
10.11
13.79
8.62
10.53 % $
10.53
12.92
8.99
561,630
570,975
610,305
570,975
551,060
551,060
590,390
551,060
11.74 %
11.94
12.76
10.91
11.55 %
11.55
12.38
10.56
The Notes and the 4.50% Notes both qualify as Tier 2 capital for the Company, and the $51.0 million that was
transferred to Origin Bank during the fourth quarter of 2020, qualifies as Tier 1 capital for regulatory capital purposes at the
Bank.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry.
However, we provided other financial measures, such as pre-tax, pre-provision earnings, in this report that are considered
“non-GAAP financial measures.” Generally, a non-GAAP financial measure is a numerical measure of a company’s financial
performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the
most directly comparable measure calculated and presented in accordance with GAAP.
We consider pre-tax, pre-provision earnings as presented in this report as an important measure of financial
performance as it provides supplemental information that we use to evaluate our business, to assess underlying operational
performance and to allow a comparison to prior periods without the impact of increases in the allowance for credit losses, and
related income tax effects, associated with the implementation of CECL and continuing impact of the COVID-19 pandemic.
74
We believe non-GAAP measures and ratios, when taken together with the corresponding GAAP measures and
ratios, provide meaningful supplemental information regarding our performance and capital strength. We use, and believe
that investors benefit from referring to, non-GAAP measures in assessing our operating results and related trends. However,
non-GAAP measures should be considered in addition to, and not as a substitute for or preferable to, amounts prepared in
accordance with GAAP. In the following table, we have provided a reconciliation of pre-tax pre-provision earnings to the
most comparable GAAP financial measure.
December 31,
(Dollars in thousands, except per share amounts)
2020
2019
2018
2017
2016
Calculation of PTPP Earnings:
Net Income
$
36,357 $
53,882 $
51,605 $
14,669 $
Plus: provision for credit losses
Plus: income tax expense
59,900
7,996
9,568
12,666
1,014
10,837
8,336
5,813
12,850
30,078
2,916
PTPP Earnings
$
104,253 $
76,116 $
63,456 $
28,818 $
45,844
Goodwill and other intangible assets, net
30,480
31,540
32,861
Calculation of Tangible Book Value per
Common Share:
Total common stockholders' equity (1)
Less: Preferred stock, Series SBLF
Convertible preferred stock, Series D
Tangible Common Equity (1)
Plus: Convertible preferred stock, Series D
Tangible common equity(1), as converted
Divided by common shares, as converted (1)
Tangible Book Value per Common Share, as
converted
____________________________
(1)
$
647,150 $
599,262 $
549,779 $
455,342 $
448,657
—
—
—
—
—
—
48,260
16,998
24,336
48,260
16,998
24,854
$
$
$
616,670 $
567,722 $
516,918 $
365,748 $
358,545
—
—
—
16,998
16,998
616,670 $
567,722 $
516,918 $
365,765 $
358,562
23,506,312
23,480,945
23,726,559
20,420,396
20,385,362
26.23 $
24.18 $
21.79 $
18.74 $
18.42
(2)
Including ESOP-owned shares of 34,991 and 28,564 for the years ended December 31, 2017 and 2016, respectively.
Assumes the conversion of 901,644 shares of Series D preferred stock into common stock on a one-for-one basis for the years ended December 31,
2017 and 2016, respectively.
75
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Sensitivity and Market Risk
As a financial institution, our primary component of market risk is interest rate volatility. Our financial management
policy provides management with guidelines for effective funds management and we have established a measurement system
for monitoring the net interest rate sensitivity position.
Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most of our
assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which
have a short term to maturity. Interest rate risk is the potential of economic losses due to future interest rate changes. These
economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market values. The
objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at
the same time maximizing income.
We manage exposure to interest rates by structuring the balance sheet 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 upon the nature of operations, we are not subject to foreign exchange or commodity price risk. 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. 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.
The committee meets regularly to review, among other things, the sensitivity of assets and liabilities to interest rate
changes, the book and market values of assets and liabilities, unrealized gains and losses, purchase and sale activities,
commitments to originate loans and the maturities of investments and borrowings. 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 include an analysis of relationships between interest-earning assets and
interest-bearing liabilities, and an interest rate shock simulation model.
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. 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. The assumptions used are inherently uncertain and, as a result, the model cannot
precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net
interest income. Actual results will differ from the model's simulated results due to timing, magnitude and frequency of
interest rate changes as well as changes in market conditions and the application and timing of various management
strategies.
On a quarterly basis, we run various simulation models including a static balance sheet and dynamic growth balance
sheet. These models test the impact on net interest income and fair value of equity from changes in market interest rates under
various scenarios. Under the static model, rates are shocked instantaneously and ramped rates change over a twelve-month
and twenty-four month horizon based upon parallel yield curve shifts. Parallel shock scenarios assume instantaneous parallel
movements in the yield curve compared to a flat yield curve scenario. Additionally, we run non-parallel simulation involving
analysis of interest income and expense under various changes in the shape of the yield curve. Internal policy regarding
interest rate risk simulations currently specifies that for instantaneous parallel shifts of the yield curve, estimated net interest
income at risk for the subsequent one-year period should not decline by more than 8.0% for a 100 basis point shift, 15.0% for
a 200 basis point shift, 20.0% for a 300 basis point shift, and 25.0% for a 400 basis point shift. We continue to monitor our
asset sensitivity and evaluate strategies to prevent being significantly impacted by declining interest rates in the near future.
We are modeling outside of policy in the down 100 and down 200 basis point rate scenarios, and we continue to monitor our
asset sensitivity and evaluate strategies to prevent being significantly impacted by future changes in interest rates.
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:
76
Change in Interest Rates (basis points)
+400
+300
+200
+100
Base
-100
-200
December 31, 2020
% Change in Net
Interest Income
% Change in Fair
Value of Equity
9.0 %
6.0
3.7
1.3
(9.5)
(19.7)
0.2 %
(0.3)
0.5
0.7
(5.8)
2.5
We have found that, historically, interest rates on deposits change more slowly than changes in the discount and
federal funds rates. 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 verses interest rate
sensitive liabilities. The assumptions incorporated into the model are inherently uncertain and, as a result, the model cannot
precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net
interest income. Actual results will differ from the model's simulated results due to timing, magnitude and frequency of
interest rate changes as well as changes in market conditions and the application and timing of various strategies.
Impact of Inflation
Our consolidated financial statements and related notes included in Item 8 of this report have been prepared in
accordance with U.S. GAAP. These require the measurement of financial position and operating results in terms of historical
dollars, without considering changes in the relative value of money over time due to inflation or recession. Inflation generally
increases the costs of funds and operating overhead, and to the extent loans and other assets bear variable rates, the yields on
such assets. Unlike most industrial companies, virtually all of the assets and liabilities of a financial institution are monetary
in nature. As a result, interest rates generally have a more significant effect on the performance of a financial institution than
the effects of general levels of inflation. In addition, inflation affects a financial institution's cost of goods and services
purchased, the cost of salaries and benefits, occupancy expense and similar items. Inflation and related increases in interest
rates generally decrease the market value of investments and loans held and may adversely affect liquidity, earnings and
stockholders' equity.
Market Risk
.Regulators have encouraged banks to transition away from the use of the London Interbank Offered Rate
("LIBOR") as a reference rate. 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 few years. Please see Item 1A Risk Factors - Risks Related to Our Business
for further information.
77
Item 8.
Financial Statements and Supplementary Data
ORIGIN BANCORP, INC.
Financial Statements
DECEMBER 31, 2020, 2019 and 2018
INDEX
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
79
82
83
85
86
87
89
78
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Origin Bancorp, Inc.
Ruston, Louisiana
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Origin Bancorp, Inc. (the "Company") as of December 31,
2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows
for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively referred to as the
"financial statements"). In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with accounting principles
generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
("PCAOB"), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in
Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) and our report dated March 2, 2021, expressed an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting.
Adoption of New Accounting Standard
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for the
allowance for credit losses in 2020 due to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments. As discussed below, the allowance for credit losses is
considered a critical audit matter.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures
that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a
whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
79
Allowance for Credit Losses
The Company’s loan portfolio totaled $5.72 billion as of December 31, 2020 and the allowance for credit losses on loans was
$86.7 million. The Company’s unfunded loan commitments totaled $1.3 billion, with an allowance for credit loss of $2.3
million. The Company’s available-for-sale and held-to-maturity securities portfolios totaled $1.0 billion as of December 31,
2020, and the allowance for credit losses on securities was $66,000. Together these amounts represent the allowance for
credit losses (“ACL”).
As more fully described in Notes 1, 3 and 4 to the Company’s consolidated financial statements, the Company estimates its
exposure to expected credit losses as of the balance sheet date, for existing financial instruments held at amortized cost,
securities classified as available for sale and off-balance sheet exposures, such as unfunded loan commitments, letters of
credit and other financial guarantees that are not unconditionally cancellable by the Company.
The determination of the ACL requires management to exercise significant judgment and consider numerous subjective
factors, including determining qualitative factors utilized to adjust historical loss rates, loan credit risk grading and
identifying loans requiring individual evaluation among others. As disclosed by management, different assumptions and
conditions could result in a materially different amount for the estimate of the ACL.
We identified the ACL at December 31, 2020 as well as at the January 1, 2020 adoption date of Topic 326, as a critical audit
matter. Auditing the ACL involved a high degree of subjectivity in evaluating management's estimates, such as evaluating
management's identification of credit quality indicators, grouping of loans determined to be similar into pools, estimating the
remaining life of loans in a pool, assessment of economic conditions and other environmental factors, evaluating the
adequacy of specific allowances associated with individually evaluated loans and assessing the appropriateness of loan credit
risk grades.
The primary procedures we performed at initial adoption of Topic 326 and as of December 31, 2020, to address this critical
audit matter included:
•
•
•
•
•
•
•
•
•
•
•
•
Obtained an understanding of the Company’s process for establishing the ACL, including the implementation of
models and the qualitative factor adjustments of the ACL.
Tested the design and operating effectiveness of controls, including those related to technology, over the ACL,
including:
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
loan data completeness and accuracy,
reconciliation of loan balances accounted for at amortized cost and underlying detail,
classifications of loans by loan pool,
historical charge-off data,
the calculation of loss rates given probability of default and loss given default,
review of commercial real-estate appraisals,
the calculation of estimated remaining lives of the loans,
the establishment of qualitative adjustments,
loan credit risk ratings,
establishment of specific ACL on individually evaluated loans,
and management’s review and disclosure controls over the ACL;
Tested of completeness and accuracy of the information utilized in the ACL, including evaluating the relevance and
reliability of such information;
Tested the ACL model’s computational accuracy such as probability of default, loss given default and estimated
remaining lives of loans;
Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the
reasonableness of the significant assumptions including consideration of impact of the COVID-19 pandemic;
Tested the loan review functions and evaluated the reasonableness of loan credit risk ratings;
Evaluated the reasonableness of specific allowances on individually evaluated loans;
Evaluated the overall reasonableness of assumptions used by management considering trends identified within peer
groups;
Evaluated the accuracy and completeness of Topic 326 disclosures in the consolidated financial statements;
Evaluated credit quality trends in delinquencies, non-accruals, charge-offs and loan risk ratings;
Tested estimated utilization rate of unfunded loan commitments;
Reviewed documentation prepared to assess the methodology utilized in the ACL calculation for securities for
reasonableness.
80
Goodwill Impairment Analysis
The Company’s goodwill totaled $26.7 million at December 31, 2020. As discussed in Notes 1 and 8 to the consolidated
financial statements, goodwill is tested for impairment at the reporting segment level on an annual basis on October 1, or
more often if events or circumstances indicate that there may be impairment. Because of the volatile market conditions, the
Company’s market value fell below book value and the Company performed a qualitative assessment each quarter during
2020 and included the use of a third-party valuation specialist during the second quarter of 2020. Based on these
assessments, it was determined that the fair value of each of the Company’s reporting segments exceeded their carrying
value. No goodwill impairment was recorded as a result.
We identified the valuation of goodwill as a critical audit matter due to the subjective nature of the assumptions used to
estimate the reporting unit’s fair value. In particular, the fair value estimate was sensitive to significant assumptions, such as
changes in the Company's forecasted cash flows, discount rate and terminal value, which are affected by expectations about
future market or economic conditions, including uncertainty resulting from the COVID-19 pandemic.
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company's
goodwill impairment process, including controls over management's review of the significant assumptions described above.
To test the estimated fair value of the Company's reporting units, with the support of our internal valuation specialists, we
performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions
discussed above and the underlying data used by the Company in its analysis. We compared the significant assumptions used
by management to current industry and economic trends. We assessed the historical accuracy of management's estimates and
performed sensitivity analyses of significant assumptions to evaluate changes in the fair value estimate of the reporting unit
resulting from changes in the assumptions. In addition, we tested management's reconciliation of the fair value of the
reporting unit to the market capitalization of the Company.
/s/ BKD, LLP
We have served as the Company’s auditor since 2016.
Little Rock, Arkansas
March 2, 2021
81
ORIGIN BANCORP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
Assets
Cash and due from banks
Interest-bearing deposits in banks
Total cash and cash equivalents
Securities:
Available for sale
Held to maturity, net allowance for credit losses of $66 at December 31, 2020, (fair
value of $41,205 and $29,523 at December 31, 2020, and December 31, 2019,
respectively)
Securities carried at fair value through income
Total securities
Non-marketable equity securities held in other financial institutions
Loans held for sale ($136,026 and $36,977 at fair value at December 31, 2020, and
December 31, 2019, respectively)
Loans, net of allowance for credit losses of $86,670 and $37,520 at December 31, 2020,
and December 31, 2019, respectively ($17,011 and $17,670 at fair value at December
31, 2020, and December 31, 2019, respectively)
Premises and equipment, net
Mortgage servicing rights
Cash surrender value of bank-owned life insurance
Goodwill and other intangible assets, net
Accrued interest receivable and other assets
Total assets
Liabilities and Stockholders' Equity
Noninterest-bearing deposits
Interest-bearing deposits
Time deposits
Total deposits
Federal Home Loan Bank ("FHLB") advances and other borrowings
Subordinated debentures, net
Accrued expenses and other liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized
Common stock ($5.00 par value; 50,000,000 shares authorized; 23,506,312 and
23,480,945 shares issued at December 31, 2020 and 2019, respectively)
Additional paid‑in capital
Retained earnings
Accumulated other comprehensive income
Total stockholders' equity
Total liabilities and stockholders' equity
December 31,
2020
2019
$
60,544 $
316,670
377,214
62,160
229,358
291,518
1,004,674
501,070
38,128
11,554
1,054,356
62,586
191,512
28,620
11,513
541,203
39,808
64,837
5,638,103
4,105,675
81,763
13,660
37,553
30,480
141,041
$
$
7,628,268 $
1,607,564 $
3,478,985
664,766
5,751,315
984,608
157,181
88,014
80,457
20,697
37,961
31,540
110,930
5,324,626
1,077,706
2,360,096
790,810
4,228,612
417,190
9,671
69,891
6,981,118
4,725,364
—
—
117,532
237,341
266,628
25,649
647,150
—
—
117,405
235,623
239,901
6,333
599,262
$
7,628,268 $
5,324,626
The accompanying notes are an integral part of these consolidated financial statements.
82
ORIGIN BANCORP, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
Interest and dividend income
Interest and fees on loans
Investment securities-taxable
Investment securities-nontaxable
Interest and dividend income on assets held in other financial institutions
Total interest and dividend income
Interest expense
Interest-bearing deposits
FHLB advances and other borrowings
Subordinated debentures
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Noninterest income
Service charges and fees
Mortgage banking revenue
Insurance commission and fee income
Gain (loss) on sales of securities, net
(Loss) on sales and disposals of other assets, net
Limited partnership investment (loss) income
Swap fee income
Change in fair value of equity investments
Other fee income
Other income
Years Ended December 31,
2019
2018
2020
$
209,114 $
206,899 $
169,384
11,302
5,428
2,858
228,702
27,150
5,895
4,121
37,166
191,536
59,900
131,636
12,998
29,603
12,746
580
(1,213)
78
2,546
—
2,253
5,061
11,975
3,327
4,881
227,082
44,716
8,097
557
53,370
173,712
9,568
164,144
13,859
12,309
12,177
20
(333)
(6)
2,185
367
1,490
4,410
9,843
4,465
4,404
188,096
29,671
4,420
553
34,644
153,452
1,014
152,438
12,754
9,620
9,720
(8)
(170)
823
927
1,977
1,811
3,786
41,240
Total noninterest income
64,652
46,478
The accompanying notes are an integral part of these consolidated financial statements.
83
ORIGIN BANCORP, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(continued)
Years Ended December 31,
2019
2018
2020
Noninterest expense
Salaries and employee benefits
Occupancy and equipment, net
Data processing
Electronic banking
Communications
Advertising and marketing
Professional services
Regulatory assessments
Loan related expenses
Office and operations
Intangible asset amortization
Franchise tax expense
Other expenses
Total noninterest expense
Income before income tax expense
Income tax expense
Net income
Preferred stock dividends
Net income allocated to participating stockholders
Net income available to common stockholders
Basic earnings per common share
Diluted earnings per common share
91,105
17,022
8,321
3,686
1,767
3,710
3,975
3,826
6,316
5,624
1,060
2,186
3,337
151,935
44,353
7,996
88,974
16,759
6,961
3,441
2,098
3,808
3,577
1,694
4,174
6,674
1,321
2,160
2,433
144,074
66,548
12,666
$
$
$
$
36,357 $
53,882 $
— $
—
— $
—
36,357 $
53,882 $
1.56 $
1.55
2.30 $
2.28
80,487
15,445
6,182
2,883
2,028
4,275
3,269
2,457
3,039
5,881
961
1,485
2,844
131,236
62,442
10,837
51,605
1,923
1,029
48,653
2.21
2.20
The accompanying notes are an integral part of these consolidated financial statements.
84
ORIGIN BANCORP, INC.
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
Net income
Other comprehensive income (loss)
Securities available for sale and transferred securities:
Net unrealized holding gain (loss) arising during the period
Net losses realized as a yield adjustment in interest on investment
securities
Reclassification adjustment for net (gain) loss included in net income
Change in the net unrealized gain (loss) on investment securities, before
tax
Income tax benefit related to net unrealized gain (loss) arising during the
period
Change in the net unrealized gain (loss) on investment securities, net of tax
Cash flow hedges:
Net unrealized (loss) gain arising during the period
Reclassification adjustment for (loss) gain included in net income
Change in the net unrealized (loss) gain on cash flow hedges, before tax
Income tax expense (benefit) related to net unrealized (loss) gain on cash
flow hedges
Change in the net unrealized (loss) gain on cash flow hedges, net of tax
Other comprehensive income (loss), net of tax
Comprehensive income
Years Ended December 31,
2020
2019
2018
$
36,357 $
53,882 $
51,605
25,646
11,439
(5,260)
(10)
(580)
25,056
5,262
19,794
(739)
(134)
(605)
(127)
(478)
19,316
(10)
(20)
11,409
2,396
9,013
(216)
37
(253)
(53)
(200)
8,813
$
55,673 $
62,695 $
(10)
8
(5,262)
(1,105)
(4,157)
104
(7)
111
23
88
(4,069)
47,536
The accompanying notes are an integral part of these consolidated financial statements.
85
ORIGIN BANCORP, INC.
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands, except per share amounts)
Common
Shares
Outstanding
Preferred
Stock
Series
SBLF
Preferred
Stock
Series D
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (loss)
Less:
Retirement
Plan-Owned
Shares
Total
Stockholders'
Equity
19,518,752 $
48,260 $
16,998 $
97,594 $
146,061 $
145,122 $
1,307 $
(34,991) $
420,351
Balance at January 1, 2018
Net income
Other comprehensive loss, net of tax
Reclassification of tax effects related to the adoption of ASU
2018-02
Recognition of stock compensation, net
Termination of ESOP put option
Stock issuance - Common
Stock issuance - RCF acquisition
—
—
—
193,913
—
3,045,426
66,824
—
—
—
—
—
—
—
Redemption of preferred stock - Series SBLF
—
(48,260)
Conversion of preferred stock - Series D to common stock
901,644
Tax benefit of 2018 stock issuance cost
Dividends declared - Series SBLF preferred stock (1)
Dividends declared - Series D preferred stock
Dividends declared - common stock ($0.13 per share)
Balance at December 31, 2018
Net income
Other comprehensive income, net of tax
Impact of adoption of ASU 2016-02 related to leases
Recognition of stock compensation, net
Dividends declared - common stock ($0.25 per share)
Repurchase of common stock
Balance at December 31, 2019
Net income
Other comprehensive income, net of tax
Impact of adoption of ASU 2016-13 - CECL
Recognition of stock compensation, net
Dividends declared - common stock ($0.3775 per share)
Repurchase of common stock
Balance at December 31, 2020
—
—
—
—
23,726,559
—
—
—
54,386
—
(300,000)
23,480,945
—
—
—
56,235
—
(30,868)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(16,998)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
970
—
15,227
334
—
4,508
—
—
—
—
—
—
—
1,028
—
79,449
2,372
—
12,490
641
—
—
—
118,633
242,041
—
—
—
272
—
—
—
—
2,141
—
(1,500)
(8,559)
117,405
235,623
—
—
—
281
—
(154)
—
—
—
2,287
—
(569)
51,605
—
—
(4,069)
(282)
282
—
—
—
—
—
—
—
(1,894)
(29)
(2,937)
191,585
53,882
—
321
—
(5,887)
—
239,901
36,357
—
(760)
—
(8,870)
—
—
—
—
—
—
—
—
—
—
—
(2,480)
—
8,813
—
—
—
—
6,333
—
19,316
—
—
—
—
—
—
—
—
34,991
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
51,605
(4,069)
—
1,998
34,991
94,676
2,706
(48,260)
—
641
(1,894)
(29)
(2,937)
549,779
53,882
8,813
321
2,413
(5,887)
(10,059)
599,262
36,357
19,316
(760)
2,568
(8,870)
(723)
23,506,312 $
— $
— $
117,532 $
237,341 $
266,628 $
25,649 $
— $
647,150
____________________________
(1)
The dividend rate on the Senior Non-Cumulative Perpetual Preferred stock, Series SBLF ("SBLF preferred stock") was payable quarterly at a fixed annual rate of 9%. The Company redeemed all 48,260 shares of the
SBLF preferred stock in June 2018.
The accompanying notes are an integral part of these consolidated financial statements.
86
ORIGIN BANCORP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Cash flows from operating activities:
2020
2019
2018
Net income
$
36,357 $
53,882 $
51,605
Adjustments to reconcile net income to net cash provided by operating
Years Ended December 31,
activities:
Provision for credit losses
Depreciation and amortization
Net amortization on securities
Amortization of investments in tax credit funds
Net realized (gain) loss on securities sold
Deferred income tax (benefit) expense
Stock-based compensation expense
Originations of mortgage loans held for sale
Proceeds from mortgage loans held for sale
Gain on mortgage loans held for sale, including origination of servicing
rights
Mortgage servicing rights valuation adjustment
Net loss on disposals of premises and equipment
Increase in the cash surrender value of life insurance
Gain on equity securities without a readily determinable fair value
Net losses on sales and write downs of other real estate owned
Other operating activities, net
Net cash provided by operating activities
Cash flows from investing activities:
Cash paid for business combinations, net of cash acquired
Purchases of securities available for sale
Maturities, paydowns and calls of securities available for sale
Proceeds from sales of securities available for sale
Purchase of securities held to maturity
Maturities, paydowns and calls of securities held to maturity
Paydowns of securities carried at fair value
59,900
6,880
4,581
1,442
(580)
(11,884)
2,320
(659,188)
570,349
(19,190)
12,746
72
(917)
—
1,141
(3,142)
887
—
(700,319)
151,932
64,702
(10,000)
415
452
9,568
6,706
975
1,608
(20)
(2,596)
2,247
(353,090)
334,958
(6,943)
7,012
139
(755)
(367)
194
8,035
61,553
—
(94,544)
154,473
27,766
(10,000)
541
434
1,014
5,869
1,138
1,899
8
5,637
1,462
(300,093)
309,153
(6,403)
963
75
(713)
(1,977)
95
8,094
77,826
(6,596)
(477,548)
279,152
20,877
—
1,018
414
Net sales (purchases) of non-marketable equity securities held in other
financial institutions
(22,401)
3,386
(17,026)
Originations of mortgage warehouse loans
(13,665,295)
(4,306,171)
(4,495,650)
Proceeds from pay-offs of mortgage warehouse loans
12,855,955
4,239,381
4,542,822
Net increase in loans, excluding mortgage warehouse and loans held for
sale
(788,719)
(290,278)
(601,153)
Purchase of bank-owned life insurance
Return of capital on limited partnership investments
Capital calls on limited partnership investments
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Proceeds from sales of other real estate owned
—
818
(525)
(7,198)
—
4,451
(4,500)
503
(1,521)
(11,152)
27
470
(4,000)
456
(2,838)
(5,482)
111
516
Net cash used in investing activities
(2,115,732)
(291,185)
(764,927)
The accompanying notes are an integral part of these consolidated financial statements.
87
ORIGIN BANCORP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(continued)
Years Ended December 31,
2020
2019
2018
271,124
250,000
(51,342)
—
—
667,065
(567,065)
1,164
—
4,135
(5,941)
(25)
559
95,178
(48,260)
—
616,592
(70,509)
187,187
116,678
34,390
675
—
1,057
16,998
2,706
Cash flows from financing activities:
Net increase in deposits
Proceeds from long-term FHLB advances
Repayments on long-term FHLB advances
Proceeds from Federal Reserve Bank Paycheck Protection Program
Liquidity Facility ("PPPLF")
Repayments on PPPLF
Proceeds from short-term FHLB advances
Repayments on short-term FHLB advances
Net increase in other borrowed funds
Issuance of subordinated debentures, net
Net (decrease) increase in securities sold under agreements to repurchase
Dividends paid
Taxes paid related to net share settlement of equity awards
Cash received from exercise of stock options
Proceeds from issuance of common stock, net of offering expenses
Redemption of Series SBLF preferred stock
Common stock repurchased
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Interest paid
Income taxes paid
Significant non-cash transactions:
1,522,703
—
445,474
100,000
(1,898)
(101,649)
319,257
(319,257)
—
—
2,107,000
2,815,000
(1,557,000)
(2,815,000)
—
147,374
(8,309)
(8,854)
—
248
—
—
(723)
2,200,541
85,696
291,518
—
—
(23,597)
(5,863)
—
166
—
—
(10,059)
404,472
174,840
116,678
$
$
377,214 $
291,518 $
36,432 $
53,227 $
24,974
10,023
Unsettled liability for investment purchases recorded at trade date
Real estate acquired in settlement of loans
Conversion of Series D preferred stock to common stock
Fair value of common stock issued in conjunction with business
combination
1,514
2,446
—
—
2,659
1,577
—
—
The accompanying notes are an integral part of these consolidated financial statements.
88
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 1 - Significant Accounting Policies
Nature of Operations.
Origin Bancorp, Inc. ("Company") is a financial holding company headquartered in
Ruston, Louisiana. The Company's wholly owned bank subsidiary, Origin Bank ("Bank"), provides a broad range of financial
services to businesses, municipalities, high net worth individuals and retail clients. The Company currently operates 44
banking centers located in Dallas/Fort Worth and Houston, Texas, North Louisiana and into Mississippi. The Company
principally operates in one business segment, community banking.
Basis of Presentation.
The consolidated financial statements include the accounts of the Company and all other
entities in which Origin Bancorp, Inc. has a controlling financial interest, including the Bank and Davison Insurance Agency,
LLC ("Davison Insurance"), doing business as Thomas & Farr Agency, and Reeves, Coon and Funderburg ("RCF"). All
significant intercompany balances and transactions have been eliminated in consolidation. The Company's accounting and
financial reporting policies conform, in all material respects, to accounting principles generally accepted in the United States
("U.S. GAAP") and to general practices within the financial services industry. The Company has evaluated subsequent events
for potential recognition and/or disclosure through the date these consolidated financial statements were issued.
Reclassifications.
Certain amounts previously reported have been reclassified to conform to the current
presentation. Such reclassifications had no effect on prior year net income or stockholders' equity.
Variable Interest Entities.
The Company determines whether it has a controlling financial interest in an entity
by first evaluating whether the entity is a voting interest entity or a variable interest entity ("VIE") under U.S. GAAP. Voting
interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself
independently and provides the equity holders with the obligation to absorb losses, the right to receive residual returns and
the right to make decisions about the entity's activities. The Company consolidates voting interest entities in which it has all,
or at least a majority of, the voting interest. As defined in applicable accounting standards, VIEs are entities that lack one or
more of the characteristics of a voting interest entity. A controlling financial interest in a VIE is present when an enterprise
has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and an
obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The enterprise with
a controlling financial interest, known as the primary beneficiary, consolidates the VIE. The Company's wholly owned
subsidiaries CTB Statutory Trust I and First Louisiana Statutory Trust I are VIEs for which the Company is not the primary
beneficiary. Accordingly, the accounts of these trusts are not included in the Company's consolidated financial statements.
Operating Segments.
Operating segments are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate
resources and in assessing performance. The Bank is the only significant subsidiary upon which management makes
decisions regarding how to allocate resources and assess performance. Individual bank branches offer a group of similar
services, including commercial, real estate and consumer loans, time deposits, checking and savings accounts, all with similar
operating and economic characteristics. While the chief operating decision-maker monitors the revenue streams of the various
products and services, operations are managed and financial performance is evaluated on a Company-wide basis.
Accordingly, all of the community banking services and branch locations are considered by management to be aggregated
into one reportable operating segment, community banking.
Use of Estimates.
The preparation of financial statements in conformity with U.S. GAAP requires management
to make estimates and assumptions based on available information that affect the amounts reported in the financial statements
and disclosures provided, including the accompanying notes, and actual results could differ. Material estimates that are
particularly susceptible to change include the allowance for credit losses for loans and available for sale securities; fair value
measurements of assets and liabilities; and income taxes. Estimates and assumptions are reviewed periodically and the effects
of revisions are reflected in the Company's consolidated financial statements in the period they are deemed necessary. While
management uses its best judgment, actual results could differ from those estimates.
Cash and Cash Equivalents.
For purposes of the statement of cash flows, the Company considers all cash on
hand, demand deposits with other banks, federal funds sold and short term interest-bearing cash items with an original
maturity less than 90 days to be cash equivalents. The Company maintains deposits with other financial institutions in
amounts that exceed federal deposit insurance coverage. Furthermore, federal funds sold are essentially uncollateralized loans
to other financial institutions. Management regularly evaluates the credit risk associated with the counterparties to these
transactions and believes that the Company is not exposed to any significant credit risks on cash and cash equivalents.
89
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
At December 31, 2020 and 2019 the Company had cash collateral required to be held with counterparties on certain
derivative transactions as discussed in Note 12 - Derivative Financial Instruments. At December 31, 2020 and 2019 the
Company had no reserve requirement for cash balances with the Federal Reserve.
Securities.
The Company accounts for debt and equity securities as follows:
Available for Sale ("AFS") - Debt securities that will be held for indefinite periods of time, including securities that
may be sold in response to changes in market interest or prepayment rates, needs for liquidity and changes in the availability
of and the yield of alternative investments are classified as AFS. These assets are carried at fair value. Fair value is
determined using published quotes. If quoted market prices are not available, fair values are based on other methods
including, but not limited to the discounting of cash flows. Unrealized gains and losses on AFS securities are excluded from
earnings and reported net of tax in accumulated other comprehensive income until realized. Please see the paragraphs under
Allowance for Credit Losses referenced below in this footnote for information on the allowance for credit losses pertaining to
AFS securities.
Held to Maturity ("HTM") - Debt securities that management has the positive intent and ability to hold until
maturity are classified as HTM and are carried at their remaining unpaid principal balance, net of unamortized premiums or
unaccredited discounts. Please see the paragraphs under Allowance for Credit Losses referenced below in this footnote for
information pertaining to the allowance for credit losses pertaining to HTM securities.
Securities Carried at Fair Value through Income - Debt securities for which the Company has elected the fair value
option for accounting are classified as securities carried at fair value through income. Management has elected the fair value
option for these items to offset the corresponding change in fair value of related interest rate swap agreements. Fair value is
determined using discounted cash flows and credit quality indicators. Changes in fair value are reported through the
consolidated statements of income as a part of other noninterest income.
Interest income on securities includes amortization of purchase premiums and discounts. Premiums and discounts on
securities are generally amortized using the interest method with a constant effective yield without anticipating prepayments,
except for mortgage-backed securities where prepayments are anticipated. Premiums on callable securities are amortized to
their earliest call date. A security is placed on nonaccrual status if (i) principal or interest has been in default for a period of
90 days or more or (ii) full payment of principal and interest is not expected. Interest accrued but not received for a security
placed on nonaccrual status is reversed against interest income. Gains and losses on sales are recorded on the trade date, are
derived from the amortized cost of the security sold and are determined using the specific identification method.
Prior to the adoption of ASU 2016-13, declines in the fair value of held-to-maturity and available-for-sale securities
below their cost that were deemed to be other than temporary were reflected in earnings as realized losses. In estimating
other-than-temporary impairment losses prior to January 1, 2020, management considered, among other things, (i) the length
of time and the extent to which the fair value had been less than cost, (ii) the financial condition and near-term prospects of
the issuer and (iii) the intent and our ability to retain our investment in the issuer for a period of time sufficient to allow for
any anticipated recovery in fair value.
Non-marketable Equity Securities Held in Other Financial Institutions.
Securities with limited marketability,
such as stock in the Federal Reserve Bank of Dallas ("FRB") or the Federal Home Loan Bank of Dallas ("FHLB"), are
carried at cost, less impairment, if any. These investments in stock do not have readily determinable fair values. The
Company's remaining equity investments in other financial institutions, excluding FRB and FHLB, totaling $12.1 million at
December 31, 2020 and 2019, respectively, qualify for the practicability exception under Accounting Standards Update
("ASU") 2016-01 due to having illiquid markets and are carried at cost, less impairment, plus or minus any observable price
changes. The carrying value of these securities was evaluated and was determined not to be impaired for the years ended
December 31, 2020, 2019 and 2018.
Loans Held for Sale.
Loans held for sale include mortgage loans and are carried at fair value, with unrealized
gains and losses recorded in the consolidated statements of income.
Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of
origination and mortgage loans held for sale. The forward commitments acquired by the Company for mortgage loans in
process of origination are mandatory forward commitments, and the Company is required to substitute another loan or to buy
back the commitment if the original loan does not fund. Typically, the Company delivers the mortgage loans within a few
days after the loans are funded. These commitments are derivative instruments carried at fair value.
90
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Gains and losses resulting from sales of mortgage loans are realized when the respective loans are sold to investors.
Gains and losses are determined by the difference between the selling price (including the fair value of any items such as
mortgage servicing rights) and the carrying amount of the loans sold. Fees received from borrowers to guarantee the funding
of mortgage loans held for sale are recognized as income or expense when the loans are sold or when it becomes evident that
the commitment will not be used.
Loans.
Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or
payoff, are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for credit losses,
and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan
origination fees, and certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the
related loans using the interest method. Late fees are recognized as income when earned, assuming collectability is
reasonably assured.
The Company has elected the fair value option on a small portion of its LHFI, with changes in fair value recorded in
noninterest income. For these loans, the earned current contractual interest payment is recognized in interest income. Loan
origination costs and fees are recognized in earnings as incurred and not deferred. Because these loans are recognized at fair
value, the Company's allowance for credit losses policy does not apply to these loans. Fair value is determined using
discounted cash flows and credit quality indicators.
In addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit
accounts to be loans and classifies these overdrafts as loans in its consolidated balance sheets.
Loans are placed on nonaccrual status when management believes that the borrower's financial condition, after
giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful,
or generally when loans are 90 days or more past due. When accrual of interest is discontinued, all unpaid accrued interest is
reversed. Past due status is based on contractual terms of the loan. Interest income on nonaccrual loans may be recognized to
the extent cash payments are received, but payments received are usually applied to principal. Nonaccrual loans are generally
returned to accrual status when principal and interest payments are less than 90 days past due, the customer has made
required payments for at least six months, and the Company reasonably expects to collect all principal and interest.
Allowance for Credit Losses.
The allowance for loan credit losses represents the estimated losses for financial
assets 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. The Company evaluates loans held for investment ("LHFI") on a pool basis with pools of loans
characterized by loan type, collateral, industry, internal credit risk rating and Fair Isaac Corporation ("FICO") score. The
Company applied a probability of default, loss given default loss methodology to the loan pools at January 1 and December
31, 2020. Historical loss rates for each pool are calculated based on charge-off and recovery data beginning with the second
quarter of 2012. These loss rates are adjusted for differences between current period conditions, including the ongoing effects
of COVID-19 on the U.S. economy, and the conditions existing during the historical loss period. Historical losses are
additionally adjusted for the effects of certain economic variables forecast over a one-year period. Subsequent to the forecast
effects, historical loss rates are used to estimate losses over the estimated remaining lives of the loans. The estimated
remaining lives consist of the contractual lives, adjusted for estimated prepayments. Loans that exhibit characteristics
different from their pool characteristics are evaluated on an individual basis. Certain of these loans are considered to be
collateral dependent with the borrower experiencing financial difficulty. For these loans, the fair value of collateral practical
expedient is elected whereby the allowance is calculated as the amount by which the amortized cost exceeds the fair value of
collateral, less costs to sell (if applicable). Those individual loans that are not collateral dependent are evaluated based on a
discounted cash flow methodology. This evaluation is inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available. Loans are charged off against the allowance for credit losses
when management believes the loss is confirmed. Subsequent recoveries, if any, are credited to the allowance.
Prior to the adoption of ASU 2016-13, the allowance for credit losses on loans was established through a provision
for loan losses charged to expense, which represented management’s best estimate of inherent losses that had been incurred
within the existing portfolio of loans. The allowance for credit losses on loans included allowance allocations calculated in
accordance with ASC Topic 310, “Receivables” and allowance allocations calculated in accordance with ASC Topic 450,
“Contingencies.”
91
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Delinquency statistics are updated at least monthly and are the most meaningful indicator of the credit quality of
one-to-four single family residential, home equity loans and lines of credit and other consumer loans. Internal risk ratings are
considered the most meaningful indicator of credit quality for commercial and industrial, construction, and commercial real
estate loans. Internal risk ratings are a key factor in identifying loans that are individually evaluated for impairment and
impact management's estimates of loss factors used in determining the amount of the allowance for credit losses. Internal risk
ratings are updated on a regular basis.
Prior to the adoption of ASC 326 on January 1, 2020, loans were reported as impaired when, based on then current
information and events, it was probable that the Company would be unable to collect all amounts due in accordance with the
original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment was
evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan was
impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the present value of
estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was expected solely
from the collateral. Interest payments on impaired loans were typically applied to principal unless collectibility of the
principal amount was reasonably assured, in which case interest was recognized on a cash basis. Impaired loans, or portions
thereof, were charged off when deemed uncollectible.
Troubled debt restructurings ("TDRs") are loans for which the contractual terms on the loan have been modified and
both of the following conditions exist: (1) the borrower is experiencing financial difficulty and (2) the restructuring
constitutes a concession. Concessions could include a reduction in the interest rate on the loan, payment extensions,
forgiveness of principal, forbearance or other actions intended to maximize collection. The Company assesses all loan
modifications to determine whether they constitute a TDR.
Certain borrowers are currently unable to meet their contractual payment obligations because of the adverse effects
of COVID-19. To help mitigate these effects, loan customers may apply for a deferral of payments, or portions thereof, for up
to 90 days. The CARES Act and related guidance from the federal banking agencies provide financial institutions the option
to temporarily suspend requirements under GAAP related to classification of certain loan modifications as TDRs to account
for the current and anticipated effects of COVID-19. The CARES Act, as amended by the Consolidated Appropriations Act,
2021, specified that COVID-19 related loan modifications executed between March 1, 2020 and the earlier of (i) 60 days
after the date of termination of the national emergency declared by the President and (ii) January 1, 2022, on loans that were
current as of December 31, 2019 are not TDRs. Additionally, under guidance from the federal banking agencies, other short-
term modifications made on a good faith in response to COVID-19 to borrowers that were current prior to any relief are not
TDRs under ASC Subtopic 310-40, “Troubled Debt Restructuring by Creditors.” These modifications include short-term
(e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in
payment that are insignificant. At December 31, 2020, the Company had 49 loans totaling $97.7 million under COVID-19
related forbearance agreements.
The allowance for off-balance sheet exposures was determined using the same methodology that is applied to LHFI.
Utilization rates are determined based on historical usage.
Credit losses related to available for sale debt securities are recorded through an allowance for credit losses. The
amount of the allowance for credit losses is limited to the amount by which fair value is below amortized cost. Discounted
cash flow analysis is required for determining credit losses for available for sale securities. In determining whether or not a
credit loss exists, such factors as extent of the loss, adverse conditions related to the entity, industry or geographic region,
security structure, ratings and changes by a rating agency and past performance are considered. The length of time a security
has been in an unrealized loss position is not a factor in determining whether a credit loss exists.
The allowance for credit losses for held-to-maturity securities is calculated using a probability of default, loss given
default methodology. Credit losses are estimated over the lives of the securities using historical loss rates, adjusted for current
conditions and reasonable and supportable forecasts. Third party data is used for the historical loss rates and probability of
default statistics. Additionally, the Company uses a weighted average of three possible economic scenarios derived from third
party data which is used to calculate the forecast effect. The forecast effect is applied over the estimated lives of the
securities.
Premises and Equipment, net.
Land is carried at cost. Buildings and improvements are stated at cost less
accumulated depreciation computed using the straight-line method over the estimated useful lives of the assets, which range
from 35 to 39 years. Furniture, fixtures, and equipment are stated at cost less accumulated depreciation computed using the
straight-line method over the estimated useful lives of the assets, which range from three to seven years.
92
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Leases. The Company adopted ASU No. 2016-02 — Leases (Topic 842) as of January 1, 2019, and recorded a
$19.7 million right-of-use ("ROU") asset offset by a $19.4 million lease liability, recognizing a net after tax $321,000
cumulative effect adjustment credit to retained earnings. The Company elected the package of practical expedients, which
among other things, does not require reassessment of lease classification. The Company determines if an arrangement is a
lease at inception. Operating lease assets are included in accrued interest receivable and other assets, operating lease liabilities
are included in accrued expenses and other liabilities in the Company's consolidated balance sheets. The Company has made
an accounting policy election not to recognize short-term lease assets and liabilities (less than a 12-month term) or immaterial
equipment and server space leases in its balance sheets; instead, the Company recognizes the lease expense for these leases
on a straight-line basis over the life of the lease. The Company has no material finance leases.
ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent
the Company's obligation to make lease payments arising from the lease. ROU lease assets and liabilities are recognized at
the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses
an estimated incremental collateralized borrowing rate, which is derived from information available at the lease
commencement date and gives consideration to the applicable FHLB borrowing rates, when determining the present value of
lease payments.
The Company's lease terms include options to extend a lease when it is reasonably certain that the Company will
exercise that option. The Company's lease agreements do not contain any residual value guarantees. All of the Company's
operating long-term leases are real estate leases, which are accounted for as a single lease component.
Mortgage Servicing Rights and Transfers of Financial Assets.
Gains or losses on "servicing-retained" loan
sale transactions generally include a component reflecting the differential between the contractual interest rate of the loan and
the interest rate to be received by the investor. The present value of the estimated future profit for servicing the loans is also
taken into account in determining the amount of gain or loss on the sale of these loans. For loans sold servicing-retained, the
fair value of mortgage servicing rights is recorded as an asset, with their value estimated using a discounted cash flow
methodology to arrive at the present value of future expected earnings from the servicing of the loans. Significant model
inputs include prepayment speeds, discount rates, and servicing costs. Servicing revenues are based on a contractual
percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned.
Loans sold into the secondary market are considered transfers of financial assets. These transfers are accounted for
as sales when control over the asset has been surrendered, which is deemed to have occurred when: an asset does not have
any claims to it by the transferor or their creditors, including in bankruptcy or other receivership situations; the transferee
obtains the unconditional right to pledge or exchange the asset; or the transfer does not include a repurchase provision above
the limited recourse provisions of these loan sales.
GNMA optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans
that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer's option
and without GNMA's prior authorization, the servicer may repurchase a delinquent loan for an amount equal to 100% of the
remaining principal balance of the loan. This buy-back option is considered a conditional option until the delinquency criteria
are met, at which time the option becomes unconditional. When a financial institution is deemed to have regained effective
control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be
included in the balance sheet as mortgage loans held for sale, regardless of whether the institution intends to exercise the buy-
back option. These loans were recorded as mortgage loans held for sale, at the lower of cost or fair value with a
corresponding liability in FHLB advances and other borrowings on the Company's consolidated balance sheets.
93
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Derivative Instruments and Hedging Activities.
All derivatives are recorded on the accompanying
consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended
use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge
accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives
designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment
attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and
qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions,
are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss
recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that
are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash
flow hedge. During the term of a cash flow hedge contract the effective portion of changes in fair value in the derivative
instrument are recorded in accumulated other comprehensive income. Changes in the fair value of derivatives to which hedge
accounting does not apply are recognized immediately in earnings. Note 12 - Derivative Financial Instruments describes the
derivative instruments currently used by the Company and discloses how these derivatives impact its consolidated balance
sheets and statements of income.
Goodwill and Other Intangible Assets.
Goodwill, which represents the excess of cost over the fair value of the
net assets of an acquired business, is not amortized but tested for impairment on an annual basis, which is typically October 1
for the Company, or more often if events or circumstances indicate that there may be impairment. Because of the volatile
market conditions during which the Company's market value fell below book value, the Company performed a qualitative
assessment of whether it was more likely than not that the fair value was less than carrying value during each quarter of 2020
including a goodwill impairment assessment performed by a third party valuation specialist during the second quarter of
2020. Based on these assessments, it was determined that the Company's fair value exceeded carrying value and no goodwill
impairment was recorded during 2020.
Other intangible assets, such as relationship based intangibles and core deposit intangibles, are amortized on a basis
consistent with the receipt of economic benefit to us. Such assets are evaluated at least annually as to the recoverability of
their carrying value for potential impairment. In the quarter following the period in which identified intangible assets become
fully amortized, the fully amortized balances are removed from the gross asset and accumulated amortization amounts.
Other Real Estate Owned.
Other real estate owned ("OREO") represents properties acquired through
foreclosure or acceptance of a deed in lieu of foreclosure on loans on which the borrowers have defaulted as to payment of
principal and interest. OREO also includes bank-owned real estate which the Company is no longer utilizing and intends to
sell. These properties are initially recorded at fair value, less cost to sell, at the date of foreclosure establishing a new cost
basis. Fair value is determined based on third party appraisals. Any subsequent capital improvements that increase value are
added to the balance of the properties. Any valuation adjustments required at the date of transfer from loans to OREO are
charged to the allowance for credit losses. Any subsequent write-downs to reflect current fair value, or gains and losses on the
sale of the properties are charged to noninterest income. At December 31, 2020 and 2019, the balance of OREO was $1.6
million and $4.7 million, respectively, and included as a component of other assets in the accompanying consolidated balance
sheets.
Overnight Repurchase Agreements with Depositors.
The Company enters into agreements under which it sells
securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Company may
transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates it to
repurchase the assets. Securities sold under agreements to repurchase generally mature on the banking day following that on
which the investment was initially sold and are treated as collateralized financing transactions which are recorded at the
amounts at which the securities were sold plus accrued interest. Interest rates and maturity dates of the securities involved
vary and are not intended to be matched with funds from customers.
Revenue Recognition.
In general, for revenue not associated with financial instruments, guarantees and
lease contracts, the Company applies the following steps when recognizing revenue from contracts with customers: (i)
identify the contract, (ii) identify the performance obligations, (iii) determine the transaction price, (iv) allocate the
transaction price to the performance obligations and (v) recognize revenue when a performance obligation is satisfied. Our
contracts with customers are generally short term in nature, typically due within one year or less or cancellable by us or our
customer upon a short notice period. Performance obligations for our customer contracts are generally satisfied at a single
point in time, typically when the transaction is complete, or over time. Descriptions of the Company's revenue generating
activities that are within the scope of Topic 606 are described below.
94
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Service charges and fees on deposit accounts
Service charges and fees on deposit accounts are primarily comprised of maintenance fees, service fees,
stop payment and insufficient funds fees. The Company's performance obligation for service fees or other fees covering a
period of time are generally satisfied, and related revenue recognized, over the period in which the service is provided. The
Company's performance obligations for transactional-based fees are generally satisfied, and related revenue recognized, at a
point in time.
Insurance commission and fee income
The Company earns commission income through production on behalf of insurance carriers and also earns
fee income by providing complementary services such as collection of premiums. In most instances the Company considers
the performance obligation to be complete at the time the service was rendered.
Credit card interchange income
The Company records credit card interchange income at a point in time as card transactions occur. The
Company's performance obligation for these transactions is deemed to have occurred upon completion of each transaction.
The amounts are included as a component of other income in the consolidated statements of income.
Gain or loss on sale of other assets and OREO
In the normal course of business, the Company recognizes the sale on other assets and OREO, along with
any gain or loss, when control of the property transfers to the buyer through an executed contractual agreement. The
transaction price is fixed, and on occasion the Company will finance a portion of the purchase price of the transferred asset.
Mortgage Banking Revenue.
This revenue category primarily reflects the Company's mortgage production,
sales and mortgage servicing revenue, including fees and income derived from mortgages originated with the intent to sell;
mortgage sales and servicing; and the impact of risk management activities associated with the mortgage pipeline and
mortgage servicing rights ("MSRs"). This revenue category also includes gains and losses on sales and changes in fair value
for mortgage loans originated with the intent to sell and measured at fair value under the fair value option. Changes in the fair
value of MSRs are reported in mortgage banking revenue. Net interest income from mortgage loans is recorded in interest
income.
Income Taxes.
Income tax expense is the total of the current year income tax due or refundable and the change
in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary
differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation
allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained
in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax
benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than
not" test, no tax benefit is recorded. The Company did not have any amount accrued with respect to uncertainty in income
taxes at December 31, 2020 and 2019.
The Company recognizes interest and/or penalties related to income tax matters as a component of noninterest
expense. There were no penalties or related interest for the years ended December 31, 2020, 2019 or 2018. Federal income
tax expense or benefit has been allocated to subsidiaries on a separate return basis.
95
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Stock-Based Compensation.
The cost of employee services received in exchange for stock options or restricted
stock grants are measured using the fair value of the award on the grant date and is recognized over the service period.
Other Investments.
The Company accounts for investments in limited partnerships, limited liability companies
("LLCs"), and other privately held companies using either the equity method of accounting or at amortized cost net of
impairments and observable price changes. The accounting treatment depends upon the Company's percentage ownership or
degree of management influence.
Under the equity method of accounting, the Company records its initial investment at cost. Subsequently, the
carrying amount of the investment is increased or decreased to reflect its share of income or loss of the investee. The
Company's recognition of earnings or losses from an equity method investment is based on its ownership percentage in the
investee and the investee's earnings for the reporting period, and is recorded on a one-quarter lag.
All of the Company's investments in limited partnerships, LLCs, and other companies are privately held, and their
fair values are not readily available. Management evaluates the investments in investees for impairment based on the
investee's ability to generate cash through its operations or obtain alternative financing, and other subjective factors. There
are inherent risks associated with investments in such companies, which may result in volatility in the consolidated
statements of income in future periods.
At December 31, 2020 and 2019, investments in limited partnerships, LLCs and other privately held companies
totaled $15.7 million and $16.0 million, respectively, and were included in other assets in the accompanying consolidated
balance sheets.
Investments in Tax Credit Entities.
As part of its Community Reinvestment Act responsibilities and due to their
favorable economic characteristics, the Company invests in tax credit-motivated projects primarily in the markets it serves.
These projects are directed at tax credits issued under Low-Income Housing Tax Credits. The Company generates returns on
tax credit motivated projects through the receipt of federal, and if applicable, state tax credits. The federal tax credits are
recorded as an offset to the income tax provision in the year that they are earned under federal income tax law – over 10 to 15
years beginning in the year in which rental activity commences. These credits, if not used in the tax return for the year of
origination, can be carried forward for 20 years.
The Company invests in a tax credit entity, usually an LLC, which owns the real estate. The Company receives a
nonvoting interest in the entity that must be retained during the compliance period for the credits (15 years for Low-Income
Housing Tax Credit programs). Control of the tax credit entity rests in the 0.1% interest general partner, who has the power
and authority to make decisions that impact economic performance of the project and is required to oversee and manage the
project. Due to the lack of any voting, economic, or managerial control, and due to the contractual reduction in the
investment, the Company accounts for its investment by amortizing the investment, beginning at the issuance of the
certificate of occupancy of the project, over the compliance period, as management believes any potential residual value in
the real estate will have limited value. Amortization is included as a component of income tax expense.
The Company has the risk of credit recapture if the project does not maintain compliance during the compliance
period. No such events have occurred to date. At December 31, 2020 and 2019, the Company had investments in tax credit
entities of $7.6 million and $9.0 million, respectively, which are included in other assets in the accompanying consolidated
balance sheets.
Earnings Per Share.
Basic and diluted earnings per common share for the years ended December 31, 2020 and
2019, are calculated using the treasury method. Under the treasury method, basic earnings per share is calculated as net
income divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share
includes the dilutive effect of additional potential common shares issuable under stock options and restricted stock awards.
Basic and diluted earnings per common share for year ended December 31, 2018, was calculated using the two-class
method. The two-class method is an earnings allocation formula that determines earnings per share for each share of common
stock and participating securities according to dividends declared (distributed earnings) and participation rights in
undistributed earnings. Distributed and undistributed earnings were allocated between common and participating security
stockholders based on their respective rights to receive dividends. Share-based payment awards that contain nonforfeitable
rights to dividends or dividend equivalents were considered participating securities (e.g., restricted stock grants). Preferred
stock that receives dividends based on dividends paid on common stock was also considered a participating security (e.g.,
Series D preferred stock). Net income attributable to common stockholders was then divided by the weighted average number
of common shares outstanding during the period, net of participating securities.
96
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Diluted income per common share considers common stock issuable under the assumed release of unvested
restricted stock awards, convertible preferred stock being converted to common stock, and the assumed exercise of stock
options granted. The dilutive effect of share-based payment awards that are not deemed to be participating securities is
calculated using the treasury stock method, which assumes that the proceeds from exercise are used to purchase common
stock at the average market price for the period. The dilutive effect of participating securities is calculated using the more
dilutive of the treasury stock method (which assumes that the participating securities are exercised/released) or the two-class
method (which assumes that the participating securities are not exercised/released and earnings are reallocated between
common and participating security stockholders). Potentially dilutive common stock equivalents are excluded from the
computation of diluted earnings per common share in periods in which the effect would be antidilutive.
Effect of Recently Adopted Accounting Standards
ASU No. 2019-10, Financial Instruments —Credit Losses (Topic 326), the impact of this ASU alleviates step 2 of
the goodwill impairment test. Implementation of this ASU became effective for the Company on January 1, 2020, and did not
materially impact the consolidated financial statements or disclosures.
ASU No. 2018-15, Intangibles, Goodwill and Other, Internal Use Software - (Topic 350-40): Customer's Accounting
for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract aligns the requirements for
capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for
capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include
an internal-use software license). Accordingly, the amendments require an entity (customer) in a hosting arrangement that is a
service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset
related to the service contract and which costs to expense. The amendments also require the entity (customer) to expense the
capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement,
which includes reasonably certain renewals. For public business entities that file reports with the Securities and Exchange
Commission ("SEC"), the amendments in the update are effective for fiscal years beginning after December 15, 2019,
including interim periods within those fiscal years, early adoption is permitted.
The Company prospectively adopted ASU 2018-15 effective October 1, 2018. As a result of this implementation,
capitalized costs relating to internal use software totaled $455,000 at December 31, 2018, and are expensed over the useful
life of the contract rather than expensed as incurred. The asset is reflected on the consolidated balance sheets in accrued
interest receivable and other assets and the related amortization expense is reflected in data processing expense on the
consolidated statements of income.
ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments; ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses; ASU
2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and
Hedging, and Topic 825, Financial Instruments; ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted
Transition Relief; ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses;
collectively, the "ASUs". These ASUs introduce and amend ASC Topic 326, Financial Instruments - Credit Losses and
amend guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For
assets held at amortized cost basis, Topic 326 eliminates the current incurred loss approach and, instead, requires an entity to
reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted
from the amortized cost basis of the financial assets to present the net amount expected to be collected. This guidance also
changes the accounting for purchased loans and securities with credit deterioration.
Topic 326 also applies to off-balance sheet exposures such as unfunded loan commitments, letters of credit and other
financial guarantees. Expected credit losses related to off-balance sheet exposures will be presented as a liability rather than
as an allowance.
Please see the paragraphs under Allowance for Credit Losses referenced above in this footnote for additional
information on the determination of the allowance for credit losses as required by these ASUs.
The Company made the following policy elections related to the adoption of the guidance in Topic 326:
•
Accrued interest will be written off against interest income when financial assets are placed into
nonaccrual status. Therefore, accrued interest will be excluded from the amortized cost basis for purposes of
calculating the allowance for credit losses. Accrued interest receivable is presented with other assets in a separate
line item in the consolidated balance sheet.
97
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
•
The fair value of collateral practical expedient has been elected on certain loans, in determining
the allowance for credit losses, for which the repayment is expected to be provided substantially through the
operation or sale of the collateral when the borrower is experiencing financial difficulty.
•
For credit loss estimates calculated using a discounted cash flow approach, the entire change in
present value is reported in credit loss expense rather than being attributed to interest income.
The adoption of ASC Topic 326 was recorded on it's original effective date as a cumulative effect adjustment to
retained earnings at January 1, 2020, and is shown below.
(Dollars in thousands)
LHFI:
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total allowance for loan credit losses
Reserve for off-balance sheet exposures
Held-to-Maturity Securities:
Municipal securities
December 31, 2019
Balance
Transition
Adjustment
January 1, 2020
ACL Balance
$
10,013 $
(5,052) $
3,711
6,332
20,056
16,960
262
242
1,141
(2,526)
(6,437)
7,296
29
360
4,961
4,852
3,806
13,619
24,256
291
602
$
$
$
37,520 $
1,248 $
38,768
1,810 $
(381) $
1,429
— $
96 $
96
ASU No. 2018-13, Fair Value Measurement - (Topic 820): Disclosure Framework - Changes to the Disclosure
Requirements for Fair Value Measurement modifies the disclosure requirements on fair value measurements in Topic 820.
The amendments in this update remove disclosures that no longer are considered cost beneficial, modify/clarify the specific
requirements of certain disclosures, and add disclosure requirements identified as relevant. ASU 2018-13 became effective
for us on January 1, 2020, and did not have a significant impact on our financial statements.
Effect of Newly Issued But Not Yet Effective Accounting Standards
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies
the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards
Codification (ASC) 740, Income Taxes. It also clarifies certain aspects of the existing guidance to promote more consistent
application, among other things. The amendments in the update are effective for fiscal years beginning after December 15,
2020, including interim periods within those fiscal years. Implementation of this ASU is not expected to materially impact the
consolidated financial statements or disclosures.
98
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 2 - Earnings Per Share
(Dollars in thousands, except per share amounts)
Basic earnings per common share
Net income
Less: Dividends to preferred stock (1)
Net income allocated to participating stockholders (1) (2)
Net income available to common stockholders (3)
Weighted average common shares outstanding
Basic earnings per common share (4)
Diluted earnings per common share
Diluted earnings applicable to common stockholders (3)
Weighted average diluted common shares outstanding:
Weighted average common shares outstanding
Dilutive effect of common stock options
Years Ended December 31,
2020
2019
2018
36,357 $
53,882 $
—
—
—
—
36,357 $
53,882 $
51,605
1,923
1,029
48,653
23,367,221
23,470,746
21,995,990
1.56 $
2.30 $
2.21
36,357 $
53,882 $
48,819
$
$
$
$
23,367,221
23,470,746
21,995,990
144,731
203,319
198,439
Weighted average diluted common shares outstanding
23,511,952
23,674,065
22,194,429
Diluted earnings per common share
$
1.55 $
2.28 $
2.20
____________________________
(1)
Participating stockholders include those that hold certain share-based payment awards that contain nonforfeitable rights to dividends or dividend
equivalents. Such shares or units are considered participating securities (i.e., nonvested restricted stock grants). Additionally, for period prior to June
30, 2018, Series D preferred stockholders were participating stockholders as those shares participate in dividends with common shares on a one for one
basis. Net income allocated to participating stockholders does not include dividends paid to preferred stockholders.
The average participating share count for the calculation of earnings per share for the year ended December 31, 2018, includes an allocation for Series
D preferred stockholders, which were converted to common stock during the quarter ended June 30, 2018.
Net income available to common stockholders for basic and diluted earnings per share may differ under the two-class method as a result of adding
common stock equivalents for options to dilutive shares outstanding, which alters the ratio used to allocate earnings to common stockholders and
participating securities for the purposes of calculating diluted earnings per share.
Due to the combined impact of the repurchase of common stock on the quarterly average common shares outstanding calculation compared to the
impact of the repurchase of common stock on the year-to-date average common shares outstanding calculation, and the effect of rounding, the sum of
the quarterly earnings per common share may not equal the year-to-date earnings per common share amount.
(2)
(3)
(4)
99
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 3 - Securities
The following table is a summary of the amortized cost and estimated fair value, including gross unrealized gains
and losses, of available for sale, held to maturity and securities carried at fair value through income for the dates indicated:
(Dollars in thousands)
December 31, 2020
Available for sale:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Allowance
for Credit
Losses
Net
Carrying
Amount
State and municipal securities
$ 420,559 $
21,884 $
(258) $ 442,185 $
— $ 442,185
Corporate bonds
U.S. government and agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Residential collateralized mortgage obligations
Asset-backed securities
Total
Held to maturity:
64,313
851
10,814
207,742
193,865
73,451
1,762
3
266
7,441
1,739
877
(137)
65,938
(5)
—
(232)
(261)
—
849
11,080
214,951
195,343
74,328
—
—
—
—
—
—
65,938
849
11,080
214,951
195,343
74,328
$ 971,595 $
33,972 $
(893) $ 1,004,674 $
— $ 1,004,674
State and municipal securities
$
38,194 $
3,011 $
— $
41,205 $
(66) $
38,128
Securities carried at fair value through income:
State and municipal securities(1)
$
10,618 $
— $
— $
11,554 $
— $
11,554
December 31, 2019
Available for sale:
State and municipal securities
$
96,180 $
3,039 $
(35) $
99,184 $
— $
99,184
Corporate bonds
U.S. government and agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Commercial collateralized mortgage obligations
Residential collateralized mortgage obligations
16,037
5,063
11,882
204,650
4,321
154,925
780
183
262
3,105
73
1,186
—
(8)
—
16,817
5,238
12,144
(249)
207,506
—
4,394
(324)
155,787
—
—
—
—
—
—
16,817
5,238
12,144
207,506
4,394
155,787
Total
Held to maturity:
$ 493,058 $
8,628 $
(616) $ 501,070 $
— $ 501,070
State and municipal securities
$
28,620 $
903 $
— $
29,523 $
— $
28,620
Securities carried at fair value through income:
State and municipal securities(1)
$
11,070 $
— $
— $
11,513 $
— $
11,513
____________________________
(1)
Securities carried at fair value through income have no unrealized gains or losses at the balance sheet date as all changes in value have been recognized
in the consolidated statements of income. See Note 5 - Fair Value of Financial Instruments for more information.
100
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Securities with unrealized losses at December 31, 2020 and 2019, aggregated by investment category and those
individual securities that have been in a continuous unrealized loss position for less than 12 months, and for 12 months or
more, were as follows.
(Dollars in thousands)
December 31, 2020
Available for sale:
Less than 12 Months
12 Months or More
Total
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
Fair Value
Unrealized
Loss
State and municipal securities
$
21,979 $
(258) $
— $
— $
21,979 $
Corporate bonds
U.S. government and agency securities
Residential mortgage-backed securities
Residential collateralized mortgage obligations
30,513
—
23,178
43,911
(137)
—
(232)
(261)
—
568
—
—
—
(5)
—
—
30,513
568
23,178
43,911
Total
Held to maturity:
$ 119,581 $
(888) $
568 $
(5) $ 120,149 $
(258)
(137)
(5)
(232)
(261)
(893)
State and municipal securities
$
— $
— $
— $
— $
— $
—
December 31, 2019
Available for sale:
State and municipal securities
$
6,996 $
(35) $
— $
— $
6,996 $
Corporate bonds
U.S. government and agency securities
Residential mortgage-backed securities
Residential collateralized mortgage obligations
—
—
29,184
20,266
—
—
(151)
(118)
—
663
14,917
24,275
—
(8)
(98)
(206)
—
663
44,101
44,541
Total
Held to maturity:
$
56,446 $
(304) $
39,855 $
(312) $
96,301 $
(35)
—
(8)
(249)
(324)
(616)
State and municipal securities
$
— $
— $
— $
— $
— $
—
Management evaluates available for sale debt securities in unrealized loss positions to determine whether the
impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the
fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of
the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair
value.
At December 31, 2020, the Company had 44 available for sale debt securities in an unrealized loss position without
an allowance for credit losses. Management does not have the intent to sell any of these securities and believes that it is more
likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected
to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.
Accordingly, at December 31, 2020, management believes that the unrealized losses detailed in the previous table are due to
noncredit-related factors, including changes in interest rates and other market conditions, and therefore no losses have been
recognized in the Company’s consolidated statements of income.
The following table presents the activity in the allowance for credit losses for held-to-maturity debt securities.
(Dollars in thousands)
Allowance for credit losses:
Balance at January 1, 2020
Impact of adopting ASC 326
Credit loss benefit
Balance at December 31, 2020
Municipal Securities
Year Ended December 31,2020
$
$
—
96
(30)
66
101
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Accrued interest of $5.4 million was not included in the calculation of the allowance at December 31, 2020. There
were no past due held-to-maturity securities at December 31, 2020. No held-to-maturity securities were in nonaccrual status
at December 31, 2020, or placed into nonaccrual status during the year ended December 31, 2020.
Proceeds from sales of securities available for sale and gross gains for the years ended December 31, 2020, 2019 and
2018.
(Dollars in thousands)
Proceeds from sales
Gross realized gains
Gross realized losses
2020
December 31,
2019
$
64,702 $
27,766 $
774
(194)
161
(141)
2018
20,877
381
(389)
The following table presents the amortized cost and fair value of securities available for sale and held to maturity at
December 31, 2020, grouped by contractual maturity. Mortgage-backed securities and collateralized mortgage obligations,
which do not have contractual payments due at a single maturity date, are shown separately. Actual maturities for mortgage-
backed securities, collateralized mortgage obligations and asset-backed securities will differ from contractual maturities as a
result of prepayments made on the underlying mortgages.
(Dollars in thousands)
December 31, 2020
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Commercial mortgage-backed securities
Residential mortgage-backed securities
Residential collateralized mortgage obligations
Asset-backed securities
Total
Held to Maturity
Available for Sale
Amortized Cost
Fair Value
Amortized Cost
Fair Value
$
12,999 $
13,068 $
3,210 $
—
25,195
—
28,137
—
—
—
—
—
—
—
—
—
—
47,500
111,383
323,630
10,814
207,742
193,865
73,451
3,237
51,572
115,206
338,957
11,080
214,951
195,343
74,328
$
38,194 $
41,205 $
971,595 $
1,004,674
The following table presents carrying amounts of securities pledged as collateral for deposits and repurchase
agreements for the period ends presented.
(Dollars in thousands)
December 31,
2020
2019
Carrying value of securities pledged to secure public deposits
$
289,537 $
Carrying value of securities pledged to repurchase agreements
10,982
285,552
20,356
102
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 4 - Loans
Loans consist of the following:
(Dollars in thousands)
Loans held for sale
LHFI:
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial(1)
Mortgage warehouse lines of credit
Consumer
Total loans accounted for at amortized cost
Loans accounted for at fair value
Total LHFI(2)
Less: Allowance for loan losses
LHFI, net
December 31,
2020
2019
191,512 $
64,837
1,370,928 $
1,279,177
$
$
531,860
885,120
2,787,908
1,817,862
1,084,001
17,991
5,707,762
17,011
5,724,773
86,670
$
5,638,103 $
517,688
689,555
2,486,420
1,343,475
274,659
20,971
4,125,525
17,670
4,143,195
37,520
4,105,675
____________________________
(1)
(2)
Includes $546.5 million of PPP loans at December 31, 2020. No PPP loans were outstanding at December 31, 2019.
Includes net deferred loan fees of $13.7 million and $3.6 million at December 31, 2020, and December 31, 2019, respectively. Origination of PPP loans
contributed $9.6 million of the increase in net deferred loan fees during the year.
Included in total LHFI were $17.0 million and $17.7 million of commercial real estate loans for which the fair value
option was elected at December 31, 2020 and 2019, respectively. The Company mitigates the interest rate component of fair
value risk on loans at fair value by entering into derivative interest rate contracts. See Note 5 - Fair Value of Financial
Instruments for more information on loans for which the fair value option has been elected.
The Company has been a participating lender in the PPP. At December 31, 2020, there were approximately $546.5
million in PPP loans outstanding included in the Company’s commercial and industrial loan portfolio, net of $9.6 million in
net deferred loan fees. PPP loans have a maximum maturity of two years and earn interest at 1%. PPP loans are fully
guaranteed by the U.S. government and can be forgiven by the SBA if the borrower uses the proceeds to pay specified
expenses. The Company believes that the majority of our PPP loans will ultimately be forgiven by the SBA in accordance
with the terms of the program.
Credit quality indicators. As part of the Company's commitment to manage the credit quality of its loan portfolio,
management annually updates and evaluates certain credit quality indicators, which include but are not limited to (i)
weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of
classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions in the states in which the
Company operates. The Company maintains an internal risk rating system where ratings are assigned to individual loans
based on assessed risk. Loan risk ratings are the primary indicator of credit quality for the loan portfolio and are continually
evaluated to ensure they are appropriate based on currently available information.
The following is a summary description of the Company's internal risk ratings:
• Pass (1-6)
Minimal risk (1)
Moderate risk (2)
Loans within this risk rating are further categorized as follows:
Well-collateralized by cash equivalent instruments held by the Bank.
Borrowers with excellent asset quality and liquidity. Borrowers' capitalization and
liquidity exceed industry norms. Borrowers in this category have significant levels of
liquid assets and have a low level of leverage.
103
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Better than average risk (3)
Average risk (4)
Borrowers with strong financial strength and excellent liquidity that consistently
demonstrate strong operating performance. Borrowers in this category generally have a
sizable net worth that can be converted into liquid assets within 12 months.
Borrowers with sound credit quality and financial performance, including liquidity.
Borrowers are supported by sufficient cash flow coverage generated through operations
across the full business cycle.
Marginally acceptable risk (5) Loans generally meet minimum requirements for an acceptable loan in accordance with
Watch (6)
• Special Mention (7)
• Substandard (8)
• Doubtful (9)
• Loss (0)
lending policy, but possess one or more attributes that cause the overall risk profile to
be higher than the majority of newly approved loans.
A passing loan with one or more factors that identify a potential weakness in the overall
ability of the borrower to repay the loan. These weaknesses are generally mitigated by
other factors that reduce the risk of delinquency or loss.
This grade is intended to be temporary and includes borrowers whose credit quality
have deteriorated and is at risk of further decline.
This grade includes "Substandard" loans under regulatory guidelines. Substandard loans
exhibit a well-defined weakness that jeopardizes debt repayment in accordance with
contractual agreements, even though the loan may be performing. These obligations are
characterized by the distinct possibility that a loss may be incurred if these weaknesses
are not corrected and repayment may be dependent upon collateral liquidation or
secondary source of repayment.
This grade includes "Doubtful" loans under regulatory guidelines. Such loans are placed
on nonaccrual status and repayment may be dependent upon collateral with no readily
determinable valuation or valuations that are highly subjective in nature. Repayment for
these loans is considered improbable based on currently existing facts and
circumstances.
This grade includes "Loss" loans under regulatory guidelines. Loss loans are charged-
off or written down when repayment is not expected.
In connection with the review of the loan portfolio, the Company considers risk elements attributable to particular
loan types or categories in assessing the quality of individual loans. The list of loans to be reviewed for possible individual
evaluation consists of nonaccrual commercial loans over $100,000 with direct exposure, unsecured loans over 90 days past
due, commercial loans classified substandard or worse over $100,000 with direct exposure, TDRs, consumer loans greater
than $100,000 with a FICO score under 625, loans greater than $100,000 in which the borrower has filed bankruptcy, and all
loans 180 days or more past due. Loans under $50,000 will be evaluated collectively in designated pools unless a loss
exposure has been identified. Some additional risk elements considered by loan type include:
•
•
•
•
for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of
owner occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of
income, property value and future operating results typical of properties of that type;
for construction, land and land development loans, the perceived feasibility of the project, including the ability
to sell developed lots or improvements constructed for resale or the ability to lease property constructed for
lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer
and loan to value ratio;
for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to
income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and
marketability of the collateral; and
for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of
operating expenses compared to loan repayment requirements), the operating results of the commercial,
industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the
specific risks and volatility of income and operating results typical for businesses in that category and the value,
nature and marketability of collateral.
104
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The following table reflects recorded investments in loans by credit quality indicator and origination year at
December 31, 2020, excluding loans held for sale and loans accounted for at fair value. The Company had an immaterial
amount of revolving loans converted to term loans at December 31, 2020.
(Dollars in thousands)
Commercial real estate:(1)
Pass
Special mention
Classified
Term Loans
Amortized Cost Basis by Origination Year
2020
2019
2018
2017
2016
Prior
Revolving
Loans
Amortized
Cost Basis
Total
$ 393,317 $ 290,394 $ 312,051 $ 154,445 $ 46,132 $ 106,994 $
18,419 $ 1,321,752
824
2,806
113
1,678
2,410
6,704
20,691
—
6,586
1,476
1,656
1,093
2,145
994
27,839
21,337
Total commercial real estate loans
$ 396,947 $ 292,185 $ 321,165 $ 181,722 $ 47,608 $ 109,743 $
21,558 $ 1,370,928
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs
(1)
$
$
— $
— $
— $ 3,622 $
199 $
1,103 $
— $
4,924
—
—
—
—
—
19
—
19
— $
— $
— $ 3,622 $
199 $
1,084 $
— $
4,905
Excludes $17.0 million of commercial real estate loans at fair value, which are not included in the loss estimation methodology due to the fair value
option election.
Construction/land/land development:
Pass
Special mention
Classified
$ 189,311 $ 150,281 $ 138,000 $ 12,907 $
1,812 $
1,157 $
18,892 $ 512,360
323
—
10,421
1,811
135
726
1,003
1,507
—
143
—
168
—
11,882
3,263
7,618
Total construction/land/land development loans
$ 189,634 $ 162,513 $ 138,861 $ 15,417 $
1,955 $
1,325 $
22,155 $ 531,860
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
— $
— $
— $
— $
— $
— $
— $
—
—
—
—
—
1
—
— $
— $
— $
— $
— $
(1) $
— $
—
1
(1)
Residential real estate:
Pass
Special mention
Classified
$ 367,652 $ 143,368 $ 103,450 $ 102,272 $ 41,522 $ 50,094 $
53,854 $ 862,212
188
1,857
—
29
1,875
2,403
2,982
511
9,287
1,344
803
1,533
—
96
12,182
10,726
Total residential real estate loans
$ 369,697 $ 145,771 $ 106,461 $ 104,658 $ 52,153 $ 52,430 $
53,950 $ 885,120
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
94 $
271 $
— $
283 $
— $
44 $
— $
—
—
—
—
—
202
—
94 $
271 $
— $
283 $
— $
(158) $
— $
692
202
490
105
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Term Loans
Amortized Cost Basis by Origination Year
2020
2019
2018
2017
2016
Prior
Revolving
Loans
Amortized
Cost Basis
Total
$ 851,780 $ 153,722 $ 110,092 $ 29,413 $
9,927 $ 26,964 $ 511,220 $ 1,693,118
4,860
5,436
2,059
26,438
423
—
14,843
12,250
5,859
5,450
5,950
6,707
8,077
26,392
56,700
68,044
(Dollars in thousands)
Commercial and industrial:
Pass
Special mention
Classified
Total commercial and industrial loans
$ 862,076 $ 168,031 $ 142,389 $ 35,286 $ 15,877 $ 48,514 $ 545,689 $ 1,817,862
Current period gross charge-offs
$
189 $
204 $
87 $
121 $
3,228 $
469 $
2,404 $
6,702
Current period gross recoveries
—
42
20
81
185
112
582
1,022
Current period net charge-offs
$
189 $
162 $
67 $
40 $
3,043 $
357 $
1,822 $
5,680
Mortgage Warehouse Lines of Credit:
Pass
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs
Consumer:
Pass
Classified
$
$
$
— $
— $
— $
— $
— $
— $ 1,084,001 $ 1,084,001
— $
— $
— $
— $
— $
— $
— $
—
—
—
—
—
—
—
— $
— $
— $
— $
— $
— $
— $
—
—
—
$
6,702 $
3,318 $
1,578 $
203 $
116 $
83 $
5,935 $ 17,935
Total consumer loans
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
$
28
8
—
—
6
1
13
56
6,730 $
3,326 $
1,578 $
203 $
122 $
84 $
5,948 $ 17,991
— $
39 $
23 $
8 $
— $
4 $
2 $
—
—
1
7
5
7
4
— $
39 $
22 $
1 $
(5) $
(3) $
(2) $
76
24
52
The recorded investment in loans by credit quality indicator at December 31, 2019, excluding loans held for sale,
were as follows:
(Dollars in thousands)
Loans secured by real estate:
Pass
Special
Mention
Substandard
Doubtful
Loss
Total
December 31, 2019
Commercial real estate
$ 1,269,493 $
12,479 $
14,875 $
— $
— $ 1,296,847
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total LHFI
512,901
680,046
2,462,440
1,277,564
274,659
20,808
149
1,558
14,186
28,478
—
—
4,638
7,951
27,464
37,433
—
163
—
—
—
—
—
—
—
—
—
—
—
—
517,688
689,555
2,504,090
1,343,475
274,659
20,971
$ 4,035,471 $
42,664 $
65,060 $
— $
— $ 4,143,195
106
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The following tables present the Company's loan portfolio aging analysis at the dates indicated:
December 31, 2020
30-59 Days
Past Due
60-89 Days
Past Due
Loans Past
Due 90
Days or
More
Total Past
Due
Current
Loans
Total
Loans
Receivable
Accruing
Loans 90
or More
Days Past
Due
$
1,072 $
— $
3,172 $
4,244 $ 1,383,695 $ 1,387,939 $
369
3,774
5,215
703
—
113
1
134
135
2,328
364
5,864
2,698
4,272
529,162
880,848
531,860
885,120
11,214
2,793,705
2,804,919
1,097
12,625
14,425
1,803,437
1,817,862
—
9
—
2
—
1,084,001
1,084,001
124
17,867
17,991
$
6,031 $
1,241 $
18,491 $
25,763 $ 5,699,010 $ 5,724,773 $
—
—
—
—
—
—
—
—
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate (1)
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total LHFI
____________________________
(1)
Includes $17.0 million of commercial real estate loans at fair value
December 31, 2019
30-59 Days
Past Due
60-89 Days
Past Due
Loans Past
Due 90
Days or
More
Total Past
Due
Current
Loans
Total
Loans
Receivable
Accruing
Loans 90
or More
Days Past
Due
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
$
917 $
— $
5,891 $
6,808 $ 1,290,039 $ 1,296,847 $
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total LHFI
3,569
2,174
6,660
1,588
—
164
133
1,918
2,051
1,037
—
35
56
913
6,860
11,545
—
40
3,758
5,005
513,930
684,550
517,688
689,555
15,571
2,488,519
2,504,090
14,170
1,329,305
1,343,475
—
239
274,659
274,659
20,732
20,971
$
8,412 $
3,123 $
18,445 $
29,980 $ 4,113,215 $ 4,143,195 $
—
—
—
—
—
—
—
—
____________________________
(1)
Includes $17.7 million of commercial real estate loans at fair value
107
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The following tables detail activity in the allowance for loan credit losses by portfolio segment. Accrued interest of
$20.3 million was not included in the book value for the purposes of calculating the allowance at December 31, 2020.
Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other
categories.
(Dollars in thousands)
Loans secured by real estate:
Year Ended December 31, 2020
Beginning
Balance
Impact of
Adopting
ASC 326
Charge-offs
Recoveries
Provision (1)
Ending
Balance
Commercial real estate
$
10,013 $
(5,052) $
4,924 $
19 $
15,374 $
15,430
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
3,711
6,332
16,960
262
242
1,141
(2,526)
7,296
29
360
—
692
6,702
—
76
1
202
1,022
—
24
3,338
6,102
33,281
565
368
8,191
9,418
51,857
856
918
$
37,520 $
1,248 $
12,394 $
1,268 $
59,028 $
86,670
____________________________
(1)
The $59.9 million provision for credit losses on the consolidated statements of income includes a $59.0 million net loan loss provision, a $902,000
provision for off-balance sheet commitments and a $30,000 release of provision for held to maturity credit loss for the year ended December 31, 2020.
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
Year Ended December 31, 2019
Beginning
Balance
Charge-offs
Recoveries
Provision
(Benefit)(1)
Ending
Balance
$
8,999 $
1,420 $
341 $
2,093 $
10,013
3,331
5,705
15,616
316
236
38
265
8,231
29
148
40
185
3,627
—
48
378
707
5,948
(25)
106
3,711
6,332
16,960
262
242
$
34,203 $
10,131 $
4,241 $
9,207 $
37,520
____________________________
(1)
The $9.6 million provision for credit losses on the consolidated statements of income includes a $9.2 million net loan loss provision and a $361,000
provision for off-balance sheet commitments for the year ended December 31, 2019.
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
Year Ended December 31, 2018
Beginning
Balance
Charge-offs
Recoveries
Provision
(Benefit)(1)
Ending
Balance
$
8,998 $
1,300 $
226 $
1,075 $
2,950
5,807
18,831
214
283
228
407
5,068
—
121
6
133
2,206
—
92
603
172
(353)
102
(18)
8,999
3,331
5,705
15,616
316
236
$
37,083 $
7,124 $
2,663 $
1,581 $
34,203
____________________________
(1)
The $1.0 million provision for credit losses on the consolidated statements of income includes a $1.6 million loan loss provision and a $567,000 release
of provision for off-balance sheet commitments for the year ended December 31, 2018.
108
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The provision for loan credit losses for the year ended December 31, 2020, was driven by the continuing
uncertainty related to the ongoing economic impact and duration of the current COVID-19 pandemic. Based upon the
requirements of CECL, economic forecasts are essential for estimating the life of loan losses. The increased risk, as
reflected in current and forecast adjustments, resulted in approximately $39.8 million in provision expense in total
collective reserves, of which $27.5 million was related to qualitative factor changes, across the Company’s risk pools for
the year ended December 31, 2020. An additional $8.1 million in provision expense was due to the current and forecast
effects of individually evaluated loans. There were four significant loan charge-offs during year ended December 31,
2020, totaling $6.6 million reflecting two loan relationships.
The following table shows the recorded investment in loans by loss estimation methodology at December 31, 2020.
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate(1)
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
Collectively
Evaluated
December 31, 2020
Individually Evaluated
Probability of
Default
Fair Value of
Collateral
Discounted
Cash Flow
Total
$
1,365,284 $
3,173 $
2,471 $
1,370,928
528,894
879,015
1,804,049
1,084,001
17,991
2,621
2,009
3,152
—
—
345
4,096
10,661
—
—
531,860
885,120
1,817,862
1,084,001
17,991
$
5,679,234 $
10,955 $
17,573 $
5,707,762
____________________________
(1)
Excludes $17.0 million of commercial real estate loans at fair value, which are not included in the loss estimation methodology due to the fair value
option election.
The following table shows the allowance for loan credit losses by loss estimation methodology at December 31,
2020.
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
Collectively
Evaluated
December 31, 2020
Individually Evaluated
Probability of
Default
Fair Value of
Collateral
Discounted
Cash Flow
Total
$
14,896 $
525 $
9 $
8,062
8,983
44,714
856
918
128
—
1,707
—
—
1
435
5,436
—
—
15,430
8,191
9,418
51,857
856
918
$
78,429 $
2,360 $
5,881 $
86,670
109
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The following tables present the balance of loans receivable by method of impairment evaluation at the dates
indicated:
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
December 31, 2019
Period End
Allowance
Allocated to Loans
Individually
Evaluated for
Impairment
Period End
Allowance
Allocated to Loans
Collectively
Evaluated for
Impairment
Period End Loan
Balance
Individually
Evaluated for
Impairment
Period End Loan
Balance
Collectively
Evaluated for
Impairment (1)
$
3 $
10,010 $
7,446 $
1,271,731
3
21
168
—
4
3,708
6,311
16,792
262
238
4,329
4,937
15,662
—
100
513,359
684,618
1,327,813
274,659
20,871
$
199 $
37,321 $
32,474 $
4,093,051
____________________________
(1)
Excludes $17.7 million of commercial real estate loans at fair value, which are not evaluated for impairment due to the fair value option election. See
Note 5 - Fair Value of Financial Instruments for more information.
The following table presents impaired loans at the dates indicated. No mortgage warehouse lines of credit were
impaired at December 31, 2019.
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Consumer
December 31, 2019
Unpaid
Contractual
Principal
Balance
Recorded
Investment
with no
Allowance
Recorded
Investment
with an
Allowance
Total
Recorded
Investment
Allocation of
Allowance for
Loan Losses
$
10,788 $
7,375 $
71 $
7,446 $
4,692
5,846
21,326
22,857
110
4,256
4,407
16,038
14,385
—
73
530
674
1,277
100
4,329
4,937
16,712
15,662
100
3
3
21
27
168
4
199
Total impaired loans
$
44,293 $
30,423 $
2,051 $
32,474 $
Note that the Company is not using the collateral maintenance agreement practical expedient. All fair value of
collateral is real estate related.
Collateral-dependent loans consist primarily of commercial real estate and commercial and industrial loans. These
loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided
substantially through the operation or sale of the underlying collateral. Loan balances are charged down to the underlying
collateral value when they are deemed uncollectible.
110
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Nonaccrual LHFI were as follows:
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Consumer
Total nonaccrual loans
December 31,
2020
2019
Nonaccrual
With No
Allowance for
Credit Loss
Nonaccrual
Nonaccrual
$
1,053 $
3,704 $
1,319
2,436
4,808
82
—
2,962
6,530
13,196
12,897
56
$
4,890 $
26,149 $
6,994
4,337
5,132
16,463
14,520
163
31,146
All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income.
Subsequent receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded only after
principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably assured. At December 31, 2020, the Company had
no funding commitments the terms of which have been modified in TDRs.
For the years ended December 31, 2020, 2019 and 2018, gross interest income that would have been recorded had
the nonaccruing loans been current in accordance with their original terms was $1.5 million, $1.5 million and $1.4 million,
respectively. No interest income was recorded on these loans while they were considered nonaccrual during the years ended
December 31, 2020, 2019 or 2018.
The Company elects the fair value option for recording residential mortgage loans held for sale, as well as certain
commercial real estate in accordance with U.S. GAAP. The Company had $681,000 of nonaccrual mortgage loans held for
sale that were recorded using the fair value option election at December 31, 2020, compared to $927,000 at December 31,
2019. There were no nonaccrual LHFI that were recorded using the fair value option election at December 31, 2020, or
December 31, 2019.
Certain borrowers are currently unable to meet their contractual payment obligations because of the adverse effects
of COVID-19. To help mitigate these effects, loan customers may apply for a deferral of payments, or portions thereof, for up
to 90 days. The CARES Act and related guidance from the federal banking agencies provide financial institutions the option
to temporarily suspend requirements under GAAP related to classification of certain loan modifications as TDRs to account
for the current and anticipated effects of COVID-19. The CARES Act, as amended by the Consolidated Appropriations Act,
2021, specified that COVID-19 related loan modifications executed between March 1, 2020 and the earlier of (i) 60 days
after the date of termination of the national emergency declared by the President and (ii) January 1, 2022, on loans that were
current as of December 31, 2019 are not TDRs. Additionally, under guidance from the federal banking agencies, other short-
term modifications made on a good faith basis in response to COVID-19 to borrowers that were current prior to any relief are
not TDRs under ASC Subtopic 310-40, “Troubled Debt Restructuring by Creditors.” These modifications include short-term
(e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in
payment that are insignificant. At December 31, 2020, the Company had 49 loans totaling $97.7 million under COVID-19
related forbearance agreements that were not treated as TDRs pursuant to the CARES Act and interagency guidance.
111
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Loans classified as TDRs, excluding the impact of forbearances granted due to COVID-19, were as follows:
(Dollars in thousands)
TDRs
Nonaccrual TDRs
Performing TDRs
Total
December 31,
2020
2019
$
$
5,671 $
3,314
8,985 $
6,609
1,843
8,452
The tables below summarize loans classified as TDR's by loan and concession type.
Year Ended December 31, 2020
Number of
Loans
Restructured
Pre-
Modification
Recorded
Balance
Term
Concessions
Interest Rate
Concessions
Combination
of Term and
Rate
Concessions
Total
Modifications
2 $
1,696 $
1,694 $
— $
— $
5
7
5
1
1,212
2,908
217
2
—
1,694
193
—
177
177
—
—
877
877
—
2
1,694
1,054
2,748
193
2
13 $
3,127 $
1,887 $
177 $
879 $
2,943
Year Ended December 31, 2019
Number of
Loans
Restructured
Pre-
Modification
Recorded
Balance
Term
Concessions
Interest Rate
Concessions
Combination
of Term and
Rate
Concessions
Total
Modifications
1 $
361 $
— $
— $
343 $
2
3
5
1
2,516
2,877
1,314
11
—
—
852
9
—
—
—
—
2,410
2,753
—
—
343
2,410
2,753
852
9
9 $
4,202 $
861 $
— $
2,753 $
3,614
Year Ended December 31, 2018
Number of
Loans
Restructured
Pre-
Modification
Recorded
Balance
Term
Concessions
Interest Rate
Concessions
Combination
of Term and
Rate
Concessions
Total
Modifications
1 $
252 $
150 $
— $
— $
6
7
3
1
428
680
198
33
48
198
180
—
19
19
—
—
331
331
14
29
11 $
911 $
378 $
19 $
374 $
150
398
548
194
29
771
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Residential real estate
Total real estate
Commercial and industrial
Consumer
Total
(Dollars in thousands)
Loans secured by real estate:
Construction/land/land
development
Residential real estate
Total real estate
Commercial and industrial
Consumer
Total
(Dollars in thousands)
Loans secured by real estate:
Commercial real estate
Residential real estate
Total real estate
Commercial and industrial
Consumer
Total
112
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
During the years ended December 31, 2020 and December 31, 2018, no loans defaulted after having been modified
as a TDR within the previous 12 months. During the year ended December 31, 2019, two loans with a combined outstanding
principal balance of $117,000 defaulted after having been modified as a TDR within the previous 12 months. A payment
default is defined as a loan that was 90 or more days past due. The modifications made during the year ended December 31,
2020, did not significantly impact the Company's determination of the allowance for loan credit losses. The Company
monitors the performance of the modified loans to their restructured terms on an ongoing basis. In the event of a subsequent
default, the allowance for loan credit losses continues to be reassessed on the basis of an individual evaluation of each loan.
Note 5 - Fair Value of Financial Instruments
Fair value is the exchange price that is expected to be received for an asset or paid to transfer a liability (exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. Certain assets and liabilities are recorded in the Company's consolidated financial statements at fair
value. Some are recorded on a recurring basis and some on a non-recurring basis.
The Company utilizes fair value measurement to record fair value adjustments to certain assets and liabilities and to
determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates.
In cases where quoted market values in an active market are not available, the Company utilizes valuation techniques that are
consistent with the market approach, the income approach and/or the cost approach to estimate the fair values of its financial
instruments. Such valuation techniques are consistently applied.
A hierarchy for fair value has been established which categorizes the valuation techniques into three levels used to
measure fair value. The three levels are as follows:
Level 1 - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Fair value is based on significant other observable inputs that are generally determined based on a single
price for each financial instrument provided to the Company by an unrelated third-party pricing service and is based on one
or more of the following:
•
•
•
•
Quoted prices for similar, but not identical, assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in markets that are not active;
Inputs other than quoted prices that are observable, such as interest rate and yield curves,
volatilities, prepayment speeds, loss severities, credit risks and default rates;
Other inputs derived from or corroborated by observable market inputs.
Level 3 - Prices or valuation techniques that require inputs that are both significant and unobservable in the market.
These instruments are valued using the best information available, some of which is internally developed, and reflects the
Company's own assumptions about the risk premiums that market participants would generally require and the assumptions
they would use.
There were no transfers between fair value reporting levels for any period presented.
Fair Values of Assets and Liabilities Recorded on a Recurring Basis
The following tables summarize financial assets and financial liabilities recorded at fair value on a recurring basis at
December 31, 2020 and 2019, segregated by the level of valuation inputs within the fair value hierarchy utilized to measure
fair value. There were no changes in the valuation techniques during 2020 or 2019.
113
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
(Dollars in thousands)
State and municipal securities
Corporate bonds
U.S. government agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Residential collateralized mortgage obligations
Asset-backed securities
Securities available for sale
Securities carried at fair value through income
Loans held for sale
Loans at fair value
Mortgage servicing rights
Other assets - derivatives
Total recurring fair value measurements - assets
Other liabilities - derivatives
Total recurring fair value measurements - liabilities
(Dollars in thousands)
State and municipal securities
Corporate bonds
U.S. government agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Commercial collateralized mortgage obligations
Residential collateralized mortgage obligations
Securities available for sale
Securities carried at fair value through income
Loans held for sale
Loans at fair value
Mortgage servicing rights
Other assets - derivatives
Total recurring fair value measurements - assets
Other liabilities - derivatives
Total recurring fair value measurements - liabilities
Level 1
Level 2
Level 3
Total
December 31, 2020
$
— $
398,120 $
44,065 $
—
—
—
—
—
—
—
—
—
—
—
—
65,938
849
11,080
214,951
195,343
74,328
960,609
—
136,026
—
—
23,694
—
—
—
—
—
—
44,065
11,554
—
17,011
13,660
—
442,185
65,938
849
11,080
214,951
195,343
74,328
1,004,674
11,554
136,026
17,011
13,660
23,694
$
$
$
$
$
$
$
— $
1,120,329 $
86,290 $
1,206,619
— $
— $
(23,020) $
(23,020) $
— $
— $
(23,020)
(23,020)
Level 1
Level 2
Level 3
Total
December 31, 2019
— $
61,011 $
38,173 $
—
—
—
—
—
—
—
—
—
—
—
—
16,817
5,238
12,144
207,506
4,394
155,787
462,897
—
36,977
—
—
9,384
—
—
—
—
—
—
38,173
11,513
—
17,670
20,697
—
99,184
16,817
5,238
12,144
207,506
4,394
155,787
501,070
11,513
36,977
17,670
20,697
9,384
— $
509,258 $
88,053 $
597,311
— $
— $
(9,488) $
(9,488) $
— $
— $
(9,488)
(9,488)
114
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31,
2020 and 2019, are summarized as follows:
(Dollars in thousands)
Loans at Fair
Value
MSRs
Securities
Available for Sale
Securities at Fair
Value Through
Income
Balance at January 1, 2020
$
17,670 $
20,697 $
38,173 $
11,513
Gain (loss) recognized in earnings:
Mortgage banking revenue(1)
Other noninterest income
Gain recognized in AOCI
Purchases, issuances, sales and settlements:
Originations
Purchases
Sales
Settlements
$
$
Balance at December 31, 2020
Balance at January 1, 2019
Losses recognized in earnings:
Mortgage banking revenue(1)
Other noninterest income
Loss recognized in AOCI
Purchases, issuances, sales, and settlements:
Originations
Sales
Settlements
Balance at December 31, 2019
$
—
(53)
—
—
—
—
(606)
(12,746)
—
—
5,709
—
—
—
17,011 $
13,660 $
—
—
1,575
—
6,478
(140)
—
493
—
—
—
—
(2,021)
44,065 $
(452)
11,554
18,571 $
25,114 $
39,361 $
11,361
—
124
—
—
—
(1,025)
17,670 $
(7,012)
—
—
2,595
—
—
—
—
1,673
—
(2,861)
—
20,697 $
38,173 $
—
586
—
—
—
(434)
11,513
____________________________
(1)
Total mortgage banking revenue includes changes in fair value due to market changes and run-off.
The Company obtains fair value measurements for loans at fair value, securities available for sale and securities at
fair value through income from an independent pricing service, therefore, quantitative unobservable inputs are unknown.
The following methodologies were used to measure the fair value of financial assets and liabilities valued on a
recurring basis:
Securities Available for Sale
Securities classified as available for sale are reported at fair value utilizing Level 1, Level 2 or Level 3 inputs. For
Level 2 securities, the Company obtains fair value measurements from an independent pricing service. The fair value
measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield
curve, live trading levels, market consensus prepayment speeds, credit information and the security's terms and conditions,
among other things. In order to ensure the fair values are consistent with Accounting Standards Codification ("ASC") 820,
Fair Value Measurements and Disclosures, the Company periodically checks the fair value by comparing them to another
pricing source, such as Bloomberg LP. The third-party pricing service is subject to an annual review of internal controls in
accordance with the Statement on Standards for Attestation Engagements No. 16, which was made available to the Company.
In certain cases where Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.
115
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Mortgage Servicing Rights ("MSR")
The carrying amounts of the MSRs equal fair value and are valued using a discounted cash flow valuation technique.
The significant assumptions used to value MSRs were as follows:
December 31, 2020
December 31, 2019
Weighted Average(1) Weighted Average(1)
12.46 %
22.08 %
8.27
9.55
Range
11.82% - 37.95%
7.83 - 9.09
Prepayment speeds
Discount rates
__________________________
(1)
The weighted average was calculated with reference to the principle balance of the underlying mortgages.
In recent years, there have been significant market-driven fluctuations in the assumptions listed above. Loans with
higher average coupon rates have a greater likelihood of prepayment during the current interest rate environment, while loans
with lower average coupon rates have a lower likelihood of prepayment. The decline in rates during the year ended December
31, 2020, has caused an increase in our weighted average prepayment speed assumptions used in the MSR valuation. These
fluctuations can be rapid and may continue to be significant. Therefore, estimating these assumptions within ranges that
market participants would use in determining the fair value of MSRs requires significant management judgment.
Derivatives
Fair values for interest rate swap agreements are based upon the amounts that would be required to settle the
contracts. Fair values for derivative loan commitments and forward loan sale commitments are based on fair values of the
underlying mortgage loans and the probability of such commitments being exercised. Significant management judgment and
estimation is required in determining these fair value measurements.
Fair Values of Assets Recorded on a Recurring Basis for which the Fair Value Option has been Elected
Certain assets are measured at fair value on a recurring basis due to the Company's election to adopt fair value
accounting treatment for those assets. This election allows for a more effective offset of the changes in fair values of the
assets and the derivative instruments used to economically hedge them without the burden of complying with the
requirements for hedge accounting under ASC 815, Derivatives and Hedging. For assets for which the fair value has been
elected, the earned current contractual interest payment is recognized in interest income, loan origination costs and fees on
fair value option loans are recognized in earnings as incurred and not deferred. At December 31, 2020 and 2019, there were
no gains or losses recorded attributable to changes in instrument-specific credit risk. The following tables summarize the
difference between the fair value and the unpaid principal balance for financial instruments for which the fair value option
has been elected:
(Dollars in thousands)
Loans held for sale(1)
Commercial real estate LHFI(2)
Securities carried at fair value through income
Total
December 31, 2020
Aggregate Fair
Value
Aggregate Unpaid
Principal Balance
Difference
$
$
136,026 $
129,955 $
17,011
11,554
16,760
10,618
164,591 $
157,333 $
6,071
251
936
7,258
____________________________
(1)
(2)
$681,000 of loans held for sale were designated as nonaccrual or 90 days or more past due at December 31, 2020. Of this balance, $473,000 was
guaranteed by U.S. Government agencies.
There were no commercial real estate loans for which the fair value had been elected that were designated as nonaccrual or 90 days or more past due at
December 31, 2020.
116
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
(Dollars in thousands)
Loans held for sale(1)
Commercial real estate LHFI(2)
Securities carried at fair value through income
Total
December 31, 2019
Aggregate Fair
Value
Aggregate Unpaid
Principal Balance
Difference
$
$
36,977 $
36,037 $
17,670
11,513
17,366
11,070
66,160 $
64,473 $
940
304
443
1,687
____________________________
(1)
(2)
A total of $927,000 of loans held for sale were designated as nonaccrual or 90 days or more past due at December 31, 2019. Of this balance, $709,000
was guaranteed by U.S. Government agencies.
There were no commercial real estate loans for which the fair value had been elected that were designated as nonaccrual or 90 days or more past due at
December 31, 2019.
Changes in the fair value of assets for which the Company elected the fair value option are classified in the
consolidated statement of income line items reflected in the following table:
(Dollars in thousands)
Years Ended December 31,
Changes in fair value included in noninterest income:
2020
2019
2018
Mortgage banking revenue
Other income:
Loans at fair value held for investment
Securities carried at fair value through income
Total impact on other income
Total fair value option impact on noninterest income (1)
$
$
5,131 $
550 $
(53)
493
440
124
586
710
5,571 $
1,260 $
(163)
(389)
(258)
(647)
(810)
____________________________
(1)
The fair value option impact on noninterest income is offset by the derivative gain/loss recognized in noninterest income. Please see Note 9 - Mortgage
Banking for more detail.
The following methodologies were used to measure the fair value of financial assets valued on a recurring basis for
which the fair value option was elected:
Securities at Fair Value through Income
Securities carried at fair value through income are valued using a discounted cash flow with a credit spread applied
to each instrument based on the credit worthiness of each issuer. Credit spreads ranged from 83 to 227 basis points at both
December 31, 2020 and 2019. The Company believes the fair value approximates an exit price.
Loans Held for Sale
Fair values for loans held for sale are established using anticipated sale prices for loans allocated to a sale
commitment, and those unallocated to a commitment are valued based on the interest rate and term for similar loans
allocated. The Company believes the fair value approximates an exit price.
LHFI
For LHFI for which the fair value option has been elected, fair values are calculated using a discounted cash flow
model with inputs including observable interest rate curves and unobservable credit adjustment spreads based on credit risk
inherent in the loan. Credit spreads ranged from 290 to 413 basis points at both December 31, 2020 and 2019. The Company
believes the fair value approximates an exit price.
117
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Fair Value of Assets Recorded on a Nonrecurring Basis
Equity Securities without Readily Determinable Fair Values
Equity securities without readily determinable fair values totaled $62.6 million and $39.8 million, at December 31,
2020 and 2019, respectively, and are shown on the face of the consolidated balance sheets. The majority of the Company's
equity investments qualify for the practical expedient allowed for equity securities without a readily determinable fair value,
such that the Company has elected to carry these securities at cost adjusted for any observable transactions during the period,
less any impairment. To date, no impairment has been recorded on the Company's investments in equity securities that do not
have readily determinable fair values.
Government National Mortgage Association Repurchase Asset
The Company recorded $55.5 million and $27.9 million, respectively, at December 31, 2020 and 2019, for
Government National Mortgage Association ("GNMA") repurchase assets included in mortgage loans held for sale on the
consolidated balance sheets. The assets are valued at the lower of cost or market and, where market is lower than cost, valued
using anticipated sale prices for loans allocated to a sale commitment, and those unallocated to a commitment are valued
based on the interest rate and term for similar loans allocated. The Company believes the fair value approximates an exit
price. Please see Note 9 - Mortgage Banking for more information on the GNMA repurchase asset.
Collateral Dependent Loans with Credit Losses
Loans for which it is probable that the Company will not collect all principal and interest due according to
contractual terms are measured to determine if any credit loss exists. Allowable methods for determining the amount of credit
loss includes estimating the fair value using the fair value of the collateral for collateral-dependent loans. If the loan is
identified as collateral-dependent, the fair value method of measuring the amount of credit loss is utilized. This method
requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value. Loans that
have experienced a credit loss that are collateral-dependent are classified within Level 3 of the fair value hierarchy when the
credit loss is determined using the fair value method. The fair value of loans that have experienced a credit loss with specific
allocated losses was approximately $12.3 million and $1.9 million at December 31, 2020, and December 31, 2019,
respectively.
Non-Financial Assets
Foreclosed assets held for sale are the only non-financial assets valued on a non-recurring basis that are initially
recorded by the Company at fair value, less estimated costs to sell. At foreclosure, if the fair value, less estimated costs to
sell, of the real estate acquired is less than the Company's recorded investment in the related loan, a write-down is recognized
through a charge to the allowance for loan credit losses. Additionally, valuations are periodically performed by management
and any subsequent reduction in value is recognized by a charge to income. The carrying value and fair value of foreclosed
assets held for sale is estimated using Level 3 inputs based on observable market data and was $1.6 million and $4.7 million
at December 31, 2020 and 2019, respectively. At December 31, 2020, the Company had no residential mortgage loans in the
process of foreclosure.
Fair Values of Financial Instruments Not Recorded at Fair Value
Loans
The estimated fair value approximates carrying value for variable-rate loans that reprice frequently and with no
significant change in credit risk. The fair value of fixed-rate loans and variable-rate loans which reprice on an infrequent basis
is estimated by discounting future cash flows using exit level pricing, which combines the current interest rates at which
similar loans with similar terms would be made to borrowers of similar credit quality and an estimated additional rate to
reflect a liquidity premium. An overall valuation adjustment is made for specific credit risks as well as general portfolio
credit risk.
118
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Deposits
The estimated fair value approximates carrying value for demand deposits. The fair value of fixed-rate deposit
liabilities with defined maturities is estimated by discounting future cash flows using the interest rates currently available for
funding from the FHLB. The estimated fair value of deposits does not take into account the value of our long-term
relationships with depositors, commonly known as core deposit intangibles, which are separate intangible assets, and not
considered financial instruments. Nonetheless, the Company would likely realize a core deposit premium if the deposit
portfolio were sold in the principal market for such deposits.
Borrowed Funds
The estimated fair value approximates carrying value for short-term borrowings. The fair value of long-term fixed-
rate and fixed-to-floating-rate borrowings is estimated using quoted market prices, if available, or by discounting future cash
flows using current interest rates for similar financial instruments. The estimated fair value approximates carrying value for
variable-rate junior subordinated debentures that reprice quarterly.
The carrying value and estimated fair values of financial instruments not recorded at fair value are as follows:
(Dollars in thousands)
Financial assets:
Level 1 inputs:
Cash and cash equivalents
Level 2 inputs:
December 31,
2020
2019
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
$
377,214 $
377,214 $
291,518 $
291,518
Non-marketable equity securities held in other financial
institutions
Accrued interest and loan fees receivable
62,586
27,146
62,586
27,146
39,808
16,430
39,808
16,430
Level 3 inputs:
Securities held to maturity
LHFI, net(1)
Financial liabilities:
Level 2 inputs:
Deposits
FHLB advances and other borrowings
Subordinated debentures
Accrued interest payable
38,128
41,205
28,620
29,523
5,621,092
5,802,744
4,088,005
3,940,347
5,751,315
5,756,312
984,608
157,181
3,556
991,943
156,395
3,556
4,228,612
417,190
9,671
2,822
4,081,430
425,318
10,717
2,822
____________________________
(1)
Does not include loans for which the fair value option had been elected at December 31, 2020 or 2019, as these loans are carried at fair value on a
recurring basis.
Note 6 - Premises and Equipment
Major classifications of premises and equipment are summarized below:
(Dollars in thousands)
Land, buildings and improvements
Furniture, fixtures and equipment
Leasehold improvements
Construction in process
Total premises and equipment
Accumulated depreciation
Premises and equipment, net
December 31,
2020
2019
$
85,108 $
28,599
16,715
1,142
131,564
(49,801)
$
81,763 $
83,161
27,911
15,790
407
127,269
(46,812)
80,457
119
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Depreciation expense for premises and equipment totaled $5.8 million, $5.4 million and $4.9 million for the years
ended December 31, 2020, 2019 and 2018, respectively.
Note 7 - Leases
The Company leases certain real estate, as well as certain equipment, under non-cancelable operating leases that
expire at various dates through 2038.
The balance sheet details and components of the Company's lease expense were as follows:
(Dollars in thousands)
December 31, 2020
December 31, 2019
Operating lease right of use assets (included in Accrued interest receivable and other
assets)
$
21,667
$
Operating lease liabilities (included in Accrued expenses and other liabilities)
Finance lease liabilities (included in Accrued expenses and other liabilities)
Weighted average remaining lease term (years) - operating leases
Weighted average discount rate - operating leases
23,445
3,148
9.22
3.44 %
24,013
25,810
248
9.58
3.49 %
(Dollars in thousands)
Lease expense:
Operating lease expense
Other lease expense
Total lease expense
Right of use assets obtained in exchange for new operating lease liabilities
Years Ended
December 31, 2020
December 31, 2019
$
$
$
4,680 $
265
4,945 $
1,338 $
4,716
245
4,961
1,256
Total lease expense was $4.4 million for the year ended December 31, 2018. Maturities of operating lease liabilities
at December 31, 2020, were as follows:
December 31, 2020
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6 and thereafter
Total lease payments
Less: Imputed interest
Total lease obligations
Supplemental cash flow related to leases was as follows:
Cash paid for operating leases
Note 8 - Goodwill and Other Intangible Assets
$
$
4,330
4,064
3,638
2,584
2,040
11,165
27,821
4,376
23,445
Year Ended
December 31, 2020
December 31, 2019
$
4,791 $
4,796
There were no changes to the carrying amount of the Company's goodwill during the years ended December 31,
2020 and 2019.
120
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The components of the Company's goodwill and other intangible assets are as follows:
(Dollars in thousands)
December 31, 2020
Goodwill
Other intangible assets:
Core deposit intangibles
Relationship based intangibles
Tradename
Non-compete
Total
December 31, 2019
Goodwill
Other intangible assets:
Core deposit intangibles
Relationship based intangibles
Tradename
Non-compete
Total
Gross
Accumulated
Amortization
Net
$
26,741 $
— $
26,741
1,260
7,304
186
270
(1,192)
(3,648)
(171)
(270)
68
3,656
15
—
35,761 $
(5,281) $
30,480
26,741 $
— $
26,741
$
$
1,260
7,304
186
270
(1,091)
(2,781)
(124)
(225)
169
4,523
62
45
$
35,761 $
(4,221) $
31,540
Amortization expense on other intangible assets totaled $1.1 million, $1.3 million and $961,000 for the years ended
December 31, 2020, 2019 and 2018, respectively, and was included as a component of other noninterest expense in the
consolidated statements of income.
Estimated future amortization expense for intangible assets remaining at December 31, 2020, was as follows:
(Dollars in thousands)
Years Ended December 31,
2021
2022
2023
2024
2025
Thereafter
Total
$
$
844
689
582
488
393
743
3,739
121
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 9 - Mortgage Banking
The following table presents the Company's revenue from mortgage banking operations:
(Dollars in thousands)
Mortgage banking revenue
Origination
Gain on sale of loans held for sale
Servicing
Total gross mortgage revenue
Mortgage HFS and pipeline fair value adjustment
MSR valuation adjustment, net of amortization
MSR hedge impact
Mortgage banking revenue
Years Ended December 31,
2020
2019
2018
$
1,880 $
1,000 $
19,190
6,116
27,186
7,351
(12,746)
7,812
6,943
6,547
14,490
979
(7,012)
3,852
$
29,603 $
12,309 $
854
6,403
7,081
14,338
(725)
(963)
(3,030)
9,620
Management uses mortgage-backed securities to mitigate the impact of changes in fair value of MSRs. See Note 12 -
Derivative Financial Instruments for further information.
Mortgage Servicing Rights
Activity in MSRs was as follows:
(Dollars in thousands)
Balance at beginning of period
Addition of servicing rights
Valuation adjustment, net of amortization
Balance at end of period
Years Ended December 31,
2020
2019
2018
$
$
20,697 $
25,114 $
5,709
(12,746)
2,595
(7,012)
13,660 $
20,697 $
24,182
1,895
(963)
25,114
The Company receives annual servicing fee income approximating 0.28% of the outstanding balance of the
underlying loans. In connection with the Company's activities as a servicer of mortgage loans, the investors and the
securitization trusts have no recourse to the Company's assets for failure of debtors to pay when due.
The Company is potentially subject to losses in its loan servicing portfolio due to loan foreclosures. The Company
has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic
benefits of a loan if it is determined that the loan sold violated representations or warranties made by the Company and/or the
borrower at the time of the sale, which the Company refers to as mortgage loan servicing putback expenses. Such
representations and warranties typically include those made regarding loans that had missing or insufficient file
documentation and/or loans obtained through fraud by borrowers or other third parties. Putback claims may be made until the
loan is paid in full. When a putback claim is received, the Company evaluates the claim and takes appropriate actions based
on the nature of the claim. The Company is required by Federal National Mortgage Association and Federal Home Loan
Mortgage Corporation to provide a response to putback claims within 60 days of the date of receipt.
The Company incurred $82,000 in mortgage loan servicing putback reserve expense for the year ended December
31, 2020, and $33,000 for the year ended December 31, 2019. The Company incurred no mortgage loan servicing putback
reserve expense for the year ended December 31, 2018. At December 31, 2020 and 2019, the reserve for mortgage loan
servicing putback expenses totaled $311,000 and $229,000, respectively. There is inherent uncertainty in reasonably
estimating the requirement for reserves against future mortgage loan servicing putback expenses. Future putback expenses
depend on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on
loans sold with servicing released and the subsequent consequences under the representations and warranties.
122
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
GNMA optional repurchase programs allow financial institutions to buy back individual delinquent mortgage loans
that meet certain criteria from the securitized loan pool for which the institution provides servicing. At the servicer's option
and without GNMA's prior authorization, the servicer may repurchase a delinquent loan for an amount equal to 100% of the
remaining principal balance of the loan. This buy-back option is considered a conditional option until the delinquency criteria
are met, at which time the option becomes unconditional. When a financial institution is deemed to have regained effective
control over these loans under the unconditional buy-back option, the loans can no longer be reported as sold and must be
included in the balance sheet as mortgage loans held for sale, regardless of whether the institution intends to exercise the buy-
back option. These loans totaled $55.5 million and $27.9 million at December 31, 2020, and December 31, 2019,
respectively, and were recorded as mortgage loans held for sale, at the lower of cost or fair value with a corresponding
liability in FHLB advances and other borrowings on the Company's consolidated balance sheets.
Note 10 - Deposits
Deposit balances are summarized as follows:
(Dollars in thousands)
Noninterest-bearing demand
Interest bearing demand
Money market
Brokered
Savings
Time deposits
Total Deposits
December 31,
2020
2019
$
1,607,564 $
1,052,639
1,789,914
431,180
205,252
664,766
1,077,706
776,037
1,277,053
152,556
154,450
790,810
$
5,751,315 $
4,228,612
Municipal deposits totaled $689.3 million and $423.8 million at December 31, 2020 and 2019, respectively.
Included in time deposits at December 31, 2020 and 2019, are $271.3 million and $319.1 million, respectively, of
time deposits in denominations of $250,000 or more.
Maturities of time deposits, at December 31, 2020, are as follows:
(Dollars in thousands)
Years Ended December 31,
2021
2022
2023
2024
2025
Total
$
$
497,516
103,156
31,272
25,025
7,797
664,766
At December 31, 2020 and 2019, overdrawn deposits of $462,000 and $1.1 million, respectively, were reclassified
as unsecured loans.
123
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 11 - Borrowings
Borrowed funds are summarized as follows:
(Dollars in thousands)
Overnight repurchase agreements with depositors
Short-term FHLB advances
GNMA repurchase liability
Long-term FHLB advances
Total FHLB advances and other borrowings
Subordinated debentures, net
Additional details of certain FHLB advances are as follows:
(Dollars in thousands)
At December 31, 2020:
Short-term FHLB advance, fixed rate
$
Long-term FHLB advance, callable quarterly, fixed rate
At December 31, 2019:
Short-term FHLB advance, fixed rate
Long-term FHLB advance, callable quarterly, fixed rate
Short-Term Borrowings
December 31,
2020
2019
8,408 $
650,000
55,485
270,715
984,608 $
157,181 $
16,717
100,000
27,860
272,613
417,190
9,671
$
$
$
Amount
Interest Rate
Maturity Date
650,000
250,000
100,000
250,000
0.10 %
1.65
1.35
1.65
1/4/2021
8/23/2033
1/2/2020
8/23/2033
The Company had unsecured lines of credit for the purchase of federal funds in the amount of $190.0 million and
$180.0 million at December 31, 2020 and 2019, respectively. The Company also had a $75.0 million secured repurchase line
of credit at December 31, 2020 and 2019. There were no amounts outstanding on these lines at either date. It is customary for
the financial institutions granting the unsecured lines of credit to require a minimum amount of cash be held on deposit at that
institution. Amounts required to be held on deposit are typically $250,000 or less, and the Company has complied with all
compensating balance requirements to allow utilization of these lines of credit.
Securities sold under agreements to repurchase consist of the Company's obligations to other parties and mature on a
daily basis. These obligations to other parties carried a daily average interest rate of 0.22% and 1.20% for the years ended
December 31, 2020 and 2019, respectively.
Long-Term Borrowings
Interest rates for FHLB long-term advances outstanding at both December 31, 2020 and 2019, ranged from 1.65% to
5.72%, respectively. These advances are all fixed rate and are subject to restrictions or penalties in the event of prepayment.
Scheduled maturities of long-term advances from the FHLB at December 31, 2020, are as follows:
(Dollars in thousands)
Years Ended December 31,
2021
2022
2023
2024
2025
Thereafter (1)
Total
$
$
1,090
2,404
4,043
3,020
1,641
258,517
270,715
__________________________
(1)
Includes a FHLB advances totaling $250.0 million callable quarterly with a final maturity in 2033, carrying a rate of 1.65%.
124
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Security for all indebtedness and outstanding commitments to the FHLB consists of a blanket floating lien on all of
the Company's first mortgage loans, commercial real estate and other real estate loans, as well as the Company's investment
in capital stock of the FHLB and deposit accounts at the FHLB. The net amounts available under the blanket floating lien at
December 31, 2020 and 2019, were $456.9 million and $601.9 million, respectively.
Additionally, at December 31, 2020 and December 31, 2019, the Company had the availability to borrow
$793.2 million and $855.1 million, respectively, from the discount window at the Federal Reserve Bank of Dallas, with
$999.7 million and $1.09 billion in commercial and industrial loans pledged as collateral, respectively. There were no
borrowings against this line at December 31, 2020 or 2019.
Holding Company Line of Credit
During 2018, the Company entered into a Loan Agreement (the "Loan Agreement") with NexBank SSB ("Lender")
pursuant to which the Lender will make one or more revolving credit loans of up to $50 million at any time that the Company
may use for working capital and general corporate purposes. The principal amounts borrowed under the Loan Agreement will
bear interest at a variable rate equal to the applicable one-month LIBOR rate plus 3.25%. The line of credit available to the
Company under the Loan Agreement expires on October 5, 2021, or such date of the acceleration of the obligation pursuant
to the Loan Agreement, at which time all amounts borrowed, together with applicable interest, fees and other amounts owed
by the Company shall be due and payable. There were no outstanding revolving credit loans under the Loan Agreement at
December 31, 2020 or 2019.
Subordinated Debentures
In February 2020, Origin Bank completed an offering of $70.0 million in aggregate principal amount of 4.25%
fixed-to-floating rate subordinated notes due 2030 (the “Notes”) to certain investors in a transaction exempt from registration
under Section 3(a)(2) of the Securities Act of 1933, as amended. The Notes initially bear interest at a fixed annual rate of
4.25%, payable semi-annually in arrears, to but excluding February 15, 2025. 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. Origin Bank is entitled to redeem the Notes, in whole or in part, on or after February 15,
2025, and to redeem the Notes at any time in whole upon certain other specified events. The Notes qualify as Tier 2 capital
for regulatory capital purposes for Origin Bank.
In October 2020, the Company completed of an offering of $80.0 million in aggregate principal amount of 4.50%
fixed-to-floating rate subordinated notes due 2030 (the “4.50% Notes”). The 4.50% Notes bear a fixed interest rate of 4.50%
payable semi-annually in arrears, to but excluding November 1, 2025. From and including November 1, 2025, to but
excluding the maturity date or earlier redemption date, the 4.50% Notes bear a floating interest rate expected to equal the
three-month term Secured Overnight Financing Rate plus 432 basis points, payable quarterly in arrears. The Company may
redeem the 4.50% Notes at any time upon certain specified events or in whole or in part on or after November 1, 2025. The
4.50% Notes qualify as Tier 2 capital for regulatory capital purposes for the Company and $51.0 million was transferred to
Origin Bank during the fourth quarter of 2020, which qualifies as Tier 1 capital for regulatory capital purposes for the Bank.
The 4.50% Notes provided net proceeds to the Company of approximately $78.6 million.
The Company has two wholly-owned, unconsolidated subsidiary grantor trusts that were established for the purpose
of issuing trust preferred securities. The trust preferred securities accrue and pay distributions periodically at specified annual
rates as provided in each trust agreement. The trusts used the net proceeds from each of the offerings to purchase a like
amount of junior subordinated debentures (the "debentures") of the Company. The debentures are the sole assets of the trusts.
The Company's obligations under the debentures and related documents, taken together, constitute a full and unconditional
guarantee by the Company of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon
maturity of the debentures and can be currently redeemed by the Company in whole or in part, at a redemption price specified
in the indentures plus any accrued but unpaid interest to the redemption date. Due to the extended maturity date of the trust
preferred securities, they are included in Tier I capital for regulatory purposes, subject to certain limitations.
125
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
The following table is a summary of the terms of the current junior subordinated debentures at December 31, 2020:
(Dollars in thousands)
Issuance Trust
CTB Statutory Trust I
First Louisiana Statutory Trust I
Issuance Date
Maturity
Date
Amount
Outstanding
07/2001
09/2006
07/2031
12/2036
$
$
6,702
4,124
10,826
Rate Type
Variable (1)
Variable (2)
Current Rate
Maximum
Rate
3.51 %
2.02
12.50 %
16.00
____________________________
(1)
(2)
The trust preferred securities reprice quarterly based on the three-month LIBOR plus 3.30%, with the last reprice date on October 29, 2020.
The trust preferred securities reprice quarterly based on the three-month LIBOR plus 1.80%, with the last reprice date on December 11, 2020.
The balance of the junior subordinated debentures outstanding varies from the amounts carried on the consolidated
balance sheets due to the remaining purchase discount of $1.1 million and $1.2 million, at December 31, 2020, and December
31, 2019, respectively, which was established at the time of issuance and is being amortized over the remaining life of the
securities using the interest method.
Note 12 - Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company enters into derivative financial instruments to manage risks related to differences in the amount,
timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments, as well as
to manage changes in fair values of some assets which are marked at fair value through the consolidated statement of income
on a recurring basis.
Cash Flow Hedges of Interest Rate Risk
The Company is a party to an interest rate swap agreement under which the Company receives interest at a variable
rate and pays at a fixed rate. The derivative instrument represented by this swap agreement is designated as a cash flow hedge
of the Company's forecasted variable cash flows under a variable-rate term borrowing agreement. During the term of the
swap agreement, the effective portion of changes in the fair value of the derivative instrument are recorded in accumulated
other comprehensive income and subsequently reclassified into earnings in the periods that the hedged forecasted variable-
rate interest payments affected earnings. There was no ineffective portion of the change in fair value of the derivative
recognized directly in earnings. The entire swap fair value will be reclassified into earnings before the expiration date of the
swap agreement.
Derivatives Not Designated as Hedges
Customer interest rate derivative program
The Company offers certain derivatives products, primarily interest rate swaps, directly to qualified commercial
banking customers to facilitate their risk management strategies. In some instances, the Company acts only as an
intermediary, simultaneously entering into offsetting agreements with unrelated financial institutions, thereby mitigating its
net risk exposure resulting from such transactions without significantly impacting its results of operations. Because the
interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of
both the customer derivatives and any offsetting derivatives are recognized directly in earnings as a component of noninterest
income.
From time to time, the Company shares in credit risk on interest rate swap arrangements, by entering into risk
participation agreements with syndication partners. These are accounted for at fair value and disclosed as risk participation
derivatives.
Mortgage banking derivatives
The Company enters into certain derivative agreements as part of its mortgage banking and related risk management
activities. These agreements include interest rate lock commitments on prospective residential mortgage loans and forward
commitments to sell these loans to investors on a mandatory delivery basis. The Company also economically hedges the
value of MSRs by entering into a series of commitments to purchase mortgage-backed securities in the future.
126
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Fair Values of Derivative Instruments on the Balance Sheet
The following tables disclose the fair value of derivative instruments in the Company's balance sheets at December
31, 2020 and 2019, as well as the effect of these derivative instruments on the Company's consolidated statements of income
for the years ended December 31, 2020, 2019 and 2018:
(Dollars in thousands)
Notional Amounts(1)
December 31,
Fair Values
December 31,
Derivatives designated as cash flow hedging instruments:
2020
2019
2020
2019
21,000 $
10,500 $
(706) $
(101)
Interest rate swaps included in other (liabilities)
Derivatives not designated as hedging instruments:
Interest rate swaps included in other assets
$
$
326,542 $
217,633 $
20,207 $
Interest rate swaps included in other liabilities
347,096
246,397
(21,321)
Risk participation derivative included in accrued
expenses and other liabilities on the consolidated
balance sheets
Forward commitments to purchase mortgage-backed
securities included in other (liabilities) assets
Forward commitments to sell residential mortgage
loans included in other liabilities
Interest rate-lock commitments on residential
mortgage loans included in other assets
63,374
—
107,000
200,000
107,200
79,554
60,600
37,382
(18)
(317)
(658)
3,487
$
1,030,766 $
762,012 $
1,380 $
8,425
(9,278)
—
242
(109)
717
(3)
____________________________
(1)
Notional or contractual amounts, which represent the extent of involvement in the derivatives market, are used to determine the contractual cash flows
required in accordance with the terms of the agreement. These amounts are typically not exchanged, significantly exceed amounts subject to credit or
market risk and are not reflected in the consolidated balance sheets.
The weighted-average rates paid and received for interest rate swaps at December 31, 2020 and 2019, were as
follows:
Weighted-Average Interest Rate
December 31,
2020
2019
Interest rate swaps:
Cash flow hedges
Paid
Received
Paid
Received
4.81 %
2.94 %
4.81 %
4.64 %
Non-hedging interest rate swaps - financial institution
counterparties
Non-hedging interest rate swaps - customer counterparties
4.18
2.52
2.48
4.19
4.93
4.18
4.13
4.93
Gains and losses recognized on derivative instruments not designated as hedging instruments are as follows:
(Dollars in thousands)
Derivatives not designated as hedging instruments:
Amount of gain (loss) recognized in mortgage banking revenue (1)
Amount of (loss) gain recognized in other non-interest income
Years Ended December 31,
2020
2019
2018
$
4,081 $
3,079 $
(307)
(530)
(2,450)
584
____________________________
(1)
Gains and losses on these instruments are largely offset by market fluctuations in mortgage servicing rights. See Note 9 - Mortgage Banking for more
information on components of mortgage banking revenue.
Some interest rate swaps included in other assets were subject to a master netting arrangement with the counterparty
in all years presented and could be offset against some amounts included in interest rate swaps included in other liabilities.
The Company has chosen not to net these exposures in the consolidated balance sheets, and any impact of netting these
amounts would not be significant.
127
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
At December 31, 2020 and 2019, the Company had cash collateral on deposit with swap counterparties totaling
$22.2 million and $15.3 million, respectively. These amounts are included in interest-bearing deposits in banks in the
consolidated balance sheets and are considered restricted cash until such time as the underlying swaps are settled.
Note 13 - Stock and Incentive Compensation Plans
The Company has granted, and currently has outstanding, stock and incentive compensation awards subject to the
provisions of the Company's 2012 Stock Incentive Plan ("2012 Plan"). Additionally, awards have been issued prior to the
establishment of the 2012 Plan, some of which were still outstanding at December 31, 2020. The 2012 Plan is designed to
provide flexibility to the Company regarding its ability to motivate, attract and retain the services of key officers, employees
and directors. The 2012 Plan allows the Company to make grants of incentive stock options, non-qualified stock options,
stock appreciation rights, restricted stock awards, restricted stock units, dividend equivalent rights, performance unit awards
or any combination thereof. At December 31, 2020, the maximum number of shares of the Company's common stock
available for issuance under the 2012 Plan was 921,248 shares.
Share-based compensation cost charged to income for the years ended December 31, 2020, 2019 and 2018, is
presented below. There was no stock option expense for any of the periods shown.
(Dollars in thousands)
Restricted stock
Related tax benefits recognized in net income
Restricted Stock Grants
Years Ended December 31,
2020
2019
2018
$
2,320 $
2,247 $
487
472
1,462
307
The Company's restricted stock grants are time-vested awards and are granted to the Company's Board of Directors,
executives and senior management team. The service period in which time-vested awards are earned ranges from one to five
years. Time-vested awards are valued utilizing the fair value of the Company's stock at the grant date. These awards are
recognized on the straight-line method over the requisite service period, with forfeitures recognized as they occur.
The following table summarizes the Company's time-vested award activity:
Years Ended December 31,
2020
2019
2018
Weighted
Average
Grant-Date
Fair Value
Shares
Weighted
Average
Grant-Date
Fair Value
Shares
Weighted
Average
Grant-Date
Fair Value
Shares
Nonvested shares, January 1,
149,449 $
Granted
Vested
Forfeited
Nonvested shares, December 31,
30,638
(72,325)
(4,403)
103,359
35.15
20.14
33.88
37.11
31.51
174,407 $
37,641
(59,344)
(3,255)
149,449
35.01
32.77
33.50
30.21
35.15
61,293 $
151,324
(36,209)
(2,001)
174,407
24.61
37.51
27.70
37.47
35.01
During the years ended December 31, 2020 and 2019, no shares were retired by the Company upon vesting of
restricted stock awards. During the year ended December 31, 2018, award recipients surrendered and the Company retired
910 shares to cover taxes owed upon the vesting of restricted stock awards.
At December 31, 2020, there was $2.3 million of total unrecognized compensation cost related to nonvested
restricted shares awarded under the 2012 Plan. That cost is expected to be recognized over a weighted average period of 1.9
years.
128
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Stock Option Grants
The Company issues common stock options to select officers and employees through individual agreements and as a
result of obligations assumed in association with certain business combinations. As a result, both incentive and nonqualified
stock options have been issued and may be issued in the future. The exercise price of each option varies by agreement and is
based on either the fair value of the stock at the date of the grant in circumstances where option grants occurred or based on
the previously committed exercise price in the case of options acquired through merger. No outstanding stock option has a
term that exceeds twenty years, and all of the outstanding options are fully vested. The Company recognizes compensation
cost for stock option grants over the required service period based upon the grant date fair-value, which is established using a
Black-Scholes valuation model. The Black-Scholes valuation model uses assumptions of risk-free interest rate, expected term
of stock options, expected stock price volatility and expected dividends. Forfeitures are recognized as they occur.
The table below summarizes the status of the Company's stock options and changes during the years ended
December 31, 2020, 2019 and 2018.
Number of
Shares
Weighted
Average
Exercise Price
319,500 $
(45,500)
274,000
(20,000)
254,000
(30,000)
224,000 $
224,000 $
10.65
12.29
10.38
8.25
10.55
8.25
10.86
10.86
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic Value
7.07
$
—
6.75
—
5.81
—
4.92
4.92
$
$
4,840
—
6,493
—
6,932
—
3,789
3,789
(Dollars in thousands, except per share amounts)
Outstanding at January 1, 2018
Exercised
Outstanding at December 31, 2018
Exercised
Outstanding at December 31, 2019
Exercised
Outstanding at December 31, 2020
Exercisable at December 31, 2020
Note 14 - Employee Retirement Plan
Defined Contribution Retirement Plan
The Company maintains the Origin Bancorp, Inc. Employee Retirement Plan ("Retirement Plan") that is a defined
contribution benefit plan, that allows contributions under section 401(k) of the Internal Revenue Code. The Retirement Plan
covers substantially all employees who meet certain other requirements and employment classification criteria. Under the
provisions of the Retirement Plan, the Company may make discretionary matching contributions on a percentage, not to
exceed 6%, of a participant's elective deferrals. Any percentage(s) determined by the Company shall apply to all eligible
persons for the entire plan year. Historically, the Company has matched 50% of the first 6% of eligible compensation
deferred by a participant. Eligible compensation includes salaries, wages, overtime and bonuses, and excludes expense
reimbursements and fringe benefits. In addition, the Company may make additional discretionary contributions out of current
or accumulated net profit. Matching contributions are invested as directed by the participant. The total of the Company's
contributions may not exceed limitations set forth in the Retirement Plan document or the maximum deductible under the
Internal Revenue Code.
Although it has not expressed any intention to do so, the Company has the right to terminate the Retirement Plan at
any time. The total expense related to the Retirement Plan, including optional contributions, was $2.0 million, $1.8 million
and $1.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Other Benefit Plans
The Company has established non-qualified defined benefit plans for some of its key executives for which deferred
compensation liabilities are recorded as a component of accrued expenses and other liabilities in the accompanying
consolidated balance sheets. The deferred compensation liability was $11.3 million and $9.8 million at December 31, 2020
and 2019, respectively. The expense recorded for the deferred compensation plan totaled $1.9 million, $1.2 million, and
$1.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.
129
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 15 - Income Taxes
The provision for income taxes is as follows:
(Dollars in thousands)
Federal income taxes:
Current
Deferred
State income taxes:
Current
Deferred
Income tax expense
Years Ended December 31,
2020
2019
2018
$
18,157 $
14,232 $
(11,545)
(2,513)
1,723
(339)
1,030
(83)
4,562
5,658
638
(21)
$
7,996 $
12,666 $
10,837
A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is below:
Years Ended December 31,
2020
2019
2018
(Dollars in thousands)
Amount
%
Amount
%
Amount
%
Income taxes computed at statutory rate
$
9,314
21.00 % $
13,975
21.00 % $
13,113
21.00 %
Tax exempt revenue, net of nondeductible interest
Low-income housing tax credits, net of amortization
Other tax credits, net of add-backs
Bank-owned life insurance income
State income taxes, net of federal benefit
Stock-based compensation
Deferred tax write-down for enacted tax rate changes
Nondeductible expense
Other
(878)
(511)
(1,218)
(259)
1,033
181
—
257
77
(1.98)
(1.15)
(2.75)
(0.58)
2.35
0.41
—
0.58
0.16
(644)
(514)
(1,218)
(158)
730
(100)
—
413
182
(0.97)
(0.77)
(1.83)
(0.24)
1.10
(0.15)
—
0.62
0.27
(907)
(691)
(1,218)
(150)
469
(252)
231
337
(95)
(1.45)
(1.11)
(1.95)
(0.24)
0.75
(0.40)
0.37
0.53
(0.15)
Total income tax expense
$
7,996
18.04 % $
12,666
19.03 % $
10,837
17.35 %
Significant components of deferred tax assets and liabilities are as follows:
(Dollars in thousands)
Deferred tax assets:
Credit loss allowances
Deferred compensation and share-based compensation
Net operating loss carryforwards
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets net of valuation allowance
Deferred tax liabilities:
Basis difference in premises and equipment
Intangible assets
Mortgage servicing rights
Other
Gross deferred tax liabilities
Net deferred tax asset
130
December 31,
2020
2019
$
19,315 $
4,504
1,240
1,064
26,123
(994)
25,129 $
3,089 $
118
2,951
146
6,304
18,825 $
$
$
$
8,557
3,698
1,245
1,441
14,941
(970)
13,971
2,669
157
4,472
152
7,450
6,521
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
At December 31, 2020, the Company has $3.6 million in Federal gross net operating loss carryforwards acquired in
previous business combinations expiring between 2022 and 2028, and $11.1 million in state net operating losses. Due to
limitations on the amounts of these losses that can be recognized annually, the Company has determined that it is more likely
than not that some of these net operating loss carryforwards will expire unused, and has established a $994,000 valuation
allowance related to these carryforwards.
The Company files a consolidated income tax return in the U.S. federal jurisdiction and various states. With few
exceptions, the Company is no longer subject to income tax examinations by tax authorities in these taxing jurisdictions for
the years before 2017.
Note 16 - Accumulated Other Comprehensive Income
Accumulated other comprehensive income ("AOCI") includes the after-tax change in unrealized gains and losses on
AFS securities and cash flow hedging activities.
(Dollars in thousands)
Balance at January 1, 2018
Net change
Reclassification of tax effects related to the adoption of ASU 2018-02(1):
Current
Deferred
Balance at January 1, 2019
Net change
Balance at December 31, 2019
Net change
Balance at December 31, 2020
Unrealized
Gains (Losses)
on AFS
Securities
Unrealized
Gains (Losses)
on Cash Flow
Hedges
Accumulated
Other
Comprehensive
Income
$
1,280 $
(4,157)
(293)
569
(2,601)
9,013
6,412
19,794
27 $
88
17
(11)
121
(200)
(79)
(478)
$
26,206 $
(557) $
1,307
(4,069)
(276)
558
(2,480)
8,813
6,333
19,316
25,649
____________________________
(1)
During the first quarter of 2018, the Company adopted ASU 2018-02. The ASU was issued by the FASB in February 2018, to address the issue of
other comprehensive income or loss that became stranded in AOCI as a result of the re-measurement of an entity's deferred income tax assets and
liabilities following the reduction of the U.S. federal corporate tax rate from 35% to 21% pursuant to the enactment of the Tax Cuts and Jobs Act in
December 2017. The Company also had certain current tax amounts stranded in AOCI that resulted from a tax accounting election to tax net gains and
losses on AFS securities and cash flow hedges as current items beginning in 2016. The Company reclassifies the taxes from AOCI to earnings as the
individual securities and hedges are realized. Due to the change in corporate tax rates, the Company had certain net gains and losses taxed at the 35%
rate reflected in AOCI. As these transactions are realized over time, they will flow through income tax expense at the 21% rate. Rather than adjusting
income tax expense for the difference as each of these securities and instruments are realized, the Company elected to adjust the difference (stranded
tax effect) to retained earnings, consistent with the treatment of the deferred tax adjustment.
Note 17 - Capital and Regulatory Matters
The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements
administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain
mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect
on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures
of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and
other factors.
The Company is subject to the Basel III regulatory capital framework ("Basel III Capital Rules"), which includes a
2.5% capital conservation buffer effective for the Company as of January 1, 2019. The capital conservation buffer is designed
to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions
and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make
capital distributions, which includes dividend payments and stock repurchases and to pay discretionary bonuses to executive
officers.
131
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to
maintain minimum amounts and ratios (set forth in the table below) of total, common equity Tier 1 capital, Tier 1 capital,
Tier 1 capital, and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, at December 31, 2020 and 2019, that the Company and the
Bank met all capital adequacy requirements to which they are subject, including the capital buffer requirement.
At December 31, 2020 and 2019, the Bank's capital ratios exceeded those levels necessary to be categorized as "well
capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Bank
must maintain minimum total risk based, common equity Tier 1 capital, Tier 1 risk based and Tier 1 leverage ratios as set
forth in the table below. A final rule adopted by the federal banking agencies in February 2019 provides banking
organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the
adoption of CECL. In addition, on March 27, 2020, the federal banking agencies issued an interim final rule that gives
banking organizations that implement CECL before the end of 2020 the option to delay for two years CECL’s adverse effects
on regulatory capital. Origin elected to adopt CECL in the first quarter of 2020 and exercised the option to delay the
estimated impact of the adoption of CECL on our regulatory capital for two years (from January 2020 through December 31,
2021), which resulted in a 19 basis point benefit to the common equity Tier 1 capital to risk-weighted assets capital ratio at
December 31, 2020. The two-year delay will be followed by the three-year transition period of CECL's initial impact on our
regulatory capital (from January 1, 2022 through December 31, 2024).
The actual capital amounts and ratios of the Company and Bank at December 31, 2020 and 2019, are presented in
the following table:
(Dollars in thousands)
December 31, 2020
Actual
Minimum Capital
Required - Basel III
To be Well Capitalized
Under Prompt
Corrective Action
Provisions
Common Equity Tier 1 Capital to Risk-Weighted Assets
Amount
Ratio
Amount
Ratio
Amount
Ratio
Origin Bancorp, Inc.
Origin Bank
Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.
Origin Bank
Total Capital to Risk-Weighted Assets
Origin Bancorp, Inc.
Origin Bank
Leverage Ratio
Origin Bancorp, Inc.
Origin Bank
December 31, 2019
$ 604,306
9.95 % $ 425,012
7.00 %
N/A
N/A
637,863
10.53
424,010
7.00
$ 393,724
6.50 %
613,682
637,863
10.11
10.53
516,107
514,870
8.50
8.50
N/A
N/A
484,583
8.00
837,058
782,503
13.79
12.92
637,539
636,019
10.50
10.50
N/A
N/A
605,732
10.00
613,682
637,863
8.62
8.99
284,771
283,842
4.00
4.00
N/A
N/A
354,802
5.00
Common Equity Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.
Origin Bank
Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.
Origin Bank
Total Capital to Risk-Weighted Assets
Origin Bancorp, Inc.
Origin Bank
Leverage Ratio
Origin Bancorp, Inc.
Origin Bank
561,630
551,060
11.74
11.55
334,785
333,924
570,975
551,060
11.94
11.55
406,524
405,479
7.00
7.00
8.50
8.50
N/A
N/A
310,072
6.50
N/A
N/A
381,627
8.00
610,305
590,390
12.76
12.38
502,175
500,888
10.50
10.50
N/A
N/A
477,037
10.00
570,975
551,060
10.91
10.56
209,298
208,774
4.00
4.00
N/A
N/A
260,968
5.00
132
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
In the ordinary course of business, the Company depends on dividends from the Bank to provide funds for the
payment of dividends to stockholders and to provide for other cash requirements. Banking regulations may limit the amount
of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause
the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared and
paid exceed the Bank's year-to-date net income combined with the retained net income for the preceding year, which was
$60.8 million at December 31, 2020.
Stock Repurchases
In three transactions in March 2020, the Company repurchased a total of 30,868 shares of its common stock pursuant
to its stock buyback program at an average price per share of $23.44 for an aggregate purchase price of $723,000. Prior to
2020, the Company had repurchased cumulatively $10.1 million of shares under the stock buyback program, and as of
December 31, 2020, the Company's board of directors has approved approximately $29.2 million remaining shares to be
purchased under the program.
Note 18 - Commitments and Contingencies
Credit Related Commitments
In the normal course of business, the Company enters into financial instruments, such as commitments to extend
credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the
accompanying consolidated financial statements until they are funded, although they expose the Company to varying degrees
of credit risk and interest rate risk in much the same way as funded loans.
Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued
mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal
credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the
borrower continues to meet credit standards established in the underlying contract and has not violated other contractual
conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of
a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower's credit
quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all
before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.
A substantial majority of the letters of credit are standby agreements that obligate the Company to fulfill a
customer's financial commitments to a third party if the customer is unable to perform. The Company issues standby letters of
credit primarily to provide credit enhancement to its customers' other commercial or public financing arrangements and to
help them demonstrate financial capacity to vendors of essential goods and services.
The contract amounts of these instruments reflect the Company's exposure to credit risk. The Company undertakes
the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet
instruments and may require collateral or other credit support. These off-balance sheet financial instruments are summarized
below:
(Dollars in thousands)
Commitments to extend credit
Standby letters of credit
December 31,
2020
2019
$
1,341,501 $
42,911
1,374,055
39,344
In addition to the above, the Company guarantees the credit card debt of certain customers to the merchant bank that
issues the credit cards. These guarantees are in place for as long as the guaranteed credit card is open. At December 31, 2020
and 2019, these credit card guarantees totaled $200,000 and $489,000, respectively. This amount represents the maximum
potential amount of future payments under the guarantee for which the Company would be responsible in the event of
customer non-payment.
At December 31, 2020, the Company held 35 unfunded letters of credit from the FHLB totaling $527.4 million with
expiration dates ranging from January 20, 2021, to November 4, 2022. At December 31, 2019, the Company held 21
unfunded letters of credit from the FHLB totaling $241.3 million with expiration dates ranging from January 15, 2020, to
February 25, 2021.
133
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Management establishes an asset-specific allowance for certain lending-related commitments and computes a
formula-based allowance for performing consumer and commercial lending-related commitments. These are computed using
a methodology similar to that used for the commercial loan portfolio, modified for expected maturities and probabilities of
drawdown. The reserve for lending-related commitments was $2.3 million and $1.8 million at December 31, 2020 and 2019,
respectively, and is included in other liabilities in the accompanying consolidated balance sheets.
Loss Contingencies
From time to time the Company is also party to various legal actions arising in the ordinary course of business. At
this time, management does not expect that loss contingencies, if any, arising from any such proceedings, either individually
or in the aggregate, would have a material adverse effect on the consolidated financial position or liquidity of the Company.
Note 19 - Related Party Transactions
Loans to executive officers, directors, and their affiliates at December 31, 2020 and 2019, were as follows:
(Dollars in thousands)
Balance, beginning of year
Advances
Principal repayments
Effect of changes in composition of related parties
Balance, end of year
Commitments to extend credit
2020
2019
1,093 $
1,092
(793)
—
1,392 $
1,328
450
(495)
(190)
1,093
2,702 $
2,212
$
$
$
None of the above loans were considered non-performing or potential problem loans. These loans were made in the
ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other unaffiliated persons and do not involve more than normal risk of
collectability.
Deposits from related parties held by the Company at December 31, 2020 and 2019, amounted to $30.4 million and
$27.0 million, respectively.
134
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 20 - Condensed Parent Company Only Financial Statements
Financial statements of Origin Bancorp, Inc. (parent company only) are as follows:
(Dollars in thousands)
Condensed Balance Sheets
Assets
Cash and cash equivalents
Investment in affiliates/subsidiaries
Other assets
Total assets
Liabilities and Stockholders' Equity
Subordinated debentures, net
Accrued expenses and other liabilities
Total liabilities
Stockholders' Equity
Common stock
Additional paid‑in capital
Retained earnings
Accumulated other comprehensive income
Total stockholders' equity
December 31,
2020
2019
$
$
$
42,908 $
684,410
10,198
737,516 $
88,258 $
2,108
90,366
117,532
237,341
266,628
25,649
647,150
Total liabilities and stockholders' equity
$
737,516 $
5,909
593,079
10,531
609,519
9,671
586
10,257
117,405
235,623
239,901
6,333
599,262
609,519
(Dollars in thousands)
Condensed Statements of Income
Income:
Dividends from subsidiaries
Other
Total income
Expenses:
Interest expense
Salaries and employee benefits
Other
Total expenses
Income before income taxes and equity in undistributed net income of
subsidiaries
Income tax benefit
Income before equity in undistributed net income of subsidiaries
Equity in undistributed net income of subsidiaries
Years Ended December 31,
2020
2019
2018
$
17,250 $
17,500 $
12
17,262
1,333
214
1,182
2,729
14,533
549
15,082
21,275
470
17,970
563
728
1,565
2,856
15,114
502
15,616
38,266
4,500
2,052
6,552
553
658
1,462
2,673
3,879
84
3,963
47,642
51,605
Net income
$
36,357 $
53,882 $
135
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
(Dollars in thousands)
Condensed Statements of Cash Flows
Cash flows from operating activities:
Years Ended December 31,
2020
2019
2018
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
$
36,357 $
53,882 $
51,605
(1)
9
(21,275)
(38,266)
58
3,633
18,772
(51,000)
—
(51,000)
(8,854)
—
248
78,556
—
—
(723)
69,227
36,999
5,909
28
130
15,783
—
—
—
—
166
—
—
—
(10,059)
(15,756)
27
5,882
9
(47,642)
25
(2,187)
1,810
(45,794)
(2,213)
(48,007)
(23)
559
—
95,178
(48,260)
—
41,513
(4,684)
10,566
5,882
(5,863)
(5,941)
$
42,908 $
5,909 $
Deferred income taxes
Equity in undistributed net income of subsidiaries
Amortization of subordinated debentures discount
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Capital contributed to subsidiaries
Net purchases of non-marketable equity securities held in other financial
institutions
Net cash used in investing activities
Cash flows from financing activities:
Dividends paid
Taxes paid related to net share settlement of equity awards
Cash received on exercise of stock options
Proceeds from issuance of subordinated debentures
Proceeds from issuance of common stock
Payment to repurchase preferred stock
Payment to repurchase common stock
Net cash provided by (used by) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
136
ORIGIN BANCORP, INC.
Notes to Consolidated Financial Statements
Note 21 - Summary of Quarterly Financial Statements (Unaudited)
The following tables present selected unaudited data from the Company's condensed consolidated quarterly
statements of income for the quarterly periods within the years ended December 31, 2020 and 2019:
(Dollars in thousands)
Total interest income
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Non-interest income, exclusive of gain on sales of
securities, net
Gain on sales of securities, net
Non-interest expense
Income before income taxes
Income tax expense
Net income
Basic earnings per common share (1)
Diluted earnings per common share (1)
December 31
September 30
June 30
March 31
Quarters Ended - 2020
$
59,422 $
58,800 $
55,464 $
7,603
51,819
6,333
45,486
15,156
225
38,884
21,983
4,431
8,183
50,617
13,633
36,984
17,750
301
38,734
16,301
3,206
9,174
46,290
21,403
24,887
19,076
—
38,220
5,743
786
$
$
17,552 $
13,095 $
0.75 $
0.75
0.56 $
0.56
4,957 $
0.21 $
0.21
55,016
12,206
42,810
18,531
24,279
12,090
54
36,097
326
(427)
753
0.03
0.03
____________________________
(1)
Due to the combined impact of the repurchase of common stock on the quarterly average common shares outstanding calculation compared to the
impact of the repurchase of common stock on the year-to-date average common shares outstanding calculation, and the effect of rounding, the sum of
the quarterly earnings per common share will not equal the year-to-date earnings per common share amount.
December 31
September 30
June 30
March 31
Quarters Ended - 2019
(Dollars in thousands)
Total interest income
Total interest expense
Net interest income
Provision for credit losses
Net interest income after provision for credit losses
Non-interest income, exclusive of gain on sales of
securities, net
Gain on sales of securities, net
Non-interest expense
Income before income taxes
Income tax expense
Net income
$
56,719 $
58,806 $
57,063 $
12,624
44,095
2,377
41,718
10,818
—
36,534
16,002
3,175
12,827
14,184
44,622
4,201
40,421
12,860
20
35,064
18,237
3,620
14,617
14,094
42,969
1,985
40,984
11,176
—
37,095
15,065
2,782
12,283
Basic earnings per common share(1)
Diluted earnings per common share(1)
$
0.55 $
0.55
0.62 $
0.62
0.52 $
0.52
____________________________
(1)
Due to the combined impact of the repurchase of common stock on the quarterly average common shares outstanding calculation compared to the
impact of the repurchase of common stock on the year-to-date average common shares outstanding calculation, and the effect of rounding, the sum of
the quarterly earnings per common share will not equal the year-to-date earnings per common share amount.
137
54,494
12,468
42,026
1,005
41,021
11,604
—
35,381
17,244
3,089
14,155
0.60
0.60
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
None.
Item 9A.
Controls and Procedures
Evaluation of disclosure controls and procedures — As of the end of the period covered by this report, an
evaluation was performed by the Company, under the supervision and with the participation of its management, including its
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls
and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management was required to apply judgment in evaluating its controls and procedures. Based on this
evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) were effective at the end of the period covered by this report.
Management's annual report on internal control over financial reporting — Our management is responsible for
establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rules 13a-15(f) and 15d-15(f). At December 31, 2020, management assessed the effectiveness of our internal control over
financial reporting based on the criteria for effective internal control over financial reporting established in “2013 Internal
Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on the assessment, management determined that we maintained effective internal control over financial reporting at
December 31, 2020, based on those criteria. The effectiveness of our internal control over financial reporting at December 31,
2020, has been audited by BKD LLP, an independent registered public accounting firm, as stated in its report which is
included in Part II, Item 8 of this report.
Changes in internal control over financial reporting — There were no changes in the Company's internal control
over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(f) under the Exchange Act) during the quarter
ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
Limitations on the Effectiveness of Disclosure Controls and Procedures — Our management, including our Chief
Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or internal control
over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented,
can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a
control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues within a company are detected.
138
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Origin Bancorp, Inc.
Ruston, Louisiana
Opinion on the Internal Control over Financial Reporting
We have audited Origin Bancorp, Inc.'s (the "Company") internal control over financial reporting as of December 31, 2020, based
on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO).
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December
31, 2020, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
("PCAOB"), the consolidated financial statements of the Company and our report dated March 2, 2021, expressed an unqualified
opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definitions and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
/s/ BKD, LLP
Little Rock, Arkansas
March 2, 2021
139
Item 9B.
Other Information
None.
140
Item 10.
Directors, Executive Officers and Corporate Governance
PART III
The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for
our 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year end.
Item 11.
Executive Compensation
The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for
our 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year end.
Item 12.
Matters
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
With the exception of the equity compensation plan information provided below, the information required by this
Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our 2021 Annual Meeting of
Stockholders to be filed with the SEC within 120 days of our fiscal year end.
Information regarding stock-based compensation awards outstanding and available for future grants at December 31,
2020 is presented in the table below. Additional information regarding stock-based compensation plans is presented in Note
13 - Stock and Incentive Compensation Plans in the notes to our consolidated financial statements contained in Item 8 of this
report.
Number of Securities
to be Issued upon
Exercise of
Outstanding Options(1)
Weighted
Average
Exercise Price
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
2012 Stock Incentive Plan
Issued prior to establishment of the 2012 Stock Incentive Plan
Total
— $
224,000
224,000
—
10.86
10.86
921,248
—
921,248
____________________________
(1)
Includes any compensation plan and individual compensation arrangement of the Company under which equity securities of the Company are
authorized for issuance.
Certain information regarding securities authorized for issuance under our equity compensation plans is included
under the section captioned "Stock-Based Compensation Plans" in Part II, Item 5, elsewhere in this Annual Report on Form
10-K.
We know of no arrangements, including any pledge by any person of our securities, the operation of which may at a
subsequent date result in a change in control of the Company.
Further information regarding security ownership of our 5% stockholders and our directors, director nominees and
executive officers required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for our
2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year end.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for
our 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.
Item 14.
Principal Accounting Fees and Services
The information required by this Item is incorporated herein by reference to our Proxy Statement (Schedule 14A) for
our 2021 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year-end.
141
Item 15.
Exhibits, Financial Statement Schedules
(a) Documents filed as part of this Report:
PART IV
(1) Financial Statements: Reference is made to the information set forth in Part II, Item 8 of this Annual Report on
Form 10-K, which information is incorporated herein by reference.
See Part II—Item 8. Financial Statements and Supplementary Data.
(2) Financial Statement Schedules: All financial statement schedules are omitted because they are either not
applicable or not required, or because the required information is included in the consolidated financial statements or
the notes thereto is included in Part II, Item 8 of this Annual Report on Form 10-K.
(3) Exhibits: See (b) below
(b) Exhibits:
Exhibit
Number
Description
3.1
3.2
4.1
4.2
4.3
4.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Restated Articles of Incorporation, dated August 7, 2018, incorporated by reference to Exhibit 3.1 to the Company's Form
10-Q filed August 9, 2018 (File No. 001-38487).
Bylaws, incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 filed April 10, 2018
(File No. 333-224225).
Specimen common stock certificate, incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-1 filed April 10, 2018 (File No. 333-224225).
Subordinated Indenture, dated as of October 16, 2020, by and between Origin Bancorp, Inc. and U.S. Bank National
Association, as trustee, incorporated by reference to Exhibit 4.1 to the Company’s Form 8-K filed on October, 16, 2020 (File
No. 001-38487)
First Supplemental Indenture, dated as of October 16, 2020, by and between Origin Bancorp, Inc. and U.S. Bank National
Association, as trustee, incorporated by reference to Exhibit 4.2 to the Company’s Form 8-K filed on October, 16, 2020 (File
No. 001-38487)
Description of Common Stock, incorporated by reference to Exhibit 4.3 to the Company’s 10-K for the Year ended
December 31, 2019 (File No. 001-38487).
Community Trust Financial Corporation 2012 Stock Incentive Plan, incorporated by reference to Exhibit 10.1 of the
Registrant's Registration Statement on Form S-1 filed April 10, 2018 (File No. 333-224225).
Form of Restricted Stock Award Agreement under the Origin Bancorp, Inc. 2012 Stock Incentive Plan, incorporated by
reference to Exhibit 10.1 to the Company's Form 8-K filed August 28, 2018 (File No. 001-38487).
Form of Stock Option Award Agreement under the Community Trust Financial Corporation 2012 Stock Incentive Plan,
incorporated by reference to Exhibit 10.3 of the Registrant's Registration Statement on Form S-1 filed April 10, 2018 (File
No. 333-224225).
Community Trust Financial Corporation Employee Stock Ownership Plan and Trust Agreement, dated January 1, 2014, as
amended, incorporated by reference to Exhibit 10.4 of Amendment No. 2 to the Registrant's Registration Statement on Form
S-1 filed April 27, 2018 (File No. 333-224225).
2020 Restated Employment Agreement, dated February 27, 2020, by and between Origin Bancorp, Inc. and Drake Mills,
incorporated by reference to Exhibit 10.5 to the Company’s 10-K for the Year ended December 31, 2019 (File No.
001-38487).
Amended and Restated Executive Salary Continuation Plan, effective May 1, 2008, between Community Trust Bank and
Drake Mills, incorporated by reference to Exhibit 10.1 to the Company’s 10-Q for the Quarter ended March 31, 2019 (File
No. 001-38487).
Executive Deferred Compensation Agreement, dated March 30, 2001, by and between Community Trust Bank and Drake
Mills, incorporated by reference to Exhibit 10.12 of Amendment No. 1 to the Company's Registration Statement on Form
S-1 filed April 19, 2018 (File No. 333-224225).
Amended and Restated Life Insurance Endorsement Method Split Dollar Plan Agreement, dated April 25, 2018, by and
among New York Life Insurance Company, Origin Bank and Drake Mills, incorporated by reference to Exhibit 10.13 of
Amendment No. 2 to the Company's Registration Statement on Form S-1 filed April 27, 2018 (File No. 333-224225).
142
Exhibit
Number
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
Description
Amended and Restated Life Insurance Endorsement Method Split Dollar Plan Agreement, dated April 26, 2018, by and
among Great-West Life & Annuity Insurance Company, Origin Bank and Drake Mills, incorporated by reference to Exhibit
10.14 of Amendment No. 2 to the Company's Registration Statement on Form S-1 filed April 27, 2018 (File No.
333-224225).
Amended and Restated Endorsement Split Dollar Life Insurance Agreement, dated February 27, 2020, by and between
Origin Bank and Drake Mills, incorporated by reference to Exhibit 10.10 to the Company’s 10-K for the Year ended
December 31, 2019 (File No. 001-38487).
2020 Restated Employment Agreement, dated February 27, 2020, by and between Origin Bancorp, Inc. and M. Lance Hall,
incorporated by reference to Exhibit 10.11 to the Company’s 10-K for the Year ended December 31, 2019 (File No.
001-38487).
§409A Amended & Restated Executive Salary Continuation Agreement, dated December 13, 2008, by and between
Community Trust Bank and M. Lance Hall, incorporated by reference to Exhibit 10.11 of Amendment No. 1 to the
Company's Registration Statement on Form S-1 filed April 19, 2018 (File No. 333-224225).
Life Insurance Endorsement Method Split Dollar Plan Agreement, dated September 4, 2002, by and between Community
Trust Bank and M. Lance Hall, incorporated by reference to Exhibit 10.15 of Amendment No. 1 to the Company's
Registration Statement on Form S-1 filed April 19, 2018 (File No. 333-224225).
Amendment to the Life Insurance Endorsement Split Dollar Plan Agreement, dated December 8, 2008, by and between
Community Trust Bank and M. Lance Hall, incorporated by reference to Exhibit 10.16 of Amendment No. 1 to the
Company's Registration Statement on Form S-1 filed April 19, 2018 (File No. 333-224225).
Amendment to the Life Insurance Endorsement Method Split Dollar Plan Agreement, dated December 18, 2009, by and
between Community Trust Bank and M. Lance Hall, incorporated by reference to Exhibit 10.17 of Amendment No. 1 to the
Company's Registration Statement on Form S-1 filed April 19, 2018 (File No. 333-224225).
Executive Supplemental Income Agreement, dated October 29, 2019, by and between Origin Bank and M. Lance Hall,
incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed October 31, 2019 (File No. 001-38487).
Endorsement Split Dollar Life Insurance Agreement, dated October 29, 2019, by and between Origin Bank and M. Lance
Hall, incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed October 31, 2019 (File No. 001-38487).
Change in Control Agreement, dated April 5, 2017, by and between Origin Bank, Origin Bancorp, Inc. and F. Ronnie
Myrick, incorporated by reference to Exhibit 10.9 of the Registrant's Registration Statement on Form S-1 filed April 10,
2018 (File No. 333-224225).
Supplemental Executive Retirement Plan, dated August 17, 2018, by and between Origin Bank and Stephen H. Brolly,
incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 21, 2018 (File No. 001-38487).
Endorsement Split Dollar Life Insurance Agreement, dated August 17, 2018, by and between Origin Bank and Stephen H.
Brolly, incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed August 21, 2018 (File No. 001-38487).
Change in Control Agreement, dated April 2, 2018, among Origin Bank, Origin Bancorp, Inc. and Stephen H. Brolly,
incorporated by reference to Exhibit 10.2 to the Company’s 10-Q for the Quarter ended March 31, 2019 (File No.
001-38487).
Employment Agreement, effective October 1, 2008, as amended July 14, 2014, and as amended March 15, 2018, between
Community Trust Bank and Cary Davis, incorporated by reference to Exhibit 10.22 to the Company’s 10-K for the Year
ended December 31, 2019 (File No. 001-38487).
§409A Amended & Restated Executive Salary Continuation Agreement, dated December 15, 2008, between Community
Trust Bank and Cary Davis, incorporated by reference to Exhibit 10.23 to the Company’s 10-K for the Year ended
December 31, 2019 (File No. 001-38487).
2016 Amendment, dated December 14, 2016, between Origin Bank and Cary Davis, to the §409A Amended & Restated
Executive Salary Continuation Agreement, dated December 15, 2008, between Community Trust Bank and Cary Davis,
incorporated by reference to Exhibit 10.24 to the Company’s 10-K for the Year ended December 31, 2019 (File No.
001-38487).
Life Insurance Endorsement Method Split Dollar Plan Agreement, effective February 7, 2001, as amended on January 26,
2007, December 12, 2008, December 18, 2009, and June 10, 2014, between Community Trust Bank and Cary Davis,
incorporated by reference to Exhibit 10.25 to the Company’s 10-K for the Year ended December 31, 2019 (File No.
001-38487).
Loan Agreement, dated as of October 5, 2018, by and between Origin Bancorp, Inc. and NexBank SSB, incorporated by
reference to Exhibit 10.1 to the Company's Form 8-K filed October 11, 2018 (File No. 001-38487).
Revolving Promissory Note issued to NexBank SSB on October 5, 2018, incorporated by reference to Exhibit 10.2 to the
Company's Form 8-K filed October 11, 2018 (File No. 001-38487).
143
Exhibit
Number
Description
10.28
10.29
10.30
10.31
21
23
31.1
31.2
32.1
32.2
101
Pledge and Security Agreement, dated as of October 5, 2018, by and between Origin Bancorp, Inc. and NexBank SSB,
incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed October 11, 2018 (File No. 001-38487).
Fiscal and Paying Agency Agreement, dated as of February 6, 2020, by and between Origin Bank and U.S. Bank National
Association, as Fiscal and Paying Agent, incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed February
6, 2020 (File No. 001-38487).
Form of Subordinated Note Purchase Agreement, dated as of February 6, 2020, by and among Origin Bank and the several
Purchasers, incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed February 6, 2020 (File No.
001-38487).
Change in Control Agreement, dated March 28, 2018, among Origin Bank, Origin Bancorp, Inc. and Preston Moore
Subsidiaries of the Registrant
Consent of Independent Registered Public Accounting Firm
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a).
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a).
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
The following financial information from Origin Bancorp, Inc. Annual Report on Form 10-K for the year ended December
31, 2020, is formatted in XBRL: (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of
Income, (iii) the Consolidated Statements of Stockholders' Equity and Comprehensive Income, (iv) the Consolidated
Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase Document
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 2, 2021
Origin Bancorp, Inc.
(Registrant)
By: /s/ Drake Mills
Drake Mills
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
144
Date
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
/s/ Drake Mills
Drake Mills, Chairman, President and Chief Executive Officer (Principal Executive Officer)
Signature
/s/ Stephen H. Brolly
Stephen H. Brolly, Chief Financial Officer/Senior Executive Officer (Principal Financial & Principal Accounting Officer)
/s/ James S. D'Agostino
James S. D'Agostino, Director
/s/ James E. Davison, Jr.
James E. Davison, Jr., Director
/s/ Richard Gallot, Jr.
Richard Gallot, Jr., Director
/s/ Stacey W. Goff
Stacey W. Goff, Director
/s/ Michael A. Jones
Michael A. Jones, Director
/s/ Gary E. Luffey
Gary E. Luffey, Director
/s/ Farrell J. Malone
Farrell J. Malone, Director
/s/ F. Ronnie Myrick
F. Ronnie Myrick, Director
/s/ George M. Snellings, IV
George M. Snellings, IV, Director
/s/ Elizabeth E. Solender
Elizabeth E. Solender, Director
/s/ Steven Taylor
Steven Taylor, Director
145
THE BOARD OF DIRECTORS
ORIGIN BANCORP, INC. / ORIGIN BANK
James D’Agostino, Jr.
Managing Director
Encore Interests LLC
1,2
James Davison, Jr.
Investments
3
Richard Gallot, Jr.
President
Grambling State University
Stacey Goff
General Counsel &
Chief Administrative Officer
CenturyLink, Inc.
*
Lance Hall
President &
Chief Executive Officer
Origin Bank
Michael Jones
Certified Public Accountant
4
Gary Luffey
Partner
Green Clinic
5
Farrell Malone
Partner (Retired)
KPMG LLP
Drake Mills
Chairman, President &
Chief Executive Officer
Origin Bancorp, Inc.
Chairman
Origin Bank
Ronnie Myrick
Vice Chairman
Origin Bank
George Snellings, IV
Attorney
Nelson, Zentner, Sartor
& Snellings, LLC
6
Elizabeth Solender
President
Solender/Hall, Inc.
Steven Taylor
Auto Dealer
EXECUTIVE OFFICERS
Drake Mills - Chairman, President & Chief Executive Officer, Origin Bancorp, Inc. / Chairman, Origin Bank
Lance Hall - President & Chief Executive Officer, Origin Bank
Chase Anderson
Chief Accounting Officer
& Treasurer
Warrie Birdwell
Regional President
North Texas
Steve Brolly
Chief Financial Officer
Russ Chase
Chief Community Banking
Officer
Jim Crotwell
Chief Risk Officer
Cary Davis
Executive Risk Officer
Josh Hammett
Chief Information Officer
David Harrison
Chief Audit Executive
Carmen Jordan
Regional President
Houston
Ryan Kilpatrick
Chief Brand &
Communications Officer
Larry Little
State President
Louisiana
Regina McNeill
Market Analytics &
Strategic Planning
Clark Mercer
Chief Compliance
Officer
Preston Moore
Chief Credit &
Banking Officer
Larry Ratzlaff
State President
Mississippi
Lonnie Scarborough
Chief Dream Manager &
Talent Development Officer
Linda Tuten
Chief People &
Diversity Officer
Debbie Williamson
Chief Operations
Officer
1. Chair, Finance Committee 2. Lead Independent Director 3. Chair, Risk Committee 4. Chair, Nominating & Corporate Governance Committee
5. Chair, Audit Committee 6. Chair, Compensation Committee
*Origin Bank Board Member Only
www.Origin.bank
500 South Service Road East, Ruston, LA 71270
· Member FDIC