22 221
ANNUAL REPORT
2022 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 9 CONSECUTIVE YEARS
2021 - 3rd IN THE NATION | AMERICAN BANKER & BEST COMPANIES GROUP
OVER 250 ORGANIZATIONS SERVED
IN OUR COMMUNITIES SINCE 2021
44 BANKING CENTERS
SERVING 22 COMMUNITIES
DOLLARS IN MILLIONS
ENTRY: DFW 2008 | HOUSTON 2013
LOCATIONS: 19
LOANS: $2,695
DEPOSITS: $3,132
ENTRY: 1912
LOCATIONS: 19
LOANS: $1,341
DEPOSITS: $2,850
ENTRY: 2010
LOCATIONS: 6
LOANS: $568
DEPOSITS: $588
LETTER FROM THE CHAIRMAN
As I reflect on what we have accomplished as a company in
2021, I am reminded what a great time it is to be an Origin
stakeholder. Origin has always believed that relationships
are at the center of our business and that our culture defines
our success. The power of that philosophy was evident this
past year as we had one of the most successful years as a
company in our 110 years of doing business.
Origin is delivering on these key strategies and we are in
a position of strength as we enter 2022. We ended 2021
with $7.9 billion in total assets, $5.2 billion in loans, and
$6.6 billion in deposits. We also had record net income
of $108.5 million, or $4.60 diluted earnings per share. Our
pre-tax, pre-provision income was $121.7 million for 2021,
up 16.7% year over year.
Through the intentional execution of our strategic plan,
we have delivered exactly as we said we would when we
became a public company in early 2018. We talked about
seven key strategies for our company. Specifically, that we
would:
• Have a strong deposit franchise and dynamic organic
growth
• Scale and leverage our investments and infrastructure
• Drive low-cost funding in North Louisiana to build
earning assets in the strong growth markets of Houston,
Dallas and Fort Worth
• Maintain a low expense environment in North Louisiana
to drive operational efficiency
• Continue to execute on our lift-out strategy
• Drive up profitability in Texas through scaling earning
assets
• Implement an opportunistic M&A strategy
ORGANIC GROWTH
Our successful growth has always been about relationships.
Origin’s philosophy is that our success comes from having
the right people. We have high-quality bankers who attract
high-quality relationships throughout our markets. This is
evident as you look at our dynamic, organic loan growth
over the past five years. Excluding loans generated by
the Paycheck Protection Program (PPP) and Mortgage
Warehouse, our teams have delivered more than 50%
organic loan growth with a compound annual growth
rate of more than 10% for that same five-year period.
For 2021 specifically, loan growth excluding PPP and
Mortgage Warehouse increased more than $400 million, or
approximately 10%.
Our deposit growth has been equally as impressive. Core
deposits remain at the center of how we define and value
loyal client relationships, and we continue to emphasize this
philosophy with our bankers. In 2021, our teams responded
by growing average core deposits by $1.37 billion, or
30%. Of that growth, noninterest-bearing deposits grew
more than $556 million, or 35%. This consistent growth is
a reflection of the deep commitment that we have to our
relationship-based business model.
TEXAS GROWTH STORY
The main driver of our successful growth has been the
expansion of our Texas franchise. At year-end, 59% of our
loans held for investment, excluding PPP and Mortgage
Warehouse, and 48% of our deposits were attributed to our
Texas footprint. With 19 locations throughout Dallas, Fort
Worth and Houston, Origin is in a very strong position to
leverage our existing infrastructure in the fourth and fifth
largest MSA’s in the country.
As I look back over the past five years in Texas, we have a
compound annual loan growth rate of more than 21% and
a compound annual deposit growth rate of more than 27%.
Our teams in these markets are committed to our culture
and are consistently delivering results. I am extremely
optimistic about our future in Texas.
CULTURE – THE COMPETITIVE ADVANTAGE
As I have often said before, our commitment to culture and
the way we consistently reinforce it gives us a competitive
advantage. In 2021, we were recognized by American
Banker magazine as the third “Best Bank to Work For”
in America. This is the ninth year in a row we have been
recognized by this publication and reflects the way our
culture has quantitative value. It is through this award-
winning culture that we are able to attract lift-out teams and
bankers who desire to be a part of a relationship-based,
customer-centric organization. This strategy has worked
well for our company, and in 2021, we were able to attract
new bankers throughout our markets who share our vision
for banking and create additional opportunities to drive
strong organic growth.
FOCUS ON TECHNOLOGY
FOCUS ON TECHNOLOGY
Our commitment to technology is a key part of our
company’s vision. We have long believed that combining
technology with our trusted advisor concept of banking
is what helps make us successful. Our investments in
technology will allow us to automate processes that
improve operational efficiencies, gather more meaningful
and actionable data, increase customer satisfaction and
drive long-term value. In 2021, we redesigned our website
to enhance our customers’ online experience and provide
a more personalized customer journey through responsive
technology. We have also advanced productivity through
robotic process automation. At year end, our team was
able to convert the equivalent of approximately 4,000 labor
hours to robotic processes. This type of forward thinking
remains a priority for us as we continue to find innovative
ways to be more efficient and productive.
EXPANDING REVENUE STREAMS
Origin made significant advances in the expansion of our
insurance business in 2021. We finalized the acquisition
of the remaining 62% of The Lincoln Agency, which gives
us full ownership of that company, and also closed on the
acquisition of Pulley-White Insurance Agency.
Combined with our other agencies, we expect to increase
current insurance revenue by approximately 20%, while
reducing operating expenses moving forward. These
strategic partnerships have been and will continue to be
key components in growing noninterest income.
INVESTING IN OUR PEOPLE
At Origin, we know that continually investing in the
development of our people is one of the reasons our
company is so dynamic. Our mission statement is
“to passionately pursue ways to make banking and
insurance more rewarding for our employees, customers,
communities and shareholders.” This mission involves all
four of our stakeholders, but employees are purposefully
listed first. Everything we do begins with our employees
and is driven by their commitment to the Origin culture and
to creating experiences that are lasting and valuable for our
stakeholders.
In 2021, we celebrated the graduation of our first class of
the Origin Leadership Academy. This program is a two-
year experience designed to enhance the knowledge, skills
and abilities of our future leaders. We also continued the
Emerging Leaders Council, which was created to identify,
develop and retain employees who are making a major
impact across our company. We also launched a formalized
internship program to provide young people an opportunity
to learn this business and understand the significance that
banking and insurance have in our communities. Through
our Dream Manager Program, Project Enrich, and many
other career development initiatives, we are focused on
investing in the future of this company and remembering
what makes Origin a special place—our people.
CONCLUSION
I look back on 2021 as a year where we strengthened our
company for long-term success. I am pleased with our
credit metrics and the leadership of our credit team. The
stability and resiliency of our portfolio continues to be
driven by our focus on relationship banking.
Our capital position has supported our organic growth while
allowing us to continue to build valuable partnerships. We
are in a strong posiston and we will take an opportunistic
approach in deploying our capital in ways we believe will
benefit our shareholders and drive long-term value.
The focused execution of our strategic plan allowed us
to deliver tremendous results in 2021. We produced
impressive, organic loan growth and took advantage of
dislocation in the market. We remained disciplined in
managing our expense structure and made improvements
to our already strong credit quality. While leveraging our
unique culture, we attracted highly talented bankers to our
team and significantly grew our Texas franchise.
Origin’s success is a direct reflection of the incredible
employees that make up this organization. It is their
commitment to our culture, execution of our strategic plan
and unwavering loyalty to the company that make this such
a special place to work. We have so much to look forward
to in the upcoming year, and I believe that our best days are
still ahead.
On behalf of our management team and board of directors,
thank you for your investment and trust in Origin Bancorp,
Inc.
Origin has always believed that relationships are at the center of our
business and that our culture defines our success.
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
2021
2020
Net Interest Income
$
216,252
$
191,536
Provision for Credit Losses
Noninterest Income
Noninterest Expense
Net Income
SUMMARY BALANCE SHEET
(10,765)
62,193
156,779
108,546
59,900
64,652
151,935
36,357
Total Loans Held for Investment
$
5,231,331
$
5,724,773
Total Assets
Total Deposits
7,861,285
7,628,268
6,570,693
5,751,315
Total Stockholders’ Equity
730,211
647,150
PER COMMON SHARE DATA
Diluted Earnings Per Common Share
$
4.60
$
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
0.49
30.75
1.45%
15.79%
11.36%
14.77%
0.3775
27.53
0.56%
5.82%
10.11%
13.79%
PROXY STATEMENT AND NOTICE OF
2 22
ANNUAL MEETING OF STOCKHOLDERS
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS 500 South Service Road East, Ruston, Louisiana 71270
March 15, 2022
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 27, 2022. The Annual Meeting will
begin promptly at 12:00 p.m., Central Time.
On or about March 15, 2022, we mailed a Notice of Internet Availability of Proxy Materials to all
stockholders of record at the close of business on March 8, 2022, 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.
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 MEETING INFORMATION
Notice of
Annual Meeting of
Stockholders
VOTING ITEMS
Date:
April 27, 2022
Time:
12:00 p.m.,
Central Time
Format: Virtual
Record Date: Close of
business on March 8, 2022
1. Elect 13 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 2021 (the “Say-On-Pay Proposal”);
3. Ratify the appointment of BKD, LLP as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2022; and
4. 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 register.proxypush.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 27, 2022, 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 of Directors (“Board”) has fixed the close of business on March 8, 2022, as the record
date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting
(the “Record Date”). 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
| 2022 Proxy Statement Important Notice Regarding the Availability of Proxy Materials for the 2022 Annual Meeting of
Stockholders to be held virtually on April 27, 2022. 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 15, 2022
v
2022 Proxy Statement | TABLE OF CONTENTS
iii
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
1 PROXY STATEMENT
2 ABOUT THE ANNUAL MEETING
10 PROPOSAL 1: ELECTION OF DIRECTORS
10 Director Nominees
11 Director Nominee Qualifications and Experience
17 Board Diversity
18 2021 Named Executive Officers
20 CORPORATE GOVERNANCE
20 Board Leadership Structure
21 Director Independence
22 Director Education and Self-Assessment
22 Board Meetings and Committees
31 Human Capital Management
33 Stockholder Nominees and Proposals for 2022
Annual Meeting
35 Certain Relationships and Related Transactions
37 Director Compensation
40
COMPENSATION DISCUSSION AND
ANALYSIS
40 Overview
40 Business and Financial Highlights
43 Key Compensation Committee Actions in 2021
44 Executive Compensation Philosophy
44 Compensation Best Practice
45 Say-On-Pay and Stockholder Outreach
45 Role of Compensation Committee, Compensation
Consultant and Chief Executive Officer
46 Competitive Benchmarking and Compensation Peer
Group
47 Discussion of Executive Compensation Components
54 Other Compensation Policies and Information
54 Risk Assessment
55 Clawbacks for Any Restatement; Executive
Compensation Recovery Policy
55 Trading Restrictions regarding Hedging or Pledging
of Common Stock
56 Report of Compensation Committee
57 Executive Compensation Tables
58 Outstanding Equity Awards at Fiscal Year-End
59 Option Exercises and Stock Vested
59 2012 Stock Incentive Plan
60 Supplemental Executive Retirement Plan and
Executive Supplemental Income Agreement
62 Life Insurance Plans
63 Employment Arrangements, Change in Control
Agreements, and Potential Payments Upon
Termination or Change In Control
71 Chief Executive Officer Pay Ratio
72
74
PROPOSAL 2: ADVISORY VOTE ON
SAY-ON-PAY PROPOSAL
PROPOSAL 3: RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
75 OTHER INFORMATION
75 Stock Ownership of Principal Stockholders, Directors
and Management
76 DELINQUENT SECTION 16(A) REPORTS
77 ANNUAL REPORT ON FORM 10-K
78 HOUSEHOLDING OF PROXY MATERIALS
vi
| 2022 Proxy Statement 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
2022 Annual Meeting of Stockholders
to be held virtually on April 27, 2022
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 Stockholders to be held virtually on Wednesday, April 27, 2022,
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 2022 Annual Meeting of
Stockholders to be Held Virtually on April 27, 2022
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, 2021, 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 15, 2022, to all stockholders of record entitled to vote at the Annual Meeting at the
close of business on March 8, 2022. You should read our entire proxy statement carefully before voting.
1
2022 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 13)
To elect 13 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 13 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 72)
We are seeking a non-binding advisory vote from our stockholders to approve the
compensation paid to our NEOs in 2021, as described in the Compensation Discussion
and Analysis section and the executive compensation tables that follow, beginning on
page 40 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: Ratification of Independent Registered Public Accounting Firm (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, 2022, 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, 2022.
Our Board’s
Recommendation
FOR each
Director
Nominee
FOR
FOR
Stockholders will also transact any other business that may properly come before the Annual Meeting
or any adjournment or postponement thereof.
2
| 2022 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 27, 2022.
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 8, 2022, 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 Annual Meeting an email will be sent to the email address you provided during registration with a
unique link to the virtual Annual Meeting.
You may vote or submit questions during the Annual Meeting by following the instructions available
on the meeting website during the Annual 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 Annual 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 the Record Date, March 8, 2022,
may vote at the Annual Meeting. As of the Record Date, we had 23,748,748 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 by such stockholder on the Record Date. We do not have
cumulative voting rights for the election of directors.
3
2022 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 Annual 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 27, 2022, 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
| 2022 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 26, 2022, to be counted at the Annual Meeting. If
voting shares of common stock held in our 401(k), you must vote via Internet or telephone by no later
than 11:59 p.m., Central Time, on April 24, 2022. If voting shares of common stock held in our Employee
401(k) via mail, the Company must receive your proxy via mail no later than April 24, 2022, 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, your bank, broker or
other nominee will be permitted to exercise its own voting discretion with respect to the ratification of
the appointment of BKD, LLP (Proposal 3), but will not be permitted to exercise voting discretion with
respect to any of the other proposals being voted on at the Annual Meeting.
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 bank,
broker, 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 common stock 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 bank, broker, or other nominee holding shares of common stock
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 for the fiscal year
ending December 31, 2022 (Proposal 3). 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
2022 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 26, 2022, to be counted at the Annual Meeting. If
voting shares of common stock held in our Employee 401(k), you must vote via Internet or telephone
by no later than 11:59 p.m., Central Time, on April 24, 2022. If voting shares of common stock held
in our Employee 401(k) via mail, the Company must receive your proxy via mail no later than April 24,
2022, 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 bank, broker, 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 the ratification of the appointment of BKD, LLP to serve as our independent
registered public accounting firm for the fiscal year ending December 31, 2022;
Proposal 1
Proposal 2
Proposal 3
6
| 2022 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 for the fiscal year ending December 31,
2022 (Proposal 3).
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), and (iii) the ratification of BKD, LLP’s
appointment as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2022 (Proposal 3). 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), and (iii)
the ratification of BKD, LLP’s appointment as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2022 (Proposal 3), 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
2022 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 15, 2022, 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
| 2022 Proxy Statement ABOUT THE ANNUAL MEETING
ABOUT THE ANNUAL MEETING
• Obtain directions to attend the virtual 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
2022 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 13 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 each 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 of the Board,
our Board, which currently consists of 12 directors, has nominated each of the 12 incumbent directors,
along with a new director nominee, Daniel Chu, to serve as directors for 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 director nominees 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 director 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 its committees.
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 director 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.
10
| 2022 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominee Qualifications and Experience
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, the Company’s principal subsidiary (or, in the case of the new director
nominee, will be a director of the Bank), for so long as they are directors of the Company. Mr. Chu was
recommended to the Nominating and Corporate Governance Committee as a director nominee by the
Company’s Chief Executive Officer (“CEO”), Drake Mills.
Director Nominee
Background
Qualifications
Daniel Chu
Independent
Founder, CEO &
Chairman of Tricolor
Holdings
Age(1): 58
New Director Nominee
James D’Agostino, Jr.*
Independent
Managing Director of
Encore Interests LLC
Chairman of the Board
of Directors of Houston
Trust Company
Age(1): 75
Director Since 2013
Board Committees:
• Audit Committee
• Finance Committee
(Chair)
• Nominating and
Corporate Governance
• Risk Committee
With over twenty-five years’ experience in
the auto finance industry, Daniel Chu brings
an unprecedented track record in financial
services targeting the underserved Hispanic
consumer. Previously, he has distinguished
himself as a successful serial entrepreneur,
having founded six companies over the past
thirty years. Prior to his current role, Chu
founded two other firms in the auto financial
services industry which became publicly
traded. He has served in the capacity of
CEO with seven different companies. Chu
graduated from St. Mark’s School of Texas
and following graduation from college, Chu
coached basketball at the intercollegiate level
for seven years.
Mr. D’Agostino, Jr. 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.
• B.S. in Electrical
Engineering from
Washington University
• M.S.in Athletic
Administration from the
University of Miami
• Mr. Chu’s entrepreneurial
and management
experience make him a
valuable asset to our Board
• B.S. in Economics from
Villanova University
• 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 enables him to
make valuable contributions
to our Board
11
2022 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominee
Background
Qualifications
• B.S. from Louisiana Tech
University
• Mr. Davison, Jr.’s
management experience
in the energy and
transportation industries
and his work as a director of
a publicly-traded enterprise
enables him to make
valuable contributions to
our Board
• B.S. from Alcorn State
University
• J.D. from Mississippi
College School of Law
• Ms. Edney’s litigation
experience and immersion
in the medical industry
provides valuable
knowledge and expertise to
our Board
James Davison, Jr.
Director for Genesis
Energy, L.P.
(NYSE: GEL)
Age(1): 55
Director Since 1999
Board Committees:
• Finance Committee
• Risk Committee (Chair)
A. La’Verne Edney
Independent
Litigation Partner at
Butler Snow, LLP
Age(1): 55
Director Since 2021
Board Committees:
• Nominating and
Corporate Governance
• Risk Committee
Mr. Davison, Jr., has served as a director for
Genesis Energy, L.P. (NYSE: GEL) since 2007,
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.
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 the American
College of Trial Lawyers, the International
Academy of Trial Lawyers and the International
Society of Barristers. She is also a Fellow of
the American Board of Trial Advocates and
currently serves as Vice-President and has
served on the faculties 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 was recognized by Chambers
USA in 2020-2021 and has been named as
one of the Best Lawyers in America in the
area of Mass Torts/Class Actions in each year
since 2016. She received the Capital Area
Bar Association’s Professionalism Award in
2021 and the Mississippi Women Lawyers
Association’s Lifetime Achievement Award
in 2019, and was chosen as Lawyer of the
Year and Distinguished Alumni Lawyer by
Mississippi College School of Law in 2018.
Ms. Edney serves on numerous boards and
committees including the Board of Trustees
of Mississippi College; the Mississippi Bar
Foundation board; the Magnolia Speech
School board; the Baptist Hospital Board of
Regents; and the Greater Jackson Chamber
board. Additionally, she served as the
President of the Mississippi Bar Foundation
from 2019-2020.
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| 2022 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominee
Background
Qualifications
Meryl Farr
Independent
President and Owner of
KRM
Managing Co-Owner and
CEO of Neighbors, LLC
Age(1): 33
Director Since 2021
Board Committees:
• Audit Committee
• Finance Committee
Richard Gallot, Jr.
Independent
President of Grambling
State University
Director for Cleco
Corporation
Age(1): 55
Director Since 2019
Board Committee:
• Compensation
Committee
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 has been an Advisory Board Member
for Origin Bank since 2012.
Mr. Gallot, Jr. has served as President of
Grambling State University since 2016, 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 is licensed to practice law. 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.
• B.A. in International Affairs
from the University of
Georgia with a minor in
Spanish
• Ms. Farr’s innovative and
entrepreneurial business
approach, ownership, and
leadership, as well as her
community involvement,
provides a valuable skill set
to our Board
• B.A. in History from
Grambling State University
• J.D. from Southern
University Law School
• Mr. Gallot, Jr.’s experience
in professional and political
leadership positions and his
legal acumen enables him
to be a valuable contributor
to our Board
13
2022 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominee
Background
Qualifications
Stacey Goff
Independent
Executive Vice President &
General Counsel for
Lumen Technologies, Inc.
(NYSE: LUMN)
Age(1): 56
Director Since 2020
Board Committees:
• Compensation
Committee
• Nominating and
Corporate Governance
Michael Jones
Independent
Certified Public
Accountant
Certified Fraud Examiner
Age(1): 66
Director Since 1991
Board Committees:
• Audit Committee
• Compensation
Committee
• Nominating and
Corporate Governance
(Chair)
Gary Luffey
Independent
Partner at the Green
Clinic
Age(1): 67
Director Since 2017
Board Committees:
• Compensation
Committee
• Risk Committee
14
Mr. Goff currently serves as Executive Vice
President & General Counsel for Lumen
Technologies, Inc. (NYSE: LUMN) (“Lumen”)
where he is responsible for Lumen’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 Lumen has completed during the past 20
years. Mr. Goff also directs the negotiation
of Lumen’s complex agreements and large
dispute resolutions with third parties and leads
Lumen’s legal affairs.
• B.A. in Business from
Mississippi State University
• J.D., magna cum laude from
University of Mississippi
• Mr. Goff’s experience
in public company
corporate governance and
compensation, in addition
to his legal expertise,
enables him to provide
great value to our Board
Mr. Jones 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.
• B.S. from Louisiana Tech
University
• Certified Public Accountant
(licensed in Louisiana)
• Mr. Jones’ ties within the
local community, business
experience and accounting
knowledge qualify him to
serve on our Board
Dr. Luffey has been an eye surgeon for over
35 years, 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.
• B.S in Biology from
University of Louisiana
Monroe
• M.D. from Louisiana State
University-Shreveport
• Ophthalmology Residency
with Louisiana State
University-Shreveport
• Fellow American Board
Ophthalmology
• 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
| 2022 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominee
Background
Qualifications
Farrell Malone
Independent
Certified Public
Accountant
Audit Committee
Financial Expert
Age(1): 69
Director Since 2013
Board Committees:
• Audit Committee
(Chair)
• Finance Committee
• Nominating and
Corporate Governance
Committee
• Risk Committee
Drake Mills
Chairman, President and
Chief Executive Officer
for Origin Bancorp
Age(1): 61
Director Since 2012
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.
• B.S. in Accounting from
Louisiana State University
• Mr. Malone brings to our
Board extensive accounting,
management, strategic
planning, risk assessment
and financial skills, which
are important to the
oversight of our financial
reporting, enterprise
and operational risk
management operations
• B.S. in Finance from
Louisiana Tech University
• 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
Mr. Mills is our Chairman, President and
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.
15
2022 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
Director Nominee
Background
Qualifications
• B.A. in Communication
from Emerson College
• M.A. in Communication
from Purdue University
• Earned the NACD
Governance Fellow status,
which requires continuing
education in corporate
governance
• Ms. Solender’s real estate
acumen, human resources
knowledge, nonprofit
experience and extensive
involvement in the North
Texas community make her
a valuable addition to our
Board
• Attended North East
Louisiana University
• Mr. Taylor’s business
experience in various
companies and unique
viewpoints obtained in his
successful enterprises make
him a valued member of
our Board
Ms. Solender 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 North Texas 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. Her other board
service includes The Real Estate Council
Community Investors Board, Advisory Board
Chair for Lost Oak Winery, and Meadows
Museum Advisory Council. The Dallas
Business Journal has named her one of the
top 25 Women in Business in the Dallas/Fort
Worth area and in 2019 Bisnow named her
a Power Woman in commercial real estate.
Ms. Solender is a past national president of
Commercial Real Estate Women (“CREW”)
Network and past chair of the National
Association of Corporate Directors (“NACD”)
North Texas Chapter.
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.
Elizabeth Solender
Independent
President of Solender/
Hall, Inc.
Age(1): 70
Director Since 2016
Board Committees:
• Compensation
Committee (Chair)
• Nominating and
Corporate Governance
Committee
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,
Age(1): 68
Director Since 2016
Board Committees:
• Compensation
Committee
• Finance Committee
(1) Ages as of March 7, 2022
16
| 2022 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
Board Diversity
The Company and the Board believe the diversity reflected in the communities we serve must be
represented in the composition of the Board itself and is integral and necessary to the effective and
successful functioning of the Company’s operations. We believe the members of our Board are well-
qualified and reflect the diversity within our marketplace including being representative of the age,
gender, race, experience and expertise. The table below discloses the demographic mix of our Board
as of December 31, 2021.
Total Number of Directors
12
Board Diversity Matrix (As of December 31, 2021)
Female
Male
Non-Binary
Did Not Disclose
Gender
Part I: Gender Identity
Directors
Part II: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographic Background
Stockholder Approval
3
1
2
9
1
8
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 13 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 13 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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2022 Proxy Statement | PROPOSAL 1. ELECTION
OF DIRECTORS
2021 Named Executive Officers
The biographical information set forth below outlines the background and experience of the Company’s
NEOs who do not also serve on the Company’s Board.
NEO
Stephen Brolly
Senior Executive Officer
and Chief Financial
Officer
Age(1): 59
M. Lance Hall
President and Chief
Executive Officer of
Origin Bank
Age(1): 48
Background
Qualifications
• B.S. in Accounting from
Drexel University
• Licensed Certified Public
Accountant (1988)
• B.S. in Managerial
Finance from the
University of Mississippi
• Graduate of The
Graduate School of
Banking at Louisiana
State University
Mr. Brolly has approximately 23 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 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.
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 22 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.
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| 2022 Proxy Statement PROPOSAL 1. ELECTION
OF DIRECTORS
PROPOSAL 1. ELECTION
OF DIRECTORS
NEO
Jim Crotwell
Senior Executive Officer
and Chief Risk Officer
Age(1): 63
Preston Moore
Senior Executive Officer
and Chief Credit and
Banking Officer
Age(1): 61
(1) Ages as of March 7, 2022.
Background
Qualifications
• B.S. in Accounting
from the University of
Louisiana at Monroe
• Certified Public
Accountant - Inactive
• B.A. in Political Science
at Washington and Lee
University
• MBA in Finance at the
University of Texas
Mr. Crotwell joined Origin Bank in 2012 and
has held various positions of ever-increasing
responsibility beginning with managing the
middle market division in northeast Louisiana
and continuing to his currently held position of
Chief Risk Officer for the bank, a role he has
held since December 2019. Mr. Crotwell began
his professional career in public accounting and
then transitioned to banking in 1983 when he
began a 15-year career with Central Bank and its
successor, First Commerce Corporation, serving
in various roles including Manager of Credit
Analysis, Commercial Lender, and Loan Review
Manager. In 1998, he joined Hibernia Bank which
was acquired by Capital One, ultimately managing
Business Banking for North Louisiana and serving
as Northeast Louisiana’s Market President. Over
the years, Mr. Crotwell has held various positions
at several community organizations including
United Way of Northeast Louisiana serving as Board
Chairman; Monroe Chamber of Commerce serving
as Board Member and on Finance Committee,
Ouachita Council on Aging serving as Board
Member and Treasurer, Rays of Sonshine serving as
Board Member and Treasurer, and Monroe Youth
Baseball serving as a coach and League VP.
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 38 years, and he
has a vast wealth of financial knowledge. Mr. Moore
formerly served as a board member for the Harris
County Improvement District No. 12, 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.
19
2022 Proxy Statement | CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
• 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-evaluations 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 11 of our anticipated 13 directors, or Messrs. Chu, 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 and Business Conduct Policy (“Ethics Policy”) in place that applies to all of
our directors, officers and employees. The Ethics Policy 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
Ethics Policy, 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 Ethics Policy, 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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2022 Proxy Statement | CORPORATE GOVERNANCE
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 2021, 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 the 2021 insurance outlook, compensation best practices,
asset impairment and financial reporting, Environmental, Social & Governance (“ESG”) topics, and
corporate governance were completed by individual directors and Ms. Solender attended the Bank
Director Conference on Compensation. Training was conducted by qualified employees regarding the
Bank Secrecy Act and fair lending practices and risks, among other topics. In addition to presentations,
our Board subscribes to bankdirector.com and Mr. D’Agostino, Dr. Luffey 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 of our directors
attended the 2021
annual meeting of
stockholders
It is our policy to
invite all directors
and nominees for
director to attend the
Annual Meeting
Our Board met six
times during the 2021
fiscal year (including
regularly scheduled
and special meetings)
During the 2021
fiscal year, each
of the directors
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)
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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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 Committee,
a Finance Committee, a Nominating and Corporate Governance Committee, and a Risk Committee, each
of which has the composition and responsibilities described below. 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 Restated Articles
of Incorporation (the “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
Ms. Farr. 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, 2021.
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2022 Proxy Statement | CORPORATE GOVERNANCE
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 function;
• Overseeing our compliance with applicable laws and regulations;
• Overseeing our risk management function related to financial reporting;
• Overseeing our procedures for receipt, assessment and handling of complaints regarding accounting,
internal accounting controls or auditing matters;
• Overseeing concerns regarding questionable accounting and auditing, including submissions made
by employees pursuant to the Ethics and Compliance Reporting (Whistleblower) Policy; and
•
Investigating matters pertaining to the adherence to the Ethics Policy or other standards of business
conduct, as such are related to accounting, auditing, financial reporting or internal control functions.
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 fiscal year ending December 31,
2022. BKD, LLP served as the Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2021, 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 must pre-approve engagements for audit and non-audit services to be rendered
by the Company’s independent registered public accounting firm and the fees and terms of each such
engagement. Pre-approval may be given as part of the Audit Committee’s approval of the scope of an
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.
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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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, 2021 and 2020, 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
Total
Years Ended December 31,
2021
$ 614
28
—
—
$ 642
2020
$ 576
90
—
—
$ 666
(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 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 during the 2021 and 2020 audit years and review and consent
procedures during the 2020 audit year relating to our prospectus supplement filed under the Securities Act.
During the fiscal year ended December 31, 2021, 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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2022 Proxy Statement | CORPORATE GOVERNANCE
Report by Audit Committee
The Audit Committee has reviewed and discussed with management of the Company and BKD, LLP,
the Company’s independent registered public accounting firm, the audited financial statements for the
fiscal year ended December 31, 2021, management’s assessment of the effectiveness of the Company’s
internal control over financial reporting, and BKD, LLP’s evaluation of the effectiveness of the Company’s
internal controls over financial reporting. The Audit Committee has discussed with BKD, LLP the matters
required to be discussed by applicable requirements of the Public Company Accounting Oversight Board
(“PCAOB”) and the SEC. The Audit Committee has also received the written disclosures and the letter
from BKD, LLP 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 BKD, LLP 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, 2021.
THE AUDIT COMMITTEE
Farrell Malone (Chair)
James D’Agostino, Jr.
Meryl Farr
Michael Jones
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 Securities Exchange Act of 1934, as amended (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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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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 eight meetings during the
fiscal year ended December 31, 2021.
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 officer’s 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;
• 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. Additionally, assessing whether any risks arising from compensation
practices, policies and programs for employees are reasonably likely to have a material adverse
effect on the Company;
• Reviewing and approving the implementation or revision of any clawback policy allowing the
Company to recoup compensation paid to executive officers and other employees;
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2022 Proxy Statement | CORPORATE GOVERNANCE
• Approving or making recommendations to the Board with respect to the adoption or modification
of policies regarding the pledging or hedging of Company stock, if any, and monitoring compliance
with respect to any adopted policy on pledging and hedging;
• Providing strategic review of the Company’s human resources strategies and initiatives to ensure the
Company is seeking, developing and retaining human capital appropriate to the Company’s needs;
• Establishing and monitoring compliance with any stock ownership and holding guidelines of the
Company that are applicable to executive officers; and
• Reviewing and establishing compensation for non-executive directors.
Compensation Committee Interlocks and Insider Participation
No members serving on the Compensation Committee during 2021 were officers or employees of the
Company or any of its subsidiaries.
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 sessions. 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.”
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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Nominating and Corporate Governance Committee
The current members of our Nominating and Corporate Governance Committee are Messrs. Jones
(Chair), D’Agostino, Jr., Goff, Malone and Mses. Edney and 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 five meetings during the fiscal year ended December 31, 2021.
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:
• 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 Ethics Policy 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, which is the
responsibility of the Audit Committee.
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.”
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2022 Proxy Statement | CORPORATE GOVERNANCE
Finance Committee
The current members of our Finance Committee are Messrs. D’Agostino, Jr. (Chair), Davison, Jr.,
Malone, Taylor and Ms. Farr. The Finance Committee met four times in 2021. 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.”
Risk Committee
The current members of the Risk Committee are Messrs. Davison, Jr., (Chair), D’Agostino, Jr., Luffey,
Malone, and Ms. Edney. The Risk Committee held five meetings in 2021.
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 Chief Risk Officer, Jim Crotwell. Our Board
believes an effective enterprise risk management system is necessary to ensure the successful, safe and
sound management of the Company. 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;
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CORPORATE GOVERNANCE
• 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.”
Human Capital Management
As of December 31, 2021, we employed 797 full-time equivalent 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 Centers for Disease Control and
Prevention (“CDC”) recommended pandemic safety protocols to prevent the spread of the virus among
our employees and customers. 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. 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. While
many of these policies have shifted and changed in response to the fluid nature and characteristics of
the pandemic itself, we continue to focus on the mental, emotional and physical health of our employees
by maintaining ongoing communication regarding changes in CDC safety recommendations 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.
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Employee Engagement
We have a Dream Manager® program that assists our employees in meeting their own personal and
professional goals in addition to helping them improve physically, emotionally, intellectually, and
spiritually. We launched a nationally-recognized financial wellness program(“SmartDollar”) in the first
quarter of 2021 that is designed to assist our employees in becoming debt-free and saving money for
emergencies and retirement, empowering them to become better financially prepared for their future
and already have a 36% participation rate. Due to our adoption rate, we won a national award from
the Dave Ramsey Foundation called the “Vision” award. Also in 2021, we hired a certified Holistic
Health Coach to spearhead our Health & Wellness initiatives. He already has approximately 10% of our
employee base signed up to begin making needed changes in their desire to be healthier. Additionally,
in one specific initiative designed to help out the communities we serve, our Project Enrich program
provides employees with up to twenty hours of paid time off to volunteer in their communities. In 2021,
the employees of Origin volunteered 1,687 hours in the community during bank time, not including
many more on personal time.
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 10%
of Glint’s global customer base with regard to employee engagement. We regularly receive hundreds
of written comments each quarter that in turn are used to improve processes, policies, or programs
in an effort to show tangible affirmation of those comments. We also continued a practice that was
implemented at the beginning of the pandemic called “The Origin Insider”. This webinar event occurs
monthly and features speakers (internal and external) for our work-from-home and work-from-work
employees. The employees are able to submit questions for the speakers in advance of the webinar.
Talent Development
Talent development at Origin begins with our comprehensive recruitment program and continues
throughout the employee life cycle. Beginning in 2021, we implemented the Giving Interns Valuable
Experience (g.i.v.e.) program, and welcomed a very diverse (both in gender and race) group of 12
interns from 10 different universities. The program was successful at promoting Origin’s brand and
resulted in strong experiential feedback while also creating job opportunities for 3 of the 12 interns.
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. Beginning in 2021, we are piloting a
program called “Career Manager” in which we focus on small groups of young professionals and spend
dedicated time one-on-one with them to enhance their career aspirations and help them understand
the business of banking faster than they normally would. This also helps with retention. 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.
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CORPORATE GOVERNANCE
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.
In order to support and live our culture, the Company’s talent acquisition team attends job fairs that
attract ethnically and culturally diverse employees. We also have a partnership with Circa, a workforce
development company that utilizes a connected system of job recruiting sites that post our employment
opportunities with various community partners that include: veterans, LGBTQ-identifying individuals,
individuals with disabilities, minorities and women, professional and industry organizations, skilled
trade associations and college students. Also, we have a formal internship program that is designed
to develop a strong pool of diverse candidates through on-campus recruiting with local colleges and
universities including local Historically Black Colleges and Universities. Additionally, all employees
participate in diversity training and managers have additional, in-depth training on recognizing
unconscious biases and access to brand new micro learning lessons every week to help respond to
current needs around diversity and inclusion.
Also, we recently rolled out VIBE Central in Workday. VIBE stands for Value, Inclusion, Belonging and
Equity. This allows senior leaders in our organization to set goals and monitor progress by assessing,
measuring, benchmarking, and managing diversity and inclusion by the dimensions of their choice,
such as race/ethnicity and gender.
It is because of our focused initiatives that Origin has been named one of America’s “Best Banks to
Work For” for nine 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 fifteen 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 2023 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 2023 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 16, 2022. However, if
the date of the 2023 annual meeting of stockholders is changed by more than 30 days from April 27,
2023, 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 2023 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 2023 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 28, 2022, and no later than January 27, 2023. If the 2023
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2022 Proxy Statement | CORPORATE GOVERNANCE
annual meeting is not called for a date that is within 30 days of April 27, 2023, 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.
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.
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CORPORATE GOVERNANCE
Certain Relationships and Related-Party 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 Ethics Policy provides guidance for addressing actual or potential conflicts of 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.”
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2022 Proxy Statement | CORPORATE GOVERNANCE
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, 2021, 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.
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, 2021, we had approximately $471,000 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 $833,000 in unfunded loan commitments to these persons. As of December 31, 2021,
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.
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. 49% 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 $6,000 to Ruston Aviation,
Inc. for the fiscal year ended December 31, 2021, including the Bank’s portion of shared operating
costs in connection with its joint ownership of the aircraft.
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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
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, 2021, we paid approximately $108,000 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,
2021, 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, 2021, in connection with
this lease.
Lincoln Agency Lease
Effective December 31, 2021, the Company acquired all of the outstanding ownership interests in The
Lincoln Agency, LLC (“Lincoln Agency”), an insurance agency headquartered in Ruston, Louisiana.
Since 2005, Lincoln Agency has leased an office condominium for its corporate headquarters, located
at 504 South Service Road East, Ruston, Louisiana, from MNG Properties, L.L.C. (“MNG”), which was
renewed most recently on February 1, 2021 for a ten-year term. Our Chairman and CEO, Drake Mills,
owns 33.3% of MNG. During 2021, Lincoln Agency paid MNG an aggregate of $151,104 in lease
payments. Under the terms of the lease agreement, total future minimum lease payments to MNG
were approximately $1.4 million as of March 1, 2022.
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 is used by the Compensation Committee to review the compensation of senior management. No
changes were made to director compensation in 2021.
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2022 Proxy Statement | CORPORATE GOVERNANCE
The following table summarizes the committee and other fees/benefits paid to non-employee directors
during the year ended December 31, 2021:
Cash and Equity Retainers:
Retainer per director
Equity-based awards per director(1)
Lead independent director
Committee Service Fees:
Audit
Compensation
Finance
Nominating and Corporate Governance
Risk
Committee
Member Fee $
Committee
Chair Premium $
Other Annual
Fees/Benefits $
—
—
—
6,000
4,000
2,000
2,000
2,000
—
—
—
12,000
8,000
4,000
4,000
4,000
29,000
36,000
16,000
—
—
—
—
—
(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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| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
The following table summarizes the total compensation paid by the Company to non-employee
directors for the fiscal year ended December 31, 2021:
Name
James S D’Agostino, Jr.
James E Davison, Jr.
A. La’Verne Edney
Meryl Farr
Richard J Gallot, Jr.
Stacey Goff
Michael Jones
Gary E Luffey
Farrell J Malone
F. Ronnie Myrick(3) (4)
George M Snellings, IV(3)
Elizabeth Solender
Steven Taylor
Fees Earned or
Paid in Cash(1)
$
Stock Awards(2)
$
61,541
39,541
22,000
24,667
35,541
35,541
45,541
37,541
53,541
11,000
14,874
43,541
40,208
36,014
36,014
36,014
36,014
36,014
36,014
36,014
36,014
36,014
—
—
36,014
36,014
Total
$
97,555
75,555
58,014
60,681
71,555
71,555
81,555
73,555
89,555
11,000
14,874
79,555
76,222
(1) Amount includes the payment of dividends during the fiscal year ended December 31, 2021, on restricted stock awarded to the directors
in conjunction with their service on the Board.
(2)
The amounts shown in this column reflect restricted stock awards granted to the directors during 2021 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, 2021, included in our Annual Report on Form 10-K.
(3) Mr. Myrick and Mr. Snellings, IV, did not stand for reelection at the 2021 annual stockholders meeting.
(4) 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 and he was awarded 1,850 shares of restricted stock in the first quarter of 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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2022 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The following discussion provides an overview and analysis of Origin’s compensation philosophy and
objectives, pay for performance alignment and the variables considered when making the compensation-
related decisions for Origin’s NEOs.
This discussion describes the components of the Company’s compensation program for its NEOs and
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, 2021.
2021 Business and Financial Highlights
In evaluating the Company’s overall executive compensation program and decisions, including payouts
under the 2021 programs and plan designs for our 2021 programs, the Compensation Committee
considered a number of factors, including the strategic and financial performance of the Company
in 2021.
Some specific highlights and key accomplishments considered by the Compensation Committee in its
decision-making process during 2021 included:
• Net income for the year ended December 31, 2021, was at a record high of $108.5 million compared
to $36.4 million for the year ended December 31, 2020. Pre-tax, pre-provision (“PTPP”) earnings
were the highest in our history at $121.7 million for the year ended December 31, 2021, compared
to $104.3 million for the year ended December 31, 2020. Additionally, our PTPP earnings excluding
PPP loans were $102.5 million for the year ended December 31, 2021, compared to $94.5 million
for the year ended December 31, 2020.1
• Return on average assets was 1.45% for the year ended December 31, 2021, compared to 0.56%
for the year ended December 31, 2020. PTPP return on average assets (“PTPP ROAA”) was 1.63%
for the year ended December 31, 2021, compared to 1.62% for the year ended December 31, 2020.
PTPP ROAA excluding PPP loans was 1.45% for the year ended December 31, 2021, compared to
1.56% for the year ended December 31, 2020.1
• Net income was $108.5 million for the year ended December 31, 2021, achieving a historic high
compared to $36.4 million for the year ended December 31, 2020.
• Total loans held for investment (“LHFI”) at December 31, 2021, excluding PPP loans and mortgage
warehouse lines of credit, were $4.50 billion, reflecting a $404.2 million, or 9.9% increase compared
to December 31, 2020.
• Total deposits grew $819.4 million, or 14.2%, to $6.57 billion at December 31, 2021, compared to
$5.75 billion at December 31, 2020. Noninterest-bearing deposits grew $555.9 million, or 34.6%,
compared to December 31, 2020, and represented 32.9% of total deposits at December 31, 2021.
• Total securities increased $480.6 million, or 45.6%, to $1.53 billion at December 31, 2021, compared
to $1.05 billion at December 31, 2020.
(1)
PTPP earnings and PTPP ROAA are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their comparable
GAAP measures, please see the Non-GAAP Financial Measures section below.
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| 2022 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
• We issued $11.5 million in common stock dividends to stockholders during the year ended
December 31, 2021.
• On December 31, 2021, the Company acquired the remaining 62% equity interest in The Lincoln
Agency, LLC bringing the Company’s total ownership to 100%. Additionally, the Company acquired
substantially all assets of the Pulley-White Insurance Agency, Inc. in Bossier City, Louisiana on
December 31, 2021.
• For the ninth consecutive year, Origin Bank was named one of the best banks to work for in the U.S.,
and Origin Bank was recognized as the third best bank to work for in the nation, by American Banker
and Best Companies Group, which identifies U.S. banks for outstanding employee satisfaction.
The chart below reflects another strong year of bank performance and compares the cumulative total
stockholder return on our common stock to the cumulative total stockholder return for the Nasdaq
Composite Index and the Nasdaq U.S. Benchmark Banks TR Index for the period beginning on
December 31, 2020, through December 31, 2021. 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, and the Nasdaq U.S. Benchmark Banks TR Index 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
Comparison of Cumulative Total Stockholder Return
$210
$180
$150
$120
$90
$60
12/31/20
03/31/21
06/30/21
09/30/21
12/31/21
Origin Bancorp, Inc.
Nasdaq U.S. Benchmark Banks TR Index
Nasdaq Composite Index
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2022 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
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
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, to be important measures of
financial performance as these provide 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 effect.
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)
2021
2020
December 31,
Net Income
Plus: provision for credit losses
Plus: income tax expense
PTPP Earnings
Minus: PPP loans interest income
PTPP Earnings excluding PPP loans
Total average assets
Minus: Average PPP loans
$ 108,546
$ 36,357
(10,765)
23,885
59,900
7,996
$ 121,666
$ 104,253
19,145
9,759
$ 102,521
$ 94,494
$ 7,470,927
$ 6,442,528
380,894
388,736
Total average assets excluding PPP loans
$ 7,090,033
$ 6,053,792
PTPP Earnings
Divided by: Total average assets
PTPP ROAA
$ 121,666
$ 104,253
7,470,927
6,442,528
1.63%
1.62%
PTPP Earnings excluding PPP loans
$ 102,521
$ 94,494
Divided by: Total average assets excluding PPP loans
7,090,033
6,053,792
PTPP ROAA excl. PPP loans
1.45%
1.56%
42
| 2022 Proxy Statement
COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Key Compensation Committee Actions in 2021
The Compensation Committee took several actions which are consistent with our determination to pay
for performance and align our incentive compensation metrics to key strategic initiatives.
• Emphasis on Pay-for-Performance: In 2021, the Compensation Committee refocused executives
on more objective financial measures by reducing the use of non-corporate financial measures within
the executive annual incentive program. The overall structure of the plan was modified to reduce
the individual scorecard component (previously 45%, reduced to 25% in 2021) while increasing
the use of objective financial measures (previously 55%, increased to 75% in 2021). We believe the
revised 2021 performance metrics more effectively align the interests of our NEOs with those of
stockholders by making a significant portion of their compensation contingent upon measurable
financial results beneficial to stockholders, and thereby incenting our NEOs to create long-term
value for stockholders.
• Realigned the Annual Bonus Program to Key Financial Measures: In 2020, the annual bonus
program design included 45% of the overall program weighted towards strategic initiatives and
“discretion.” The Compensation Committee evaluated stockholder responses feedback to the
program’s design and identified specific adjustments that would more effectively align the program
with the Company’s financial results while also making the plan easier to monitor and administer.
The Compensation Committee approved the addition of a profitability measure (net income)
weighted 25% to complement the return measure already included in the bonus program (PTPP
ROAA) that is weighted 30%. The Compensation Committee also evaluated the Risk Management
& Credit Quality evaluation within the 2020 plan and determined to specifically identify targets
for non-performing assets (“NPA”) and net charge-offs for 2021. Each credit quality measure is
weighted at 10%. These plan adjustments ensured that 75% of the 2021 bonus opportunity is
contingent upon achievement of specific targets as approved by the Compensation Committee
(an increase of 20% from the 2020 plan) with the remaining 25% of the bonus opportunity being
based on an individual scorecard that would consider individual performance and strategic goal
achievements.
• Rigorous Objective Performance Goals: The Compensation Committee reviewed both historic
projections, relative performance statistics and future financial performance forecasts when
approving each of the annual bonus goals.
• Limited Increase in Base Salaries or Target Bonus Percentages for our NEOs: While the majority
of our NEOs’ base salaries and target bonus percentages were not increased in 2021, the CEO
increased the base salary for Jim Crotwell, Chief Risk Officer, based upon additional responsibilities
assumed in conjunction with the retirement of the former executive risk officer. The increase was
reviewed by the Compensation Committee.
• Developed a Long-Term Incentive Compensation Strategy: In order to more effectively align our
NEOs’ total compensation opportunity with long-term stockholder value creation, the Compensation
Committee evaluated the Company’s long-term incentive compensation strategy in 2021. Prior
to 2021, our NEOs were provided periodic long-term incentives. In an effort to both align our
compensation practices closer to prevailing market trends as well as to increase the alignment
of executive officer compensation with stockholders the Compensation Committee approved
an equity grant in August 2021 with the intention of providing ongoing equity awards to certain
executives within the organization. The initial award was provided in the form of Restricted Stock
Units (“RSUs”) that will vest in three equal annual installments beginning in August 2022. Starting in
43
2022 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
February 2022, the Compensation Committee implemented a Long Term Incentive Plan (“LTIP”) as
a vehicle to grant annual equity to NEOs under the terms of our 2012 Stock Incentive Plan, with 50%
of the award granted in Performance Stock Units (“PSUs”) and 50% granted in RSUs.
Executive Compensation Philosophy
The quality and loyalty of our employees, including our executive team, is critical to executing our
community banking philosophy. To meet the primary goal of our executive compensation philosophy
of attracting, retaining and incenting highly qualified and loyal employees, our compensation programs
are designed using the following principles:
• 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 strategic organizational goals and stockholder value.
• Pay programs and practices reinforce our commitment to providing a work culture that promotes
respect, integrity, teamwork, inclusion, equity, initiative, and individual growth opportunities.
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.
Compensation Best Practice
Our executive compensation program incorporates many strong governance practices as shown below:
WHAT WE DO
WHAT WE DON’T DO
Executive compensation is tied to performance
through annual incentives with pre-established goals
having multiple financial and credit metrics.
We do not provide executives with “excise tax
gross-ups” in the event of a change in control.
We have retained an independent compensation
consultant that provides no other services to the
Company.
We conduct an annual risk review of compensation
programs and practices to ensure our plans do not
create risks that are likely to have a material adverse
impact.
We do not allow repricing of stock options without
stockholder approval.
We do not allow executive officers and directors to
engage in hedging transactions, and the pledging of
Company stock is restricted.
We maintain a clawback policy for incentive
compensation.
We do not provide excessive perquisites.
We require meaningful stock ownership by directors
and implemented stock ownership guidelines for
executives in February 2022.
We do not pay dividends on any restricted stock
units unless and until the units are fully earned and
vested.
Pay programs and practices reinforce our strong
work culture that promotes respect, integrity,
teamwork, initiative, inclusion, and individual growth
opportunities.
44
| 2022 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Say-On-Pay and Stockholder Outreach
At our annual meeting of stockholders in April 2021, stockholders signaled their support for our executive
compensation program where 65.3% of the total votes cast approved our 2021 Say-On-Pay proposal.
The Compensation Committee considers the outcome of our Say-On-Pay votes when reviewing the
objectives of our program and making future compensation decisions for the NEOs. The 2021 Say-on-
Pay vote result was lower than expected, and in response to the vote, members of management with
the support of the Compensation Committee reached out to stockholders owning more than 80% of
the common stock represented at the meeting to ask their opinions of our executive compensation
program. In response to our outreach, we received responses from stockholders representing more than
57% of our common stock represented at the meeting. Many of these were our largest stockholders of
which some voted in favor of our 2021 Say-on-Pay proposal and some voted against. The stockholder
outreach in which we engaged began before the 2021 Annual Meeting of Stockholders and continued
throughout the remainder of 2021. We engaged with stockholders on conference and video calls that
allowed stockholders to share their opinions of our executive compensation program as well as to
ask questions of the members of management on the calls. Stockholders were offered access to key
members of management, the chair of the Compensation Committee, the committee’s independent
compensation consultant, and our lead independent director. On these calls, stockholders engaged
in constructive and thought provoking conversation. The results of these calls were reported to
the Compensation Committee and the Board for consideration. During the outreach process, most
stockholders were generally in favor of our executive compensation and supported the core philosophies
of the program. A summary of the responses received are listed in summary below:
WHAT WE HEARD
HOW PROGRAMS WERE ADJUSTED:
The Short-Term Incentive Plan (STIP) should be more
metric driven
Lack of annual long-term equity awards
The Compensation Committee approved a new
STIP in which 75% of 2021 NEO incentive potential
is based on key measurable financial metrics with
the individual scorecard component reduced to 25%
(from 45% in 2020).
The Compensation Committee worked with
management and our compensation consultants
to develop an annual LTIP which utilizes RSUs and
PSUs. This was approved and awards were granted in
February 2022.
Role of Compensation Committee, Compensation Consultant and Chief
Executive Officer
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 and sets the CEO’s compensation, and reviews those of our other executive officers.
Additionally, the Compensation Committee generally considers the recommendations of the CEO with
respect to the compensation of the other NEOs. During 2021, the Compensation Committee engaged
Meridian Compensation Partners (“Meridian”), an independent executive compensation consultant,
for advice and perspective regarding executive compensation market trends and best practices.
45
2022 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
Role of the Compensation Consultant
Effective February 1, 2021, the Compensation Committee engaged Meridian as our independent
compensation consultant. During 2021, Meridian assisted the Compensation Committee with the
review of, and offered recommendations on, our 2021 Proxy Compensation Discussion and Analysis,
recommended potential changes to our Executive Incentive Plan design and metrics, and reviewed (i) the
addition of annual long-term equity awards to our executive compensation structure, (ii) the Executive
Stock Ownership guidelines approved in 2022, (iii) the impact of COVID-19 on 2021 incentive plans and
(iv) the 2021 Compensation Peer Group, as well as, provided current trends in executive compensation.
The results of these analyses were used as one of the factors to establish executive compensation for
2021. Meridian did not provide any non-compensation related services or products to the Compensation
Committee nor did it provide any services to the Board.
After evaluating information presented in accordance with SEC independence rules and Nasdaq listing
standards, the Compensation Committee concluded that Meridian was independent.
Role of Chief Executive Officer
Our CEO performs an annual performance review of executive officers of the Company and provides
a recommendation to the Compensation Committee regarding the compensation of each executive
under his or her Executive Incentive Plan. The CEO is present for the Compensation Committee’s
deliberations and decisions with respect to the other executive officers’ 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 the incentive payout to our Board for review.
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.
Based upon its analysis, the Compensation Committee approved the following 2021 Compensation Peer
Group, which was adjusted based on input from our compensation consultants. The Compensation Peer
Group is reviewed annually for continued appropriateness and included a number of modifications for
2021 including the removal of Atlantic Capital Bancshares Inc., First Bancorp, Franklin Financial Network
Inc., Guaranty Bancshares Inc., HomeTrust Bancshares Inc., Republic Bancorp Inc., SmartFinancial Inc.;
and the addition of Business First Bancshares, Inc., Independent Bank Group Inc., Renasant Corporation
and Trustmark Corporation.
Allegiance Bancshares Inc.
BancFirst Corp.
Business First Bancshares Inc.
Capital City Bank Group Inc.
CBTX, Inc.
Enterprise Financial Services Corp.
First Bancshares, Inc.
First Financial Bankshares, Inc.
Great Southern Bancorp Inc.
Independent Bank Group Inc.
Renasant Corporation
Seacoast Banking Corp. of Florida
ServisFirst Bancshares Inc.
Southside Bancshares Inc.
Stock Yards Bancorp Inc.
Triumph Bancorp Inc.
Trustmark Corporation
Veritex Holdings, Inc.
FB Financial Corp.
46
| 2022 Proxy Statement 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 2021 total compensation for our NEOs:
Compensation
Element
Base Salary
Objective
Characteristics
• Compensate executives for their level of
experience, responsibility and individual
performance
• Help attract and retain strong leadership
• Fixed component; evaluated annually
• Determined by factors such as executive’s
job responsibilities, sustained performance
in role/potential and internal equity
talent
Short-Term
Incentive Plan
• Promote achieving our annual financial
goals, as well as other objectives deemed
important to our long-term success
• Align management and stockholder
interests
Long-Term
Incentives
• Promote ownership and achievement of
our long-term corporate financial goals
through the acquisition of common stock
utilizing RSU grants
• Align management with stockholder
interests
• Provide long term retention incentives
• Variable, performance based component
• Target opportunity is set based on factors
such as executive’s job responsibilities,
sustained performance in role/potential,
internal equity, and competitive market
practices
• Actual payout depends on Company
performance and individual contribution
• Equity grants were awarded based
on factors such as executive’s job
responsibilities, sustained performance
in role/potential, internal equity, and
competitive market practices
• 3 year vesting period
• Actual value realized will vary based on
bank performance and stock price
Severance
and Change
In Control
Programs
• Create an environment where key
• Contingent component; only payable if
executives are able to take actions in the
best interest of the Company without
incurring undue personal risk
• Foster management stability during
periods of potential uncertainty
the executive’s employment is terminated
under certain circumstances and, in the
case of a change in control, to help provide
continuity of management through the
transition
Target Compensation Opportunities
The Compensation Committee does not utilize an exact calculation in determining the break-down
or weighting of NEO compensation among base salary, short-term incentive awards, and long-term
equity awards. Rather, the Compensation Committee considers all forms of compensation in light of
the market competition for executive talent balanced with and considering the need to align the goals
of the executive with those of the Company. Accordingly, the Compensation Committee believes that
a significant portion of each NEOs’ total target compensation should be in the form of annual cash
performance-based awards and equity awards that align with long-term value creation.
47
2022 Proxy Statement | COMPENSATION DISCUSSION
AND ANALYSIS
For 2021, 56% and 41% of the total targeted compensation of our CEO and other NEOs, respectively,
was either performance-based or at-risk consisting of a short-term incentive and equity awards. Below
are charts showing the compensation mix for Mr. Mills and our other NEOs based on the targeted 2021
compensation values.
CEO Target Total Direct Compensation
Other NEO Target Total Direct Compensation
Restricted
Stock
Units: 13%
Salary: 44%
Short-Term
Incentive:
28%
Salary: 59%
Restricted
Stock Units:
26%
Short-Term
Incentive:
30%
Base Salary
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 also approves base salaries for all
other NEOs. Mr. Crotwell’s base salary was increased during 2021 due to the additional responsibilities
he assumed in conjunction with the retirement of the former executive risk officer. Base salaries for all
other NEOs were not adjusted during 2021.
2021 Base Salary
$
2020 Base Salary
$
Percentage Change
%
835,800
450,000
500,000
375,000
450,000
835,800
450,000
500,000
N/A
450,000
—
—
—
N/A
—
Name
Drake Mills
Stephen Brolly
M. Lance Hall
Jim Crotwell(1)
Preston Moore
(1) Mr. Crotwell was not a NEO during 2020.
48
| 2022 Proxy Statement COMPENSATION DISCUSSION
AND ANALYSIS
COMPENSATION DISCUSSION
AND ANALYSIS
Short-Term Incentive Plan
The Short-Term Incentive Plan (“STIP”) for 2021 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.
STIP goals are reviewed and approved each year by the Compensation Committee with input from
management. A major 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.
In 2021, the Compensation Committee adjusted metric weighting so that 75% of the STIP is based on
financial metrics and 25% on individual and strategic bank goals to provide incentive to achieve key objectives
focused on continued profitability, operating efficiency, strong credit management and continued growth.
The individual and strategic objectives were updated in 2021 to reflect Company priorities.
The Compensation Committee establishes a target annual incentive award for each NEO expressed as
a percentage of the executive’s base salary, established by factors such as: the estimated contribution
and responsibility of the NEO, market practices, internal equity and the recommendation of the Chief
Executive Officer (for all officers excluding himself). For 2021, the targets for our NEOs remained the
same as in 2020.
The total annual STIP award actually paid to each NEO is determined based on the extent to which
specified weighted objective performance goals are achieved with potential payouts ranging from
50% to 150% of the incentive plan target. There are no payouts for below-threshold performance.
A minimum of 80% of the stated target must be achieved for a threshold payout of 50% of the bonus
potential of the incentive plan target. The maximum payout of 150% of the bonus potential is achieved
by reaching 120% of the incentive plan target. Payout on achievements between 80% - 120% of target
are calculated using straight-line interpolation (sliding scale).
For purposes of the 2021 performance year, the Compensation Committee selected PTPP ROAA, net
income, non-performing assets (“NPA”) and net charge-offs as performance measures in the STIP. The
individual and strategic scorecard objectives were updated in 2021 to reflect strategic priorities and
accomplishments as highlighted below for each executive.
The 2021 STIP cash incentive opportunities as a percentage of salary for each of the NEOs and 2021
results are shown below.
Name/Position
Drake Mills, CEO
Stephen Brolly, CFO
M. Lance Hall, President
Preston Moore, CC & BO
Jim Crotwell, CRO
Short-term Incentive Plan Opportunity Levels as a
% of Base Salary(1)
Threshold %
Target %
Maximum %
25.0
17.5
20.0
17.5
17.5
50.0
35.0
40.0
35.0
35.0
75.0
52.5
60.0
52.5
52.5
(1)
The Compensation Committee and the Board approved and finalized executive and CEO incentive numbers at their respective February
2022 meetings.
49
2022 Proxy Statement | CORPORATE GOVERNANCE
2021 Financial Measure Achievements (75% of the total STIP bonus
opportunity)
Based on 2021 actual financial results for PTPP ROAA, net income, NPA and net charge-offs, which
constitute 75% of the overall bonus opportunity, the financial portion of the annual bonus plan was
achieved at 129% of target. Summarized below are each of the four financial measures, their weighting
within the bonus plan and their actual achievement relative to target.
For 2021, these goals and their applicable weightings and earned payouts were:
Financial Metrics
Weighting %
Target Goal
Actual
Performance
% Earned
PTPP ROAA excl. PPP
Net Income excl. PPP
NPA to avg loans excl. PPP
Net Charge-Offs to avg loans excl. PPP
Financial Achievement:
30.0
25.0
10.0
10.0
75.0
1.41%
1.45%
$62.3 million
$89.4 million
1.00%
0.30%
0.52%
0.23%
107.1
150.0
150.0
123.3
129.3
2021 Executive Scorecard Accomplishments (25% of the total annual
bonus opportunity)
Based on the assessment against these pre-established goals, each NEO can earn 0% to 150% of their
target for the scorecard component. Performance between payout levels (i.e., threshold, target and
maximum) will be calculated using straight-line interpolation (a sliding scale).
Summarized below is a brief outline of each NEO’s individual scorecard and their individual weighted
actual performance percentage:
Name
Position
2021 Accomplishments
Drake Mills
Chairman,
President, and
Chief Executive
Officer
• Successfully negotiated and completed the acquisition of the
remaining 62% ownership interest of The Lincoln Agency, LLC
• Successfully negotiated and completed the acquisition of Pulley-
White Agency, Inc. in Northwest Louisiana
• Consolidated insurance agencies; ensured pro forma budget was
established, communicated with Board and accepted by market
analysts
• Participated in twelve investment-bank-organized investor events
and engaged with investors, continuing to build long-term
relationships
Led communication and relationship-building with analysts
•
• Completed dividend analysis to include payout ratios and dividend
yield
• Company performance ensured the ability to pay dividend in
accordance with our internally stated strategy
Weighted Scorecard Achievement
• 37.5%
50
| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Name
Position
2021 Accomplishments
Stephen Brolly
Senior Executive
Officer and Chief
Financial Officer
• Completed and implemented Employee Stock Purchase Plan and
related Form S-8 Registration Statement
• Hired Sarbanes-Oxley Act (“SOX”) manager and oversaw
development of SOX risk assessment to assess financial statement
risks and map areas to SOX processes
• Collaborated with HR to resolve payroll segregation of duties
• Oversaw development of critical spreadsheet policy
• Created investment securities subsidiary with an immediate positive
impact to net income
• Hired and onboarded Treasurer
• Maintained appropriate cash at the Holding Company to cover
projected expenditures
• Managed excess liquidity via elimination of brokered deposits and
increasing investment portfolio by 50%
• Revised contingent funding plan to incorporate stress testing
approved by our regulators
• Oversaw automation of many existing processes saving 300+ hours
Initiated CRA Investment Charter and interdepartmental meetings
•
Weighted Scorecard Achievement
• 25.0%
M. Lance Hall
President and
Chief Executive
Officer of
Origin Bank
• Created a technology strategic plan to drive automation resulting in
•
multiple efficiencies and costs saves
Increased our customer experience value proposition with digital
enhancements and enhanced credit processes and approvals
• Began delivery of real-time client surveys by text to create customer
satisfaction metrics and real-time feedback and conversations with
our clients
• Brought data cleanse project in-house eliminating about $80,000 of
expense
• Rolled out updated Origin Bank website
•
Invested $5.0 million in our first FinTech Equity Investment Fund
• Rolled out new marketing campaign -”Every Relationship has an
Origin Story”
Weighted Scorecard Achievement
• 37.5%
Preston Moore
Senior
Executive
Officer and
Chief Credit
and Banking
Officer
Introduced and utilized Opportunity Summary Memorandum
Implemented enhanced credit approval process
•
•
• Conducted quarterly Bankers Presentation
• Significant reduction of classified loans to 1.35%; well below target
•
goal of 2.25%
Improved overall asset quality by reduction in Classified Loans Held
for Investment / Total Loans Held for Investment (excl. Paycheck
Protection Program (PPP) loans) from 2.08% as of year-end 2020
• Past dues, Non-Performing Assets and Net Charge-offs were stable
and within the “minimal risk” range at year-end 2021
Weighted Scorecard Achievement
• 30.6%
51
2022 Proxy Statement | CORPORATE GOVERNANCE
Name
Position
2021 Accomplishments
Jim Crotwell
Senior
Executive
Officer and
Chief Risk
Officer
• Satisfactory third-party risk reviews
• Completed incentive plan risk review for Compensation
Committee
• Met all key objectives within the Operational Risk, Audit, and
Compliance/CRA areas of the Bank
• Effectively managed the Bank’s loan portfolio and reserve for loan
•
losses during the second year of the pandemic
Improved overall asset quality by reduction in Classified Loans
Held for Investment / Total Loans Held for Investment (excl. PPP
loans) from 2.08% as of year-end 2020 to 1.35% as of year-end
2021
• Past dues, Non-Performing Assets and Net Charge-offs were
stable and within the “minimal risk” range at year-end 2021
• Collaborated with the various markets and with Mortgage
Banking to address compliance related issues and improve
processes
• Accomplished internal audit plan, including testing of SOX
controls.
• Conducted “desk top” Cyber breach exercise
• Enhanced tracking and reporting of audit findings
• Enhanced contract management review process and developed
process for reducing critical spreadsheet risks
Weighted Scorecard Achievement
• 30.8%
The 2021 STIP cash incentive actual final payout amounts for each of the NEOs are shown below. Amounts paid out as STIP
bonuses are subject to our Clawback Policy if certain triggering events occur.
Financial
Factor
(75%)
%
Individual
Scorecard
(25%)
%
Financial
Percentage
of Target
%
Actual Bonus
Earned
$
129.3
129.3
129.3
129.3
129.3
150.0
100.0
150.0
122.2
123.0
134.5
122.0
134.5
127.5
127.7
561,976
192,113
268,953
200,854
167,641
Drake Mills, CEO
Stephen Brolly, CFO
M. Lance Hall, President
Preston Moore, CC & BO
Jim Crotwell, CRO
Long-term Incentive Plan
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. Equity grants have historically been
made to executives periodically to reward them for having met key performance objectives such as the
successful initial public offering launch in 2018.
52
| 2022 Proxy Statement CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
In 2021, the Compensation Committee worked with Meridian to develop long-term equity awards for
key executives to meet the following objectives:
• Bridge the gap between 2020 and 2022, when a consistent LTIP could be developed and implemented
• Provide and build towards having meaningful/competitive retention for Origin NEOs, complying
with newly developed and implemented stock ownership guidelines
• Create stronger long-term alignment with stockholder interests
• Motivate NEOs to achieve long-term objectives that will increase the overall value of the Company
• Utilize a simple long-term equity award structure that could be supported and easily communicated
A 2021 equity award was granted in 100% time-vested RSUs that will vest ratably over a three-year
period for the NEOs listed in the table below. The award amounts were based on a review of market
practices by Meridian, the recommendations of the Chief Executive Officer (for executive officers other
than himself), personal performance, internal equity, and expected future contributions, among other
factors. The amounts for the NEO 2021 equity grants were approved by our Compensation Committee.
2021 Equity Awards for Named Executive Officers:
Name/Position
Drake Mills, CEO
M. Lance Hall, President
Jim Crotwell, CRO
Long-Term Incentive Award
Value ($)
Shares Awarded #
500,031
250,036
125,038
12,377
6,189
3,095
Following the 2021 awards, the Compensation Committee and management worked with Meridian to
develop a consistent LTIP for implementation in February, 2022. The annual LTIP awards will be based
on a percentage of NEO salaries with 50% of the award granted in PSUs and 50% awarded in time-
based RSUs. The RSUs will vest ratably over three years. With respect to the 2022 awards, the PSUs
will be linked to the achievement of Return on Average Assets (ROAA) and Return on Average Equity
(ROAE) over a three-year performance period and have a three-year cliff-vesting.
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, Mr. Mills, Mr. Hall and Mr. Brolly 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
53
2022 Proxy Statement | CORPORATE GOVERNANCE
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 on page 60 provide more details regarding these plans.
Benefits and Perquisites
Executive officers are eligible to participate in the same benefit plans that are designed for all of
the Company’s full-time employees, including health, dental, vision, basic group life and disability
insurance. The Company also provides its employees, including executives, with a 401(k) plan, which
currently provides an employer match of 50 cents on each dollar of employee contributions up to 6%
of eligible compensation subject to limits under the Employee Retirement Income Security Act of 1974
(“ERISA”). Additionally, all employees can participate in the Employee Stock Purchase Plan (ESPP),
which grants a purchase right consisting of an option to purchase the lesser of (a) the 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 the offering date or (b) five thousand (5,000) shares of stock at 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. We also provide our NEOs with certain perquisites, including
the use of Company cars or car allowance, 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.
Risk Assessment
The Compensation Committee is responsible for overseeing the management of risk related to
our executive and non-executive compensation plans. Annually, the Chief Risk Officer prepares a
risk assessment which includes 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
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CORPORATE GOVERNANCE
manage risk. The Risk Committee helps coordinate the Chief Risk Officer’s annual compensation risk
assessment and risk management duties with the CEO and the Compensation Committee. During
the Compensation Committee’s December 2021 meeting, the Chief 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.
Clawbacks for Any Restatement; Executive Compensation Recovery Policy
We maintain 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 does not allow Covered Persons (as defined therein,
including directors, officers and employees and certain of their family and household members and
controlled entities) to engage in hedging or monetization transactions involving Origin securities, such
as prepaid variable forwards, equity swaps, collars and exchange funds, or similar transactions.
Margin Accounts. Covered Persons are not permitted to hold our securities in a margin account.
Pledged Securities. Under our Insider Trading Policy, Covered Persons are generally discouraged from
pledging Origin securities as collateral for a loan. A Covered Person who wishes to pledge Origin
securities as collateral for a loan (not including margin debt) and clearly demonstrates the financial
capacity to repay the loan without resorting to the pledged securities may engage in such a transaction
with the prior approval of a compliance officer under the policy at least ten business days prior to the
proposed execution of documents evidencing the proposed pledge.
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2022 Proxy Statement | CORPORATE GOVERNANCE
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, 2021.
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.
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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, 2021, 2020 and 2019. Except as set forth in the notes to the table,
all cash compensation for each of our NEOs was paid by the Company. There were no option awards
granted to the NEOs for the periods disclosed below.
Name and Principal
Position
Year
Salary
($)
Non-Equity
Incentive Plan
($)(1)
Bonus
($)(2)
Stock
Awards
($)(3)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(4)
All Other
Compensation
($)(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
Preston Moore(6)
Chief Credit &
Banking Officer
Jim Crotwell(7)(8)
Chief Risk Officer
2021
835,800
561,976
2020
835,800
555,490
2019
835,800
425,000
2021
450,000
192,113
2020
450,000
158,500
2019
450,000
126,000
2021
500,000
268,953
2020
500,000
266,000
2019
500,000
250,000
2021
450,000
200,854
—
—
—
—
—
—
—
—
—
—
2020
450,000
170,000
10,000
500,031
451,556
58,872
2,408,235
—
437,336
53,318
1,881,944
— 339,295
47,492
1,647,587
—
128,849
30,278
801,240
—
121,662
77,970
808,132
— 116,097
77,720
769,817
250,036
88,812
29,847
1,137,648
—
85,114
27,151
878,265
—
—
—
56,278
20,679
826,957
—
—
36,860
687,714
36,710
666,710
2021
331,000
167,641
—
125,038
8,700
632,379
(1)
(2)
(3)
(4)
(5)
The amounts shown in this column represent STIP payouts which are 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 Plan.” 2021 incentives were finalized at the
Compensation Committee meeting in February 2022.
The amounts shown in this column reflect discretionary bonuses paid to recognize the executives for their significant contributions.
Mr. Moore’s 2020 bonus was for outstanding efforts related to PPP.
The amounts shown in this column reflect RSUs granted to the NEOs and are disclosed as the aggregate grant date fair value of the
awards. 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, 2021, included in our Annual Report on Form 10-K.
Includes the change in the present value of the projected benefits under the SERP and ESIA, 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.
The amounts shown in this column for 2021 are composed of the amount of perquisites and other compensation described in the
table below.
(6) Mr. Moore was not a NEO during 2019.
(7) Mr. Crotwell was not a NEO during 2019 or 2020.
(8) Mr. Crotwell’s base salary increased from $287,000 to $375,000 per year effective July 1, 2021.
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TABLES
Amounts of perquisites and other compensation paid to our NEOs in 2021 are set forth below:
Description
Mills
($)
Brolly
($)
Hall
($)
Moore
($)
Crotwell
($)
Personal use of company car
14,757
13,766
14,549
Auto allowance
Employer 401(k) contributions
Bank-owned life insurance premiums(1)
Country club membership dues
—
8,700
29,245
6,170
—
8,700
1,642
6,170
—
8,700
428
6,170
19,160
—
9,000
8,700
—
—
—
8,700
—
—
Total
58,872
30,278
29,847
36,860
8,700
(1) Details of our insurance plans are described below under the subheading “Life Insurance Plans.”
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, 2021. All of the restricted stock awards and RSU awards shown in the table
below were granted under the 2012 Plan. There were no equity incentive plan unearned options for
any of the NEOs.
Name
Drake Mills
Stephen Brolly
M. Lance Hall
Jim Crotwell
Preston Moore(4)
Stock Awards
Number of Shares or Units of
Stock That Have Not Vested
Grant Date
11/13/2018(2)
8/20/2021(3)
11/13/2018(2)
11/13/2018(2)
8/20/2021(3)
11/13/2018(2)
8/20/2021(3)
N/A
(#)
10,977
12,377
1,724
3,831
6,189
838
3,095
—
Market Value of Shares or
Units of Stocks That Have
Not Vested(1)
($)
471,133
531,221
73,994
164,427
265,632
35,967
132,837
—
(1) Market value is determined by multiplying the closing market price of our common stock on December 31, 2021, by the number of shares
or units that have not vested.
(2)
(3)
Time-based restricted stock awards that vest annually in 20% increments with the final tranche vesting on November 13, 2023.
Time-based RSU awards that vest annually in 33.3% increments with the final tranche vesting on August 20, 2024.
(4) Mr. Moore did not have any outstanding equity awards at December 31, 2021.
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EXECUTIVE COMPENSATION
TABLES
Option Exercises and Stock Vested
The following table summarizes the stock awards that vested and stock options that were exercised
during 2021 for the NEOs. There were no stock option awarded during the fiscal year ended
December 31, 2021, for any of the NEOs. The amounts reflected below show the number of shares
acquired at the time of exercise or vesting, as applicable. The amounts reported as value realized on
vesting are shown on a before-tax basis:
Option Awards
Stock Awards
Number of Shares
Acquired on Exercise(1)
(#)
Value Realized
on Exercise(2)
($)
Number of Shares
Acquired on Vesting
(#)
Value Realized
on Vesting(3)
($)
73,096
2,657,576
—
—
—
—
—
—
—
—
5,488
2,029
1,915
419
—
254,314
79,413
88,741
19,416
—
Name
Drake Mills
Stephen Brolly
M. Lance Hall
Jim Crotwell
Preston Moore
(1)
(2)
(3)
This represents Mr. Mills’ net exercise of his total outstanding stock options of 170,000 shares on November 12, 2021. The Company
withheld a total of 96,904 shares of common stock underlying the options for payment of the exercise price and tax withholding.
Value is determined by multiplying the closing market price of the Company’s stock on the date of exercise less the respective options
strike price, by the number of shares acquired on exercise.
Value is determined by multiplying the closing market price on the date of vest by the number of shares acquired upon vesting.
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 2012 Stock Incentive Plan was amended and
restated effective January 1, 2017.
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, RSUs, dividend equivalent
rights, PSUs 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.
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Supplemental Executive Retirement Plan and Executive Supplemental
Income Agreement
The SERP is limited to eligible executive employees as determined by our Board. In 2019, the Company
entered into 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. Messrs. Moore and Crotwell do
not have either a SERP or an ESIA.
Name
Drake Mills(2)
Stephen Brolly(3)
M. Lance Hall(4)
M. Lance Hall(5)
Plan Name
SERP
SERP
SERP
ESIA
Number of Years
of Credited
Service
(#)
Present Value(1)
of Accumulated
Benefit as
of 12/31/21
($)
Payments
During Last
Fiscal Year
($)
20
3
19
—
2,977,669
421,168
445,162
34,027
—
—
—
—
(1)
Please see Note 14 - Employee Retirement Plan (401(k)), Other Benefit Plans in the Notes to the Consolidated Financial Statements in the
2021 Annual Report on Form 10-K 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, 2021, 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,
2021, was used.
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.
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EXECUTIVE COMPENSATION
TABLES
Mr. Brolly’s SERP 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. 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.
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2022 Proxy Statement | EXECUTIVE COMPENSATION
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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. Messrs. Crotwell and Moore do not have
split dollar life insurance agreements.
Name
Drake Mills
Drake Mills
Drake Mills
Stephen Brolly
M. Lance Hall
M. Lance Hall
Agreement
Effective Date
2/7/2001
5/1/2008
2/27/2020(1)
7/13/2018
7/23/2002
10/29/2019
Death Benefit
Payable to Beneficiary
at December 31, 2021
($)
218,911
1,415,436
1,500,000
1,379,712
399,357
278,714
(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
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 SERP 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
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| 2022 Proxy Statement EXECUTIVE COMPENSATION
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EXECUTIVE COMPENSATION
TABLES
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 ESIA 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.
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, 2021. 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
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2022 Proxy Statement | EXECUTIVE COMPENSATION
TABLES
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
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,
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EXECUTIVE COMPENSATION
TABLES
and (d) any equity-type award under any plan or arrangement becoming 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.
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
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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.
JIM CROTWELL
Mr. Crotwell entered into a Change In Control agreement with the Company effective June 14, 2018.
This agreement automatically renews for successive one-year terms unless notice is given 90 prior
to the end of a term. If Mr. Crotwell 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. Crotwell will be entitled to severance benefits. Those severance benefits will consist
of a (a) lump sum cash payment of one time Mr. Crotwell’s then-current base salary, (b) a lump sum
cash payment of one time the average short-term incentive plan bonus paid to him within the three
calendar years immediately preceding his termination, and (c) any equity-type award under any plan
or arrangement becoming 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. Crotwell 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.
PRESTON MOORE
Mr. Moore entered into a Change in Control agreement with the Company effective March 28, 2018. Following
an initial term that ended on March 27, 2021, this agreement automatically renews 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 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 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 becoming 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.
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Potential Payments Upon Termination or Change In Control
The table below shows the estimated amounts that could have been paid to each NEO in 2021 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, 2021, and 2021 bonuses which were paid in early 2022, and assumes
the triggering event occurred on December 31, 2021. 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
—
—
2,699,911(1)
561,976(2)
561,976(2)
4,049,866(3)
561,976(2)
2,977,669(4)
2,977,669(4)
2,977,669(4)
6,105,573(5)
6,105,573(5)
Accrued PTO(6)
128,617
128,617
128,617
128,617
128,617
128,617
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/RSU Accelerated Vesting(11)
Continuing Medical Coverage(12)
—
—
—
—
—
—
—
—
—
—
—
218,911
1,415,436
1,500,000
400,000
—
—
—
—
—
—
—
—
—
—
—
—
1,002,354
1,002,354
1,002,354
1,002,354
16,949
—
—
12,712
—
Totals
128,617
5,823,146
8,204,963
4,670,616
11,299,122
7,798,520
(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, 2021.
(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.
(4) Amounts are equal to the Accrued Liability Retirement Balance as of December 31, 2021. 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 $992,556. 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 2021 accrued and unused PTO hours as of December 31, 2021, times Mr. Mills’ hourly rate.
(7)
Split dollar life insurance dated February 7, 2001, provides for a $218,911 death benefit as of December 31, 2021, 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.
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(8) Split dollar life insurance dated May, 1, 2008, provides for a $1,415,436 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 amended and restated the Endorsement Method Split Dollar Life
Insurance Agreement, dated October 29, 2019. Prior to the amendment and restatement, the 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 $42.92 as of December 31, 2021.
(12) Mr. Mills’ employment agreement provides he receive or have paid on his behalf for a period of up to eighteen months following termination
date without Cause or resignation for Good Reason in of the Change in Control Protection Period, all COBRA premiums for continuation of
Employer’s current medical hospitalization insurance program. If Mr. Mills is terminated without Cause or resigns for Good Reason outside
of the Change in Control Protection Period, he will be entitled to two years of COBRA premiums until he secures alternative health benefits
from a new employer or COBRA coverage terminates.
Stephen Brolly
Termination
by Company
for Cause
($)
Termination
Other Than
Termination for
Cause
($)
Death
($)
Disability
($)
Change-In-
Control
($)
Retirement
($)
Change in Control Agreement(1)
Benefits Payable under SERP
—
—
—
126,350(2)
—
—
—
1,217,742(1)
—
126,350(2)
1,149,817(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
—
—
—
—
—
—
73,994
73,994
73,994
73,994
Totals
57,098
183,448
1,910,804
257,442
2,498,651
1,818,592
(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, 2021, the Accrued Liability
Retirement Balance was $421,168 and Mr. Brolly was vested in 30% 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, 2021.
(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 2021 accrued and unused PTO hours as of December 31, 2021, 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, 2021, 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 $42.92 as of December 31, 2021.
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M. Lance Hall
Employment Agreement
Benefits Payable under SERP
effective 01/01/2004
Executive Supplemental Income
Agreement dated 10/29/2019
Termination
by Company
for Cause
($)
—
—
—
Termination
Other Than
Termination for
Cause
($)
1,523,302(1)
Death
($)
Disability
($)
268,953(2)
268,953(2)
Change-In-
Control
($)
2,284,953(3)
Retirement
($)
268,953(2)
727,785(4)
445,162(5)
—
2,910,499(6)
2,910,499(6)
34,027(7)
—
34,027(7)
198,960(8)
300,000(9)
Accrued PTO(10)
76,942
76,942
76,942
76,942
76,942
76,942
Split Dollar Life Insurance
07/23/2002(11)
Split Dollar Life Insurance
10/29/2019(12)
Company Paid Life Insurance(13)
RSA/RSU Accelerated Vesting(14)
Continuing Medical Coverage(15)
Totals
—
—
—
—
—
—
—
—
—
49,150
399,357
278,714
400,000
430,059
—
—
—
—
—
—
—
—
—
—
430,059
430,059
430,059
—
36,862
—
76,942
2,411,206
2,299,187
809,981
5,938,275
3,986,453
(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, 2021.
(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,
2021, and excludes eighteen months of premium payments to which he would also be entitled.
(4)
(5)
Represents the Accrued Liability Retirement Balance as of December 31, 2021, 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, 2021, payable to Mr. Hall’s beneficiary in a lump sum on the 1st day
of the month after death.
(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.
(7)
(8)
Represents 100% of the Accrued Liability Retirement Balance as of the effective date of the termination or disability of Mr. Hall, which we
assumed to be December 31, 2021.
Represents the present value of the benefits provided under the ESIA as of December 31, 2021, 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.
(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
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, 2021.
(10) Company policy provides that, upon termination, all employees are paid for any accrued but unused PTO. The PTO amount above is
based on 2021 accrued and unused PTO hours as of December 31, 2021, times Mr. Hall’s hourly rate.
(11) Represents 80% of the net-at-risk insurance portion of the proceeds as of December 31, 2021. 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.
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(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, 2021, 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, 2021.
(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 $42.92 as of December 31, 2021.
(15) Mr. Hall’s employment agreement provides he receive or have paid on his behalf for a period of up to eighteen months following
his termination without Cause or resignation for Good Reason in the Change in Control Protection Period, all COBRA premiums for
continuation of Employer’s current medical hospitalization insurance program. If Mr. Hall is terminated without Cause or resigns for Good
Reason outside of the Change in Control Protection Period, he will be entitled to two years of COBRA premiums until he secures alternative
health benefits from a new employer or COBRA coverage terminates.
Jim Crotwell
Change in Control Agreement(1)
Company Paid Life Insurance(2)
RSA/RSU Accelerated Vesting(3)
Accrued PTO(4)
Totals
Termination
by Company
for Cause
($)
Termination
Other Than
Termination
for Cause
($)
—
—
—
38,236
38,236
—
—
—
38,236
38,236
Death
($)
—
400,000
168,804
38,236
607,040
Disability
($)
—
—
168,804
38,236
207,040
Change-In-
Control
($)
525,880
—
Retirement
($)
—
—
168,804
168,804
38,236
38,236
732,920
207,040
(1) Mr. Crotwell’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. Crotwell would be paid (i) one time the sum of his then current base salary, and (ii) a lump sum of one time the
average short-term incentive plan bonus paid to him in 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) 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 $42.92 as of December 31, 2021.
(4) Company policy provides that, upon termination, all employees are paid for any accrued but unused PTO. The PTO amount above is
based on 2021 accrued and unused PTO hours as of December 31, 2021, times the executive’s hourly rate.
Preston Moore
Change-in-Control Agreement(1)
Company Paid Life Insurance(2)
Accrued PTO(3)
Totals
Termination
by Company
for Cause
($)
Termination
Other Than
Termination
for Cause
($)
—
—
58,863
58,863
—
—
58,863
58,863
Death
($)
—
400,000
58,863
458,863
Disability
($)
—
—
58,863
58,863
Change-In-
Control
($)
1,287,236
—
58,863
1,346,099
Retirement
($)
—
—
58,863
58,863
(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 current 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 2021 accrued and unused PTO hours as of December 31, 2021, times the executive’s hourly rate.
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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
$ 70,008
$ 2,408,235
1:34
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 took 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 PEO:
• The median employee was identified for 2021 based on the employee population of 790 on
December 31, 2021, 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 PEO), we
used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for
the fiscal year 2021. In making this determination, we annualized the compensation of full-time and
part-time permanent employees who were employed on December 31, 2021, but who did not work
for us the entire year. No full-time equivalent adjustments were made for part-time employees.
• We identified our 2021 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.
• We calculated the 2021 total compensation for this employee by adding together all elements of the
median employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x)
of Regulation S-K, resulting in annual total compensation of $70,008. We then calculated the median
employee’s total annual compensation figure by aggregating the value of all wages, cash incentives,
equity incentives, Employee 401(k) employer contributions and any applicable perquisites earned
or paid in 2021 in the same manner as we calculated the total annual compensation of our PEO for
purposes of the Summary Compensation Table.
• With respect to the annual total compensation of our PEO, we used the amount reported in the
“Total” column of our 2021 Summary Compensation Table.
71
2022 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 2021 as described in the “Compensation
Discussion and Analysis” section beginning on page 40 and the “Executive Compensation Tables”
section beginning on page 57.
Voting recommendation:
FOR the advisory vote to approve executive compensation. The Compensation Committee
takes its stewardship responsibility to oversee the Company’s compensation programs very
seriously 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.
72
| 2022 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.
73
2022 Proxy Statement | PROPOSAL 3: RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
PROPOSAL 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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, 2022.
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, 2022.
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 2022 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 2022 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 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 2022.
74
| 2022 Proxy Statement PROPOSAL 3: RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
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 25, 2022, 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 23,748,748 shares of common
stock outstanding as of February 25, 2022. 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 convertible or exercisable securities held by that person that are currently exercisable or
convertible or exercisable or convertible within 60 days of February 25, 2022, if any. However, we did not
deem these shares outstanding for the purpose of computing the percentage ownership of any other person.
Name and Address of Beneficial Owner
5% Holders
T. Rowe Price Associates, Inc.(1)
BlackRock, Inc.(2)
American Century Investment Management, Inc.(3)
All Directors, Nominees and Named Executive Officers
Stephen Brolly(4)
Daniel Chu
Jim Crotwell(5)
James D’Agostino, Jr.(6) (7)
James Davison, Jr.(6) (8)
A. La’Verne Edney(6)
Meryl Farr(6)
Richard Gallot, Jr.(6)
Stacy Goff (6)
M. Lance Hall(9)
Michael Jones(6)
Gary Luffey(6)
Farrell Malone(6)
Drake Mills(10)
Preston Moore(11)
Elizabeth Solender(6) (12)
Steven Taylor(6)
Number of Common
Stock Shares Beneficially
Owned
(#)
Percent
of Class
(%)
3,197,789
1,672,293
883,126
14,919
—
13,788
59,589
668,670
826
826
3,773
3,293
51,477
207,723
153,159
7,384
185,533
51,775
14,686
49,398
13.5
7.0
3.7
*
*
*
*
2.8
*
*
*
*
*
*
*
*
*
*
*
*
All Directors Nominees and Executive Officers, as a group (17 persons)
1,486,819
* Less than 1%.
75
2022 Proxy Statement | OTHER INFORMATION
(1) Represents shares of the Company’s common stock beneficially owned as of December 31, 2021, based on the Schedule 13G/A filed by
T. Rowe Price Associates, Inc. on February 14, 2022. According to the Schedule 13G/A, T. Rowe Price Associates, Inc. has sole voting power
with respect to 985,118 shares and sole dispositive power with respect to 3,197,789 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, 2021, based on the Schedule 13G/A filed by
BlackRock, Inc. on February 3, 2022. According to the Schedule 13G/A, BlackRock, Inc. has sole voting power with respect to 1,626,037
shares and sole dispositive power with respect to 1,672,293 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, 2021, based on the Schedule 13G/A filed by
American Century Investment Management, Inc. on February 4, 2022. According to the Schedule 13G/A, American Century Investment
Management, Inc. has sole voting power with respect to 865,694 shares and sole dispositive power with respect to 883,126 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)
(10)
(11)
Includes 1,724 shares of unvested restricted stock and 2,584 shares held in the Employee 401(k) allocated to Mr. Brolly’s account.
Includes 3,000 shares held of record in an individual retirement account for his benefit, 838 shares of unvested restricted stock and 8,094
shares held in the Employee 401(k) allocated to Mr. Crotwell’s account.
Includes 826 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 3,831 shares of unvested restricted stock and 31,190 shares held in the Employee 401(k) allocated to Mr. Hall’s account.
Includes 3,466 shares held of record in an individual retirement account for his benefit, 10,977 shares of unvested restricted stock and 50,390
shares held in the 401(k) allocated to Mr. Mills’ account.
Includes 40,002 shares held jointly by Mr. Moore and his spouse, 10,273 shares held in the Employee 401(k) allocated to Mr. Moore’s
account, and 1,500 shares held of record in an individual retirement account for Mr. Moore’s benefit.
(12)
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 the fiscal year ending December 31, 2021, 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 reporting one late transaction required to be filed by Michael Jones due to an
administrative error.
76
| 2022 Proxy Statement OTHER INFORMATION
ANNUAL REPORT ON
FORM 10-K
ANNUAL REPORT ON FORM 10-K
Our financial statements for the fiscal year ended December 31, 2021, are included in our Annual
Report on Form 10-K, which was filed with the SEC on February 23, 2022. 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, 2021, 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
2022 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 15, 2022
78
| 2022 Proxy Statement 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, 2021
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 $937.8 million as of June 30,
2021, 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: 23,748,748 shares of
Common Stock, par value $5.00 per share, were issued and outstanding as of February 16, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Definitive Proxy Statement for the 2022 Annual Meeting of Stockholders of Origin Bancorp, Inc.
to be held on April 27, 2022, 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, 2021.
ORIGIN BANCORP, INC.
FORM 10-K
DECEMBER 31, 2021
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. [Reserved]
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
22
42
43
43
43
44
44
45
46
70
72
136
136
138
139
139
139
139
139
139
140
140
142
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, including the impact of supply-chain disruptions and labor pressures;
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 impact 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;
risks associated with widespread inflation or deflation;
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;
3
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
volatility and direction of market interest rates;
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; 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. In addition, as a
result of these and other factors, our past financial performance should not be relied upon as an indication of future
performance. 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, 2021, we had total assets of $7.86 billion,
total loans of $5.23 billion, total deposits of $6.57 billion and total stockholders' equity of $730.2 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 denovo into several expansion markets, expanding our
product offerings in mortgage lending and servicing as well as in insurance and private banking. We have supported our
markets by hiring a number of experienced in-market bankers and banking teams. To support our growth, we raised over
$281.8 million of new Tier 1 capital since 2006, including proceeds from our initial public offering completed in May 2018,
and in 2020, issued subordinated notes that are treated as Tier 2 capital for regulatory purposes. Through these efforts, we
have successfully increased our market share in our key geographic markets.
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.
5
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, 2021, our loans held for investment
("LHFI") portfolio was comprised of 39.8% commercial and industrial loans (including Paycheck Protection Program
("PPP") and mortgage warehouse loans), and 42.5% 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. At December 31, 2021, approximately 32.9% of our deposits were noninterest-bearing demand
deposits, and our cost of total deposits was 0.22% for the year ended December 31, 2021.
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 costs associated with deposit gathering and
our operational platform. Our footprint in Mississippi comprises areas of significant commercial investment and additional
growth opportunities. We believe all of our markets throughout Texas, Louisiana and Mississippi provide favorable business
climates and continued opportunity for growth.
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 primarily organically 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:
6
(Dollars in thousands)
Real estate:
Owner occupied commercial real estate
Non-owner occupied commercial real estate
Total commercial real estate (1)
Owner occupied construction/land/land development
Non-owner occupied construction/land/land development
Total 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,
2021
2020
$
523,655 $
1,169,857
1,693,512
160,131
369,952
530,083
909,739
3,133,334
105,761
1,348,474
627,078
16,684
$
5,231,331 $
460,524
927,415
1,387,939
100,755
431,105
531,860
885,120
2,804,919
546,519
1,271,343
1,084,001
17,991
5,724,773
____________________________
(1)
Includes commercial real estate loans accounted at fair value at December 31, 2020.
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, secondary, and tertiary 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 $61.8 million and $59.1 million for the years ended December 31, 2021 and 2020, respectively, while
construction/land/land development loans have contributed interest income of $21.9 million and $25.3 million for the years
ended December 31, 2021 and 2020, 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 $67.1 million and $64.6 million for the years ended December 31, 2021 and 2020,
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 $27.5 million and $22.3 million for the years ended December 31, 2021 and 2020, respectively.
7
Paycheck Protection Program Loans. We were a participating lender in the PPP established under the CARES Act
and administered by the Small Business Administration (“SBA”) in 2020 and 2021. At December 31, 2021 and 2020, there
were approximately $105.8 million and $546.5 million, respectively, in PPP loans outstanding, net of $3.0 million and $9.6
million, respectively, in net deferred loan fees. The majority of PPP loans have a maximum maturity of five 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 vast 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.
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 2021, credit relationships of $8.0 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 reviews our lending policies and procedures at least annually. In addition, there are
legal restrictions on the maximum amount of loans available for each lending relationship. At December 31, 2021, Origin
Bank's legal lending limit under the Louisiana Banking Law and Regulation O of the Board of Governors of the Federal
Reserve System (the "Federal Reserve") was $204.1 million for secured loans to a single borrower, $81.6 million for
unsecured loans to a single borrower and $127.9 million for loans to a single insider which represents 15% of the Bank's
capital and surplus as required by regulation. At December 31, 2021, 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, 2021, we held $6.57
billion of total deposits and have grown deposits at a compound annual growth rate of 18.8% since December 31, 2003. At
December 31, 2021, 96.6% 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.
8
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 $12.9 million, $29.6 million and $12.3
million for the years ended December 31, 2021, 2020 and 2019, respectively.
Insurance
We offer a wide variety of commercial and personal property and casualty insurance products through our wholly-
owned insurance subsidiaries. Davison Insurance Agency, LLC, doing business as Lincoln Agency, LLC (the "Lincoln
Agency"), Lincoln Agency Transportation Insurance, Pulley-White Insurance Agency ("Pulley-White"), Reeves, Coon &
Funderburg, Simoneaux & Wallace Agency and Thomas & Farr Agency. With over 30 years of growth in the insurance
industry and approximately 126 experienced professionals, our agencies have primary market locations across Louisiana, but
also serve customers in Texas, Mississippi, Arkansas and other states across the United States. In December 2021, we
acquired the remaining 62% interest in the Lincoln Agency, bringing our total ownership to 100% ownership. In addition, in
December 2021, we acquired Pulley-White located in Bossier City, Louisiana., thereby solidifying our presence as one of the
larger independent insurance agencies in North Louisiana. Insurance commission and fee income was $13.1 million, $12.7
million and $12.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
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 nonbank 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 nonbank lenders, insurance companies and certain other non-financial
entities, including retail stores which may maintain their own credit programs and certain governmental organizations which
may offer more favorable financing than we can.
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 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.
9
Human Capital Resources
Our current number of full-time equivalent employees is 797, 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 2022 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.
Recent Developments: COVID-19
The effects of the COVID-19 pandemic and the governmental and societal response to the virus, and its variants,
negatively impacted overall economic conditions on an unprecedented scale during 2020, resulting in the shuttering of
businesses and significant job loss, which continues to impact individuals, households and businesses in a multitude of ways,
including excess liquidity and contributing to wide-spread supply chain shortages. 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 in those states, which has
bolstered commercial activity to some degree. To date, the U.S. Food and Drug Administration has approved several
COVID-19 vaccines for deployment and distribution in the United States. However, a resurgence in infections, new variants,
more infectious or deadly variants, or the lack of vaccine longevity or efficacy could cause possible reimplementation of new
or additional restrictions at the national and local level to combat the COVID-19 pandemic. The duration and severity of the
COVID-19 pandemic remains impossible to predict.
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. In addition, we
created an Infection Control Protocol in accordance with Centers for Disease Control guidance which has allowed us to
ensure all employees can easily read and understand the steps that should be taken if there is a positive case of COVID-19 or
a COVID-19 exposure. 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 as needed.
In March and April 2020, two relief bills were signed into law, the Coronavirus Aid, Relief, and Economic Security
Act (the "CARES Act") and the Paycheck Protection Program and Health Care Enhancement Act (the “PPP/HCE Act”), to
provide emergency relief to several groups and individuals impacted by the COVID-19 pandemic. Among the numerous
provisions contained in the CARES Act was the creation of the $349 billion PPP, which provided 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, enacted on December 27, 2020, provided additional funding for the PPP of approximately $284 billion and
allowed eligible borrowers, including certain borrowers who already received a PPP loan, to apply for “second draw” PPP
loans through March 31, 2021. Subsequent legislation expanded the eligibility criteria for both first and second draw PPP
loans and extended the deadline to apply for PPP loans through May 31, 2021, among other things. In 2020, we established
an SBA Paycheck Protection Program task force and funded $767.4 million in loans under these programs. As of December
31, 2021, 84.5% of these PPP loans have been forgiven by the SBA. We also have offered forbearance (90-day extensions)
and modification agreements to our customers affected by the COVID-19 pandemic.
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 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.
10
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, effectiveness of the vaccines on COVID-19 and its
variants, the magnitude and duration of the continued disruption to economic activity, particularly its impact on supply chain
and the current human resource shortages, 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. Our growth and earnings performance
will be affected by management decisions, general and local economic conditions, 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.
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:
•
•
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;
11
•
•
•
•
•
•
•
•
•
•
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 transactions 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.
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. Provisions of the Dodd-Frank Act, and any future legislative or
regulatory changes, may also require us to invest significant management attention and resources to evaluate and make any
changes necessary to comply with new requirements. Failure to comply with any new requirements may negatively impact
our results of operations and financial condition.
12
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.
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") of Tier 1 capital to average total consolidated assets. 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 CBLR is currently set at 9%. 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.
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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 "CRA")), 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% or more of any class of voting securities of the bank holding company, controls more than half 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.
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.
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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, non-operating 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 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.
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.
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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
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.
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, 2021, Origin Bank met the requirements to be categorized as well capitalized under the
prompt corrective action framework currently in effect.
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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 the 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.
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.
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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 of small banks such as Origin Bank. 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 ("DIF") exceeds 2.0% and higher thresholds. The FDIC can also impose special
assessments in certain instances. Since the outbreak of the COVID-19 pandemic, the amount of total estimated insured
deposits has grown rapidly while the funds in the DIF have grown at a normal rate, causing the DIF reserve ratio to fall below
the statutory minimum of 1.35%. The FDIC adopted a restoration plan on September 15, 2020, to restore the DIF reserve
ratio to at least 1.35% by September 30, 2028. Under the restoration plan, the FDIC will continue to closely monitor the
factors that affect the DIF reserve ratio and maintain its current schedule of assessment rates. 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 or 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, 2021, 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.
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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.
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.
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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.
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.
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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" and open market operations as directed by the Federal Open
Market Committee. 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.
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;
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•
•
•
•
•
•
•
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;
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; and
•
The market price of our common stock may be subject to substantial fluctuations.
Risks Related to Our Business
The COVID-19 pandemic and measures intended to prevent its spread have 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 certain sectors of economic activity. Efforts to contain the pandemic, including
vaccinations, have made progress in reducing the impact of COVID-19 and some restrictions that were put in place to reduce
the spread of the virus have relaxed. However, as new variants of the virus cause additional outbreaks, their impact cannot be
predicted at this time and could depend on numerous factors, including the effectiveness of COVID-19 vaccines against the
variants, the availability of effective vaccines in different parts of the world, vaccination rates among the population and the
response by governmental bodies to the pandemic.
The United States and state and local governments have taken steps to attempt to mitigate some of the more severe
economic effects of the virus, including Congress’s passage of the CARES Act and related stimulus legislation. For example,
the CARES Act, which was enacted on March 27, 2020, provided certain measures to support individuals and businesses in
maintaining solvency through monetary relief, including in the form of financing, loan forgiveness and automatic
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forbearance, and the Consolidated Appropriations Act, 2021, extended some of these relief provisions in certain respects as
well as provided other forms of relief.
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 United States generally accepted accounting principles ("U.S. GAAP") related to classification of certain
loan modifications as troubled debt restructurings to account for the current and anticipated effects of COVID-19. Further, in
response to the COVID-19 outbreak, the Federal Reserve implemented a number of facilities to provide emergency liquidity
to various segments of the U.S. economy and financial markets. Many of these facilities have since expired. If economic
conditions decline, the absence of these facilities and other legislative stimulus could have an adverse effect on the U.S.
economy and ultimately on our business.
The full impact on our business activities as a result of these 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. Furthermore, the outbreak has
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;
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, specifically developing work from home
and social distancing plans for our employees. 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 COVID-19 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 continuing spread and rise of new variants, the actions to contain the
virus or treat its impact, the rollout and effectiveness of vaccination programs and the effectiveness of vaccines against new
variants, and how quickly and to what extent normal economic and operating conditions can resume. Even after the
COVID-19 outbreak has subsided, there may continue to be seasonal resurgences and we may continue to experience
materially adverse impacts to our business as a result of the virus’s global economic impact.
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 continuing 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 March 5, 2021, the United Kingdom’s Financial Conduct Authority (the “FCA”), which regulates LIBOR,
announced that (i) 24 LIBOR settings would cease to exist immediately after December 31, 2021 (all seven euro LIBOR
settings; all seven Swiss franc LIBOR settings; the Spot Next, 1-week, 2-month, and 12-month Japanese yen LIBOR settings;
the overnight, 1-week, 2-month, and 12-month sterling LIBOR settings; and the 1-week and 2-month US dollar LIBOR
settings); (ii) the 1-month, 3-month, 6-month and 12-month US LIBOR settings would cease to exist after June 30, 2023; and
(iii) the FCA would consult on whether the remaining nine LIBOR settings should continue to be published on a synthetic
basis for a certain period using the FCA’s proposed new powers that the UK government is legislating to grant to them.
Central banks and regulators in a number of major jurisdictions (for example, United States, United Kingdom, European
Union, Switzerland and Japan) have convened working groups to find, and implement the transition to, suitable replacements
for interbank offered rates. To identify a successor rate for U.S. dollar LIBOR, the Alternative Reference Rates Committee
(“ARRC”), a U.S.-based group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, was
formed. The ARRC has identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for
LIBOR. SOFR is a measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities, and is based
on directly observable U.S. Treasury-backed repurchase transactions. At this time, it is not possible to predict the effect of
these changes, any establishment of alternative reference rates or other reforms to LIBOR that may be enacted in the United
States, United Kingdom or elsewhere or whether the COVID-19 outbreak will have a further effect on LIBOR transition
plans.
It is also not possible 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 adverse 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, 2021, we had approximately $1.80 billion of loans indexed to LIBOR. 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.
The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could
have an adverse impact on the market for or value of any LIBOR-linked securities, loans, swaps and other financial
obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. All
Origin notes contain fallback language that allows us to replace the index in the event LIBOR becomes unavailable, or
unascertainable, ceases to be published or is otherwise unreliable. Such replacement is to be determined by Origin in our sole
discretion and can include an effective adjustment to the spread, if deemed necessary by us. In addition, Origin Bank has
reviewed various instruments' contracts and any inadequate fallback language 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. In addition,
in light of the FCA's announced schedule for the cessation of LIBOR, we will need to renegotiate credit agreements executed
prior to the addition of the LIBOR fallback language and extending beyond June 30, 2023 that utilize LIBOR as a factor in
determining the interest rate, in order to replace LIBOR with SOFR or another new standard that is established, which may
have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some
or all of these credit agreements may bear interest at a lower interest rate, which could have an adverse impact on our results
of operations. U.S. federal banking agencies expect banking organizations to cease entering into new contracts that use U.S.
dollar LIBOR as a reference rate by no later than December 31, 2021, and to ensure existing contracts have robust fallback
language that includes a clearly defined alternative reference rate. Origin suspended the utilization of LIBOR as an index for
new and renewed loans and instrument contracts as of December 31, 2021.
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We will be subject to heightened regulatory requirements if our total assets grow in excess of $10 billion as of
December 31 of any calendar year.
As of December 31, 2021, our total assets were $7.86 billion. In addition to our current regulatory requirements,
banks with $10 billion or more in total assets are, among other things: examined directly by the United States Consumer
Financial Protection Bureau with respect to various federal consumer financial laws; subject to limits on debit interchange
fees pursuant to Section 1075 of the Dodd-Frank Act, known as the Durbin Amendment; eligible for potentially a smaller
dividend on holdings of Federal Reserve Bank stock; subject to the Volcker Rule’s limitations on proprietary trading and
investments or sponsorship in covered funds; no longer treated as a “small institution” for FDIC deposit insurance assessment
purposes; subject to the large bank assessment methodology for calculating FDIC insurance premiums; and no longer eligible
to elect to be subject to the CBLR. Compliance with these additional ongoing requirements may necessitate additional
personnel, the design and implementation of additional internal controls, or the incurrence of other significant expenses,
among other things, any of which could have a significant adverse effect on our business, financial condition or results of
operations. Our regulators may also consider our preparation for compliance with these regulatory requirements in the course
of examining our operations generally or when considering any request from us or the Bank.
We will become subject to reduced debit interchange income and could face related adverse business
consequences if our total assets grow in excess of $10 billion as of December 31 of any calendar year.
Debit card interchange fee restrictions set forth in the Durbin Amendment, as implemented by regulations of the
Federal Reserve, cap the maximum debit interchange fee that a debit card issuer may receive per transaction. Debit card
issuers with total consolidated assets of less than $10 billion are exempt from these interchange fee restrictions. The
exemption for small issuers ceases to apply as of July 1 of the year following the calendar year in which the debit card issuer
has total consolidated assets of $10 billion or more at calendar year end. Any reduction in interchange income as a result of
the loss of the exemption for small issuers under the Durbin Amendment could have a significant adverse effect on our
business, financial condition and results of operations. Moreover, our loss of eligibility under the exemption for small issuers
could adversely affect or reduce our ability to maintain certain of our fee-sharing prepaid card partnerships, which have the
right to terminate our agreement with respect to certain financial services under such circumstances.
We may 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 outbreak of COVID-19, which has and continues to 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 and 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,
2021, $3.13 billion, or 59.9%, 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. For example, a final rule that the federal banking agencies issued in November 2021 requires banking
organizations to notify their primary federal regulator of significant computer security incidents within 36 hours of
determining that such an incident has occurred. The compliance date of this rule is May 1, 2022. 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, 2021, 55.3% of our total loans (by dollar amount), excluding mortgage warehouse
lines of credit, were made to borrowers who reside or conduct business in Texas, 28.6% attributable to Louisiana and 9.7%
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, 2021, our non-owner-occupied commercial real estate loans totaled $1.17 billion, or 22.4%, 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, 2021, approximately $1.35 billion, or 25.8%, 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, 2021, the size of our average loan held for investment was approximately
$307,093. Further, at December 31, 2021, our 20 largest borrowing relationships, excluding mortgage loans held for sale,
represented 15.2% of our outstanding loan portfolio, and 11.5% 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.
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.
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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
nonbank 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 nonbank
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.
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.
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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.
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;
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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.
The markets in which we operate are susceptible to hurricanes and other natural disasters, adverse weather and
climate change effects, 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, which may grow more
severe as a result of climate change. 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, climate change 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.
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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.
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.
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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
2021, 2020 or 2019.
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. Repricing gap analysis compares risk sensitive assets (“RSAs”) to rate sensitive liabilities (“RSLs”) to
determine asset or liability sensitivity. At December 31, 2021, our one year cumulative RSAs exceeded our cumulative RSLs
by $364.3 million, representing a cumulate gap to total assets of 4.66%. Our interest sensitivity profile was asset sensitive at
December 31, 2021, meaning that we estimate our net interest income would increase from rising interest rates and decline
with falling interest rates.
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.
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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 $1.87 billion at December 31, 2021. 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, 2021, our mortgage servicing rights had a fair value of $16.2 million, compared to $13.7 million at December 31, 2020.
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, 2021, the fair value of our portfolio of available for sale investment securities was approximately
$1.50 billion, which included a net unrealized gain of approximately $7.3 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.
37
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 re-evaluated 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.
38
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 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.
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 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 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, 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 indebtedness 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, 2021, our executive offices and those of Origin Bank were located at 500 South Service Road East,
Ruston, Louisiana 71270 and we operated through 44 banking centers in Texas, Louisiana and Mississippi. At December 31,
2021, our primary offices outside of Louisiana were located in Dallas, Texas, Houston, Texas and Ridgeland, Mississippi. At
December 31, 2021, Origin Bank owned its main office building and 25 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 17 years. We believe that our banking and other offices are in good condition and are suitable and
adequate to our needs.
At December 31, 2021, our insurance holdings operated through 14 leased offices primarily located in Louisiana.
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 January 25, 2022, there were approximately 3,260 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 Nasdaq U.S. Benchmark Banks TR Index 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, 2021. 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, and the Nasdaq U.S. Benchmark Banks TR
Index 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. Both the SNL Index for U.S.Banks with
total assets between $1.0 billion and $5.0 billion and the SNL Index for U.S. Banks with total assets between $5.0 billion and
$10.00 billion that were disclosed in the graph referenced below in our Annual Report on Form 10-K for the year ended
December 31, 2020, have been discontinued and are no longer available.
44
Comparison of Cumulative Total Stockholder ReturnOrigin Bancorp, Inc.Nasdaq Composite IndexNasdaq U.S. Benchmark Banks TR Index05/09/1806/30/1812/31/1806/30/1912/31/1906/30/2012/31/2006/30/2112/31/21$60$90$120$150$180$210 May 9,
2018
Jun 30,
2018
Dec 31,
2018
Jun 30,
2019
Dec 31,
2019
Jun 30,
2020
Dec 31,
2020
Jun 30,
2021
Dec 31,
2021
Origin Bancorp, Inc.
$ 100.00 $ 120.51 $ 100.48 $ 97.49 $ 112.41 $ 65.87 $ 83.80 $ 128.80 $ 131.00
Nasdaq Composite Index
100.00
102.32
90.40
109.08
122.24
137.04
175.34
197.60
213.15
Nasdaq U.S. Benchmark Banks TR
Index
100.00
95.3
81.39
94.85
111.66
73.29
97.37
126.7
133.69
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 SEC. The stock buyback program was initially approved for a period of 36 months, but
may be extended, terminated or amended by our board of directors.
At December 31, 2021, there remained approximately $28.0 million of capacity under the stock buyback program.
The following table summarizes the Company's stock repurchase activity for the year ended December 31, 2021.
(Dollars in thousands, except per share amounts)
Period
Total first quarter 2021
Total second quarter 2021
Total third quarter 2021
Total fourth quarter 2021
Total 2021
Item 6.
[Reserved]
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
37,568 $
33.42
37,568 $
—
—
—
—
—
—
—
—
—
37,568 $
33.42
37,568 $
27,962
27,962
27,962
27,962
27,962
45
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 2021 and 2020 and year-
over-year comparisons between 2021 and 2020. For discussion on results of operations and financial condition pertaining to
2020 and 2019 and year-over-year comparisons between 2020 and 2019, 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, 2020, filed with the SEC on March 2, 2021.
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 the current expected credit losses methodology
("CECL") for estimating allowances for credit losses, resulting in a change to the 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 LHFI
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.
46
In the first quarter of 2020, U.S. federal regulatory authorities issued an interim final rule that provided banking
organizations that adopted 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 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), and,
accordingly, we will begin to amortize the CECL adoption impact to our regulatory capital beginning on January 1, 2022.
Given the small size of the CECL adoption impact the amortization is not expected to significantly affect our regulatory
capital.
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.
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.
47
Results of Operations
Selected income statement data, returns on average assets and average equity for the comparable periods were as
follows:
(Dollars in thousands, except per share amounts)
Net income
Pre-tax, pre-provision earnings ("PTPP")(1)
Financial ratios:
Return on average assets (2)
Return on average equity (2)
At and for the Years Ended December 31,
2021
2020
2019
$
108,546
$
36,357
$
121,666
104,253
53,882
76,116
1.45 %
15.79
0.56 %
5.82
1.06 %
9.27
____________________________
(1)
PTPP earnings and tangible book value per common share, are non-GAAP financial measures. For a reconciliation of these non-GAAP financial
measures to their comparable U.S. GAAP measures, please see "Non-GAAP Financial Measures in Item 7 of this report.
All average balances are calculated using average daily balances.
(2)
Net Interest Income and Net Interest Margin
Net interest income for the year ended December 31, 2021, was $216.3 million, an increase of $24.7 million over the
year ended December 31, 2020. The increase was primarily due to a $13.7 million reduction in total deposit interest expenses,
coupled with increases of $9.4 million, $5.2 million and $4.2 million in interest income from PPP loans, mortgage warehouse
lines of credit and investment securities, respectively. These increases were partially offset by a decrease of $6.9 million in
interest earned on commercial and industrial, excluding PPP loans, coupled with an increase of $3.2 million of interest
expense on our subordinated indebtedness, during the year ended December 31, 2021, compared to the year ended December
31, 2020.
Deposit interest expense decreased to $13.4 million during the year ended December 31, 2021, compared to $27.2
million during the year ended December 31, 2020, primarily due to a reduction in deposit rates during the intervening 12-
month period. The average rate paid on savings and interest-bearing transaction accounts was 0.24% for the year ended
December 31, 2021, down from 0.52% for the year ended December 31, 2020, accounting for $10.2 million of the decrease in
interest expense from the year ended December 31, 2020. The average rate on time deposits decreased to 0.75% for the year
ended December 31, 2021, down from 1.62% for the year ended December 31, 2020, providing an additional decrease of
$5.3 million in interest expense. These two rate-driven interest expense declines were partially offset by a $3.9 million
increase in interest expense due to an increase in the average balance of savings and interest-bearing transaction accounts
when comparing the year ended December 31, 2021, to the year ended December 31, 2020.
PPP loans, which we began funding in the second quarter of 2020, contributed a $9.6 million increase in interest
income due to an increase in yield during the year ended December 31, 2021, compared to the year ended December 31,
2020, primarily as a result of the SBA forgiveness process and the recognition of deferred loan fees as the loans were
forgiven. Interest income earned on mortgage warehouse lines of credit increased by $5.2 million during the year ended
December 31, 2021, compared to the year ended December 31, 2020, primarily due to higher average mortgage activity
driven by the low interest rate environment, coupled with additional mortgage warehouse clients being on-boarded and
funding loans. Interest income earned on investment securities increased by $4.2 million during the year ended December 31,
2021, compared to the year ended December 31, 2020, primarily due to a shift in balance sheet composition as liquidity
surged primarily due to increases in deposits and to declines in PPP and mortgage warehouse lines of credit ending loan
balances and was redeployed into investment securities. Interest income earned on investment securities increased $9.3
million primarily due to higher average balances of investment securities, partially offset by a $5.1 million decrease in
interest income earned on investment securities due to declines in average yields, compared to the year ended December 31,
2020. Interest income earned on commercial and industrial loans, excluding PPP loans, decreased $6.9 million during the
year ended December 31, 2021, compared to the year ended December 31, 2020, primarily due to the impact of lower yields.
The $3.2 million increase in interest paid on subordinated indebtedness was primarily due to the issuance of $70.0 million
and $80.0 million, in February 2020 and October 2020, respectively, in aggregate principal amount of subordinated notes.
48
The fully tax-equivalent net interest margin was 3.10% for the year ended December 31, 2021, an eight basis point
decrease from the year ended December 31, 2020. The yield earned on interest-earning assets for the year ended December
31, 2021, was 3.42%, a 33 basis point decrease from 3.75% for the year ended December 31, 2020. This decrease was
partially offset by the decrease in interest rates paid on interest-bearing deposits. The rate paid on total interest-bearing
liabilities for the year ended December 31, 2021, was 0.54%, representing a decrease of 35 basis points compared to 0.89%
for the year ended December 31, 2020. The margin compression we experienced since the year ended December 31, 2020,
was partially caused by decreasing loan yields driven by declining short-term interest rates during the end of 2020 and early
to mid-2021, coupled with increasing liquidity as PPP loan balances were paid down through the SBA's forgiveness process
and mortgage warehouse loan balances continued to normalize.
49
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, 2021, 2020 and 2019.
(Dollars in thousands)
Assets
Average
Balance(1)
2021
Income/
Expense
Yield/
Rate
Average
Balance(1)
2020
Income/
Expense
Yield/
Rate
Average
Balance(1)
2019
Income/
Expense
Yield/
Rate
Commercial real estate
$ 1,501,890 $
61,804
4.12 % $ 1,322,477 $
59,059
4.47 % $ 1,247,941 $
64,214
5.15 %
Year Ended December 31,
Construction/land/land
development
Residential real estate
PPP
Commercial and industrial excl.
PPP
Mortgage warehouse lines of
credit
Consumer
LHFI
Loans held for sale
Investment securities-taxable
Investment securities-non-
taxable
Non-marketable equity
securities held in other financial
institutions
Interest-bearing deposits in
banks
528,618
916,039
380,894
21,914
37,045
19,145
4.15
4.04
5.03
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
—
1,246,183
47,919
3.85
1,321,912
54,860
4.15
1,324,002
68,991
5.21
753,588
16,764
27,470
972
5,343,976
216,269
68,917
2,512
899,532
14,555
3.65
5.80
4.05
3.65
4.04
1.62
574,837
18,707
22,320
1,195
4,950,545
206,595
82,178
2,519
5,032,723
209,114
536,816
11,302
3.88
6.39
4.17
3.07
4.16
2.11
212,733
20,809
10,698
1,426
3,972,861
205,881
29,656
1,018
4,002,517
206,899
469,100
11,975
5.03
6.85
5.18
3.43
5.17
2.55
280,157
6,337
2.26
214,224
5,428
2.53
102,258
3,327
3.25
48,970
1,181
2.41
42,782
1,055
2.47
46,233
1,421
3.07
Loans receivable
5,412,893
218,781
418,034
802
Total interest-earning assets
7,059,586
241,656
Noninterest-earning assets(2)
Total assets
411,341
$ 7,470,927
0.19
3.42
276,423
1,803
6,102,968
228,702
0.65
3.75
145,090
3,460
4,765,198
227,082
2.38
4.77
339,560
$ 6,442,528
327,773
$ 5,092,971
Liabilities and Stockholders'
Equity
Liabilities
Interest-bearing liabilities
Savings and interest-bearing
transaction accounts
$ 3,640,713 $
8,842
0.24 % $ 2,904,587 $
15,215
0.52 % $ 2,098,393 $
27,330
1.30 %
Time deposits
607,742
Total interest-bearing deposits
4,248,455
4,576
13,418
4,654
7,332
0.75
0.32
1.38
4.66
735,297
3,639,884
468,974
88,358
11,935
27,150
5,895
4,121
1.62
0.75
1.26
4.66
827,720
2,926,113
426,995
9,658
17,386
44,716
8,097
557
2.10
1.53
1.90
5.69
337,076
157,304
FHLB advances & other
borrowings
Subordinated indebtedness
Total interest-bearing
liabilities
Noninterest-bearing liabilities
Noninterest-bearing deposits
Other liabilities(2)
Total liabilities
Stockholders' Equity
Total liabilities and
stockholders' equity
Net interest spread
4,742,835
25,404
0.54
4,197,216
37,166
0.89
3,362,766
53,370
1.59
1,905,045
135,399
6,783,279
687,648
1,499,936
120,796
5,817,948
624,580
1,054,903
94,357
4,512,026
580,945
$ 7,470,927
$ 6,442,528
$ 5,092,971
2.88 %
2.86 %
3.18 %
Net interest income and margin
$ 216,252
3.06
$ 191,536
3.14
$ 173,712
3.65
Net interest income and margin -
(tax equivalent)(3)
$ 219,155
3.10
$ 194,196
3.18
$ 175,814
3.69
____________________________
(1)
Nonaccrual loans are included in their respective loan category for the purpose of calculating the yield earned. All average balances are daily average
balances.
50
(2)
(3)
Includes Government National Mortgage Association ("GNMA") repurchase average balances of $53.9 million, $37.7 million and $26.0 million for the
years ended December 31, 2021, 2020 and 2019, 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%.
Rate/Volume Analysis
The following tables present the dollar amount of changes in interest income and interest expense for major
components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to
outstanding balances and those due to changes in interest rates. The change in interest attributable to rate changes has been
determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change
in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances
outstanding between periods. For purposes of the below table, changes attributable to both rate and volume that cannot be
segregated, including the difference in day count, have been allocated to rate.
(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
Subordinated indebtedness
Total interest-bearing liabilities
Net interest income
Year Ended December 31, 2021 vs. Year Ended
December 31, 2020
Increase (Decrease) due to Change
in
Volume
Yield/Rate
Total Change
$
8,012 $
(5,267) $
(1,159)
6,485
(197)
(2,960)
6,940
(124)
(407)
16,590
7,637
1,670
153
924
26,974
3,856
(2,070)
(1,658)
3,216
3,344
(2,182)
(3,587)
9,583
(3,981)
(1,790)
(99)
400
(6,923)
(4,384)
(761)
(27)
(1,925)
(14,020)
(10,229)
(5,289)
417
(5)
(15,106)
$
23,630 $
1,086 $
2,745
(3,341)
2,898
9,386
(6,941)
5,150
(223)
(7)
9,667
3,253
909
126
(1,001)
12,954
(6,373)
(7,359)
(1,241)
3,211
(11,762)
24,716
51
(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
Junior 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
52
Provision for Credit Losses
The provision for credit losses, which includes the provisions for loan losses, off-balance sheet commitments and
investment 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, investment security credit losses 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.
We recorded a provision for credit loss benefit of $10.8 million for the year ended December 31, 2021, a
$70.7 million decrease from a provision expense of $59.9 million for the year ended December 31, 2020. The decrease in
provision expense for the year ended December 31, 2021, compared to the year ended December 31, 2020, reflects an
improvement in forecasted economic conditions compared to worsening forecasted economic conditions experienced during
the year ended December 31, 2020. Net charge-offs were $11.3 million during the year ended December 31, 2021, compared
to net charge-offs of $11.1 million during the year ended December 31, 2020. Our allowance for loan credit losses was 1.23%
of total LHFI at December 31, 2021, compared to 1.51% at December 31, 2020. The allowance for loan credit losses as a
percentage of nonperforming LHFI was 259.35% at December 31, 2021, compared to 331.45% at December 31, 2020.
Pursuant to rules promulgated by the federal banking agencies, we 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) and, accordingly, we will
begin to amortize the CECL adoption impact to our regulatory capital beginning on January 1, 2022. Given the small size of
the CECL adoption impact the amortization is not expected to significantly affect our regulatory capital.
While economic forecasts have improved, uncertainty remains due to risks related to the resurgence or lingering
effects of COVID-19, rising inflation and labor pressures, as well as continued global supply-chain disruptions that could
cause an increase in our provision for loan credit losses in the future.
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:
Year Ended December 31,
2021 vs. 2020
2020 vs. 2019
2021
2020
2019
$ Change % Change
$ Change % Change
Service charges and fees
$
15,049 $
12,998 $
13,859 $
2,051
15.8 % $
(861)
(6.2) %
Mortgage banking revenue
12,927
29,603
12,309
(16,676)
(56.3)
17,294
140.5
Insurance commission and fee
income
13,098
12,746
12,177
352
2.8
Gain on sales of securities, net
1,748
580
20
1,168
N/M
569
560
Loss on sales and disposals of
other assets, net
Limited partnership
investment income (loss)
Swap fee income
Other fee income
Other income
(185)
(1,213)
(333)
1,028
84.7
(880)
5,701
814
2,879
10,162
78
2,546
2,253
5,061
(6)
5,623
N/M
2,185
1,490
4,777
(1,732)
(68.0)
626
5,101
27.8
100.8
84
361
763
284
Total noninterest income
$
62,193 $
64,652 $
46,478 $
(2,459)
(3.8)
$
18,174
4.7
N/M
N/M
N/M
16.5
51.2
5.9
39.1
53
____________________________
N/M = Not meaningful.
Noninterest income for the year ended December 31, 2021, decreased by $2.5 million, or 3.8%, to $62.2 million,
compared to $64.7 million for the year ended December 31, 2020, and was largely driven by decreases of $16.7 million and
$1.7 million in mortgage banking revenue and swap fee income, respectively. The decreases were partially offset by increases
of $5.6 million, $5.1 million, $2.1 million and $1.2 million, in limited partnership investment income, other noninterest
income, service charges and fees income, and gain on sales of securities, respectively, combined with a $1.0 million decrease
in loss on sales and disposals of other assets, net.
Service charges and fees. The $2.1 million increase in service charges and fees income was primarily driven by an
increase of $1.3 million in debit interchange fees due to an increase in debit card transactions by customers during the year
ended December 31, 2021, as compared to the year ended December 31, 2020.
Mortgage banking revenue. The $16.7 million decrease in mortgage banking revenue compared to the year ended
December 31, 2020, was primarily due to decreases of $14.2 million and $2.2 million in the mortgage held for sale and
pipeline fair value adjustment, and gain on sale of loans sold, respectively, primarily as a result of a 29% decline in the
volume of the loans originated for sale, as well as declines in gain on sale margins of 23 basis points.
Gains on sales of securities, net. The $1.2 million increase in gain on sales of securities, net, was the result of the
movement out of positions in lower-yielding securities. We used the funds generated from the sale of the securities to prepay
relatively high-cost FHLB advances.
Loss on sales and disposals of other assets, net. The $1.0 million decrease in loss on sales and disposals of other
assets, net was primarily due to the decline in value and subsequent write-down of two commercial real estate owned
properties during the year ended December 31, 2020. No similar transactions occurred during the year ended December 31,
2021.
Limited partnership investment income. The $5.6 million increase in the limited partnership investment income
during the year ended December 31, 2021, compared to the year ended December 31, 2020, was primarily due to valuation
increases as a result of investment performance in limited partnership funds.
Swap fee income. The $1.7 million decrease in swap fee income was due to higher volume of back-to-back swaps
executed with commercial customers during the year ended December 31, 2020, driven by the low market rate environment
during that period.
Other noninterest income. The $5.1 million increase in other noninterest income was primarily due to the Company's
acquisition of the remaining 62% equity interest in the Lincoln Agency. The Company remeasured the previously held 38%
equity method investment in the Lincoln Agency to its fair value, resulting in recognition of a gain of $5.2 million in other
noninterest income.
54
Noninterest Expense
The following table presents the significant components of noninterest expense for the periods indicated:
Year Ended December 31,
2021 vs. 2020
2020 vs. 2019
2021
2020
2019
$ Change % Change
$ Change % Change
$
93,026 $
91,105 $
88,974 $
1,921
2.1 % $
2,131
2.4 %
(Dollars in thousands)
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
17,347
17,022
16,759
9,117
3,563
1,574
3,438
3,644
2,904
7,688
6,399
844
2,538
4,697
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
325
796
(123)
(193)
(272)
(331)
(922)
1,372
775
(216)
352
1,360
4,844
1.9
9.6
(3.3)
(10.9)
(7.3)
(8.3)
(24.1)
21.7
13.8
(20.4)
16.1
40.8
3.2
263
1,360
245
(331)
(98)
398
2,132
2,142
(1,050)
(261)
26
904
$
7,861
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
Total noninterest expense
$
156,779 $
151,935 $
144,074 $
Noninterest expense for the year ended December 31, 2021, increased by $4.8 million, or 3.2%, to $156.8 million,
compared to $151.9 million for the year ended December 31, 2020. The increase was primarily due to increases of $1.9
million, $1.4 million and $1.4 million in salaries and employee benefits expenses, loan-related expenses and other noninterest
expense, respectively.
Salaries and employee benefits. The $1.9 million increase in salaries and employee benefits expenses was primarily
driven by increases of $2.1 million and $1.4 million in employee salaries and incentive compensation bonus, respectively,
during the year ended December 31, 2021, which were partially offset by a $1.0 million decrease in commission expense.
The increase in employee salaries was mainly driven by an increase of 17 full-time equivalent employees during the year
ended December 31, 2021, compared to the year ended December 31, 2020. The increase in incentive compensation bonus is
primarily due to the growth in loan production during the year ended December 31, 2021. The decrease in commission
expense is mainly due to the decline in mortgage origination volume during the year ended December 31, 2021.
Loan-related expenses. The increase in loan-related expenses was primarily driven by an increase of $1.5 million in
the loan-related legal fees.
Other noninterest expense. The increase in other noninterest expense was due to prepayment fees of $1.6 million
incurred related to the early termination of long-term FHLB advances during the year ended December 31, 2021. We
terminated the advances early due to the relatively high cost of the funding using the proceeds from the sale of
underperforming investment securities as referenced under "Gain on sales of securities, net" above.
Income Tax Expense
For the year ended December 31, 2021, we recognized income tax expense of $23.9 million, compared to $8.0
million for the year ended December 31, 2020. Our effective tax rate was 18.0% for both the years ended December 31, 2021
and 2020.
Our effective income tax rates have differed from the applicable U.S. statutory rates of 21% at December 31, 2021
and 2020, 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.
55
Comparison of Financial Condition at December 31, 2021, and December 31, 2020
General
Total assets increased by $233.0 million, or 3.1%, to $7.86 billion at December 31, 2021, from $7.63 billion at
December 31, 2020. The increase was primarily attributable to increases of $480.6 million and $255.6 million in total
securities and interest-bearing deposits in banks, respectively, which was partially offset by a $493.4 million decrease in
LHFI for the comparable periods.
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, 2021, 82.3% of the loan portfolio held for investment was comprised of
commercial and industrial loans, including PPP loans, mortgage warehouse lines of credit, commercial real estate and
construction/land/land development loans, which were primarily originated within our market areas of Texas, North
Louisiana, and Mississippi.
The following table presents the ending balance of our loan portfolio held for investment at the dates indicated.
(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
Total LHFI
December 31, 2021
December 31, 2020
2021 vs. 2020
Amount
Percent
Amount
Percent
$ Change
% Change
$ 1,693,512
32.4 % $ 1,387,939
24.2 % $
305,573
22.0 %
530,083
909,739
3,133,334
105,761
1,348,474
627,078
16,684
10.1
17.4
59.9
2.0
25.8
12.0
0.3
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
(1,777)
24,619
328,415
(440,758)
77,131
(456,923)
(1,307)
(0.3)
2.8
11.7
(80.6)
6.1
(42.2)
(7.3)
$ 5,231,331
100.0 % $ 5,724,773
100.0 % $
(493,442)
(8.6) %
___________________________
(1)
Includes $17.0 million of commercial real estate loans for which the fair value option was elected at December 31, 2020. There were no loans for
which the fair value option was elected at December 31, 2021.
At December 31, 2021, total LHFI were $5.23 billion, a decrease of $493.4 million, or 8.6%, compared to $5.72
billion at December 31, 2020. The decrease primarily reflected declines of $456.9 million in mortgage warehouse lines of
credit and $440.8 million in PPP loans, primarily due to record high mortgage warehouse lines of credit production during
fiscal year 2020 and PPP loan forgiveness from the SBA, respectively. Mortgage warehouse lines of credit loan balances
have fallen within our expected range of 10% to 12% of total LHFI at December 31, 2021. Total LHFI at December 31, 2021,
excluding PPP and mortgage warehouse lines of credit, were $4.50 billion, reflecting an increase of $404.2 million, or 9.9%,
compared to December 31, 2020. 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.
Under the CARES Act, Congress allocated funds to the PPP, which was designed to provide short-term loans to
certain qualifying businesses that retained employees during the COVID-19 pandemic. These loans, totaling $105.8 million
with $3.0 million in unearned net deferred loan fees for the Company at December 31, 2021, have a maximum maturity of
five years, bear a fixed rate of interest at one percent for the entire term, and as of December 31, 2021, approximately 84.5%
of our total PPP loans granted have been forgiven under this program.
56
Loan Portfolio Maturity Analysis
The table below presents the maturity distribution of our LHFI at December 31, 2021. 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, 2021
One Year
or Less
Over One Year
Through Five
Years
Over Five
Years
Total
Commercial real estate
$
278,858 $
1,024,264 $
390,390 $
1,693,512
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
Nonperforming Assets
131,770
74,183
484,811
518,970
627,078
4,993
332,913
365,793
1,722,970
851,613
—
10,415
65,400
469,763
925,553
83,652
—
1,276
530,083
909,739
3,133,334
1,454,235
627,078
16,684
1,635,852 $
2,584,998 $
1,010,481 $
5,231,331
338,303 $
1,490,507 $
378,056 $
1,297,549
1,094,491
632,425
1,635,852 $
2,584,998 $
1,010,481 $
2,206,866
3,024,465
5,231,331
$
$
$
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 placed on nonaccrual status when management believes that the borrower's financial condition, after
giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful,
or generally when loans are 90 days or more past due. Loans may be placed on nonaccrual status even if the contractual
payments are not past due if information becomes available that causes substantial doubt about the borrower's ability to meet
the contractual obligations of the loan. When accrual of interest is discontinued, all unpaid accrued interest is reversed. Past
due status is based on 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 contractual 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. 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.
While economic forecasts have improved, uncertainty remains due to risks related to the resurgence or lingering
effects of COVID-19, rising inflation and labor pressures, as well as continued global supply-chain disruptions that could
cause an increase in nonperforming loans in future periods.
57
The following table shows our nonperforming loans and nonperforming assets at the dates indicated:
(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
Total LHFI
Ratio of nonperforming LHFI to total LHFI
Ratio of nonperforming assets to total assets
$
$
$
December 31,
2021
2020
$
$
$
512
338
11,647
12,306
100
24,903
1,754
26,657
1,279
180
1,459
401
1,860
28,517
4,064
2,763
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
5,231,331
5,724,773
0.48 %
0.36
0.46 %
0.38
At December 31, 2021, total nonperforming LHFI decreased by $1.2 million, or 4.8%, from December 31, 2020,
primarily due to reductions in most nonperforming LHFI loan categories, except for residential real estate, which represented
160 loans with an average loan balance of $73,000, and reflected a $5.1 million increase year over year. Please see Note 4 -
Loans to our consolidated financial statements contained in Item 8 of this report for more information on nonperforming
loans.
58
Potential Problem Loans
From a credit risk standpoint, we classify loans using risk grades which fall into one of five categories: pass, special
mention, substandard, doubtful or loss. The classifications of loans reflect a judgment about the risks of default and loss
associated with the loan. We review the ratings on loans and adjust them to reflect the degree of risk and loss that is felt to be
inherent or expected in each loan. The methodology is structured so that reserve allocations are increased in accordance with
deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in
credit quality (and a corresponding decrease in risk and loss). Loans rated special mention reflect borrowers who exhibit
credit weaknesses or downward trends deserving close attention. If left uncorrected, these potential weaknesses may result in
deterioration of the repayment prospects for the asset or in the bank's credit position at some future date. While potentially
weak, no loss of principal or interest is envisioned, and these borrowers currently do not pose sufficient risk to warrant
adverse classification. Loans rated substandard are those borrowers with deteriorating trends and well-defined weaknesses
that jeopardize the orderly liquidation of debt. A substandard loan is inadequately protected by the current sound worth and
paying capacity of the obligor or by the collateral pledged, if any. 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,
2021, is included in Note 4 - Loans to our consolidated financial statements contained in Item 8 of this report.
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 Note 1 - Significant Accounting
Policies to the consolidated financial statements contained in Item 8 of the Company's Annual Report for the year ended
December 31, 2020, on Form 10-K filed with the SEC 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
December 31, 2021. Historical loss rates for each pool are calculated based on charge-off and recovery data beginning with
the second quarter of 2012. These loss rates are adjusted for the effects of certain economic variables forecast over a one-year
period, particularly for differences between current period conditions, including the ongoing effects of COVID-19 on the U.S.
economy, and the conditions existing during the historical loss period. Subsequent to the forecast effects, historical loss rates
are used to estimate losses over the estimated remaining lives of the loans. The estimated remaining lives consist of the
contractual lives, adjusted for estimated prepayments. Loans that exhibit characteristics different from their pool
characteristics are evaluated on an individual basis. Certain of these loans are considered to be collateral dependent with the
borrower experiencing financial difficulty. For these loans, the fair value of collateral practical expedient is elected whereby
the allowance is calculated as the amount by which the amortized cost exceeds the fair value of collateral, less costs to sell (if
applicable). Those individual loans that are not collateral dependent are evaluated based on a discounted cash flow
methodology.
The amount of the 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.
59
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
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:
December 31,
(Dollars in thousands)
2021
2020
Loans secured by real estate:
Amount
%(1)
Amount
%(1)
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total
$
$
___________________________
(1)
Represents the ratio of each loan type to total LHFI.
13,425
4,011
6,116
40,146
340
548
64,586
32.4 % $
10.1
17.4
27.8
12.0
0.3
100.0 % $
15,430
8,191
9,418
51,857
856
918
86,670
24.2 %
9.3
15.5
31.8
18.9
0.3
100.0 %
Our allowance for loan credit losses decreased by $22.1 million or 25.5%, to $64.6 million at December 31, 2021,
from $86.7 million at December 31, 2020. The ratio of allowance for loan credit losses to total LHFI at December 31, 2021
and 2020, was 1.23% and 1.51%, respectively. The Company's credit quality profile in relation to the allowance for loan
credit losses drove a decline of $25.1 million in the collectively evaluated portion of the reserve during the year ended
December 31, 2021, of which a $19.6 million decrease was related to qualitative factor changes across the Company's risk
pools for the year ended December 31, 2021. These declines were partially offset by an increase in certain specific loan
reserves at December 31, 2021.
60
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 loan credit losses
Balance at beginning of period
Impact of adopting ASC 326
Provision for loan credit losses
Charge-offs:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Consumer
Total charge-offs
Recoveries:
Commercial real estate
Construction/land/land development
Residential real estate
Commercial and industrial
Consumer
Total recoveries
Net charge-offs
Balance at end of period
Ratio of allowance for loan credit losses to:
Nonperforming LHFI
LHFI
Net charge-offs as a percentage of:
Provision for loan credit losses
Allowance for loan credit losses
Average LHFI
N/M = Not meaningful.
Year Ended December 31,
2021
2020
$
86,670
$
—
(10,798)
170
—
78
11,923
63
12,234
65
—
117
717
49
948
11,286
$
64,586
$
259.35 %
1.23
N/M
17.47
0.21
37,520
1,248
59,028
4,924
—
692
6,702
76
12,394
19
1
202
1,022
24
1,268
11,126
86,670
331.45 %
1.51
18.85
12.84
0.22
61
Securities
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 to our
consolidated financial statements contained in Item 8 of this report.
Our securities portfolio totaled $1.53 billion at December 31, 2021, representing an increase of $480.6 million, or
45.6%, from $1.05 billion at December 31, 2020. The increase in securities during the year ended December 31, 2021,
reflects a shift in balance sheet composition as liquidity increased due to declines in PPP and mortgage warehouse lines of
credit loan balances, as a result of the SBA’s forgiveness process and the normalization of mortgage warehouse lines of credit
balances. Also contributing to the increase in liquidity was a $819.4 million year over year increase in deposits. For
additional information regarding our securities portfolio, please see Note 3 - Securities to our 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:
State and municipal securities
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:
State and municipal securities, net of allowance
Securities carried at fair value through income:
State and municipal securities
December 31,
2021
2020
Amount
% of Total
Amount
% of Total
$
405,818
27.0 % $
82,734
97,658
64,243
557,801
19,672
193,740
83,062
5.5
6.5
4.3
37.0
1.3
12.9
5.5
442,185
65,938
849
11,080
214,951
—
195,343
74,328
44.0 %
6.6
0.1
1.1
21.4
—
19.4
7.4
$
$
$
1,504,728
100.0 % $
1,004,674
100.0 %
22,767
7,497
$
$
38,128
11,554
62
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, 2021. 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)
Within One Year
December 31, 2021
After One Year
but Within Five
Years
After Five Years
but Within Ten
Years
After Ten Years
Total
Available for sale:
Amount Yield Amount Yield Amount Yield
Amount
Yield
Amount
Yield
State and municipal
securities (1)
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 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
$ 2,882
2.33 % $ 48,057
5.47 % $ 56,340
2.03 % $ 298,539
2.18 % $ 405,818
2.55 %
—
—
16,681
3.26
65,522
4.47
531
4.50
82,734
4.23
2,741
0.14
55,660
0.35
34,041
1.11
5,216
1.29
97,658
0.66
—
—
15,438
0.91
48,805
1.26
—
—
64,243
1.18
—
—
2,819
3.22
105,481
1.32
449,501
1.42
557,801
1.41
—
—
—
—
14,569
1.26
5,103
1.77
19,672
1.39
—
—
—
—
—
—
—
—
1,345
2.14
192,395
1.05
193,740
1.06
—
—
83,062
1.08
83,062
1.08
$ 5,623
1.26
$ 138,655
2.60
$ 326,103
2.05
$ 1,034,347
1.55
$ 1,504,728
1.75
—
—
—
—
22,934
3.16
—
—
22,934
3.16
—
—
—
—
—
—
7,497
4.31
7,497
4.31
$ 5,623
1.26
$ 138,655
2.60
$ 349,037
2.12
$ 1,041,844
1.57
$ 1,535,159
1.78
____________________________
(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 cost exceeded 10.0% of consolidated stockholders' equity at December 31, 2021 or
2020. 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.
63
Securities Carried at Fair Value through Income
At December 31, 2021, we held one fixed rate community investment bond of $7.5 million. At December 31, 2020,
we held two fixed rate community investment bonds totaling $11.6 million. We elected the fair value option on these
securities to offset corresponding changes in the fair value of related interest rate swap agreements.
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 $555.9 million and $409.2 million in noninterest-bearing and money market,
respectively, drove the increase in total deposits compared to December 31, 2020, primarily due to continued excess liquidity
in the marketplace.
The following table presents our deposit mix at the dates indicated:
(Dollars in thousands)
Balance
% of Total
Balance
% of Total
December 31, 2021
December 31, 2020
Noninterest-bearing demand
$
Interest-bearing demand
Money market
Time deposits
Savings
Total deposits
2,163,507
1,412,089
2,204,109
543,128
247,860
32.9 % $
21.5
33.5
8.3
3.8
1,607,564
1,478,818
1,794,915
664,766
205,252
28.0 %
25.7
31.1
11.6
3.6
$
6,570,693
100.0 % $
5,751,315
100.0 %
We manage our interest expense on deposits through specific deposit product pricing that is based on competitive
pricing, economic conditions and current and anticipated funding needs. We may use interest rates as a mechanism to attract
or deter additional deposits based on our anticipated funding needs and liquidity position. We also consider potential interest
rate risk caused by extended maturities of time deposits when setting the interest rates in periods of future economic
uncertainty.
The following table reflects the classification of our average deposits and the average rate paid on each deposit
category for the periods indicated:
2021
2020
2019
Year Ended December 31,
(Dollars in thousands)
Average
Balance
Interest
Expense
Average
Rate
Paid
Average
Balance
Interest
Expense
Average
Rate
Paid
Average
Balance
Interest
Expense
Average
Rate
Paid
Interest-bearing
demand
Money market
Time deposits
Savings
Total interest-
bearing
$ 1,396,805 $
2,822
0.20 % $ 1,170,913 $
5,179
0.44 % $ 846,859 $
9,264
1.09 %
2,011,827
607,742
232,081
5,863
4,576
157
0.29
0.75
0.07
1,553,376
735,297
180,298
9,816
11,935
220
0.63
1.62
0.12
1,097,951
827,720
153,583
17,813
17,386
253
1.62
2.10
0.16
4,248,455
13,418
0.32
3,639,884
27,150
0.75
2,926,113
44,716
1.53
Noninterest-bearing
demand
1,905,045
1,499,936
1,054,903
—
Total average
deposits
$ 6,153,500 $ 13,418
0.22
$ 5,139,820 $ 27,150
0.53
$ 3,981,016 $ 44,716
1.12
64
Our average deposit balance was $6.15 billion for the year ended December 31, 2021, an increase of $1.01 billion,
or 19.7%, from $5.14 billion for the year ended December 31, 2020. The average annualized rate paid on our interest-bearing
deposits for the year ended December 31, 2021, was 0.32%, compared to 0.75% for the year ended December 31, 2020. The
decrease in the average cost of our deposits was primarily the result of the low interest rate environment. The Federal Reserve
lowered the federal funds target rate twice during March 2020, resulting in an aggregate 150 basis point decrease in the target
rate, which did not change during the year ended December 31, 2021. When the target rate reductions began, we took action
to lower deposit rates on non-maturity deposits.
Average noninterest-bearing deposits at December 31, 2021, were $1.91 billion, compared to $1.50 billion at
December 31, 2020, an increase of $405.1 million, or 27.0%, and represented 31.0% and 29.2% of average total deposits for
the year ended December 31, 2021 and 2020, respectively.
The following table presents the maturity distribution of our time deposits and the amount of such deposits in excess
of the FDIC insurance limit at December 31, 2021. There were no otherwise uninsured time deposits below the FDIC
insurance limit at December 31, 2021. The estimated total amount of uninsured deposits at December 31, 2021, was
$3.79 billion.
(Dollars in thousands)
Remaining maturity:
3 months or less
Over 3 through 6 months
Over 6 through 12 months
Over 12 months
Total
Borrowings
U.S. Time Deposits
in Excess of the
FDIC Insurance
Limit
Total Time
Deposits
$
$
29,594 $
27,283
49,271
22,508
128,656 $
144,785
121,192
161,581
115,570
543,128
Short-term FHLB advances decreased $650.0 million at December 31, 2021 compared to December 31, 2020,
primarily driven by PPP forgiveness payments, increases in deposits and declines in warehouse loan balances during the year
ended December 31, 2021, which drove an increase in overall liquidity and a reduction in the reliance on borrowings.
Additionally, using funds generated from the sale of investment securities, we prepaid $13.1 million in long-term FHLB
advances and incurred related prepayment fees of $1.6 million during the first quarter of 2021.
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 (1)
Total FHLB advances and other borrowings
Subordinated indebtedness, net
December 31,
2021
2020
9,447 $
—
43,355
256,999
309,801 $
157,417 $
8,408
650,000
55,485
270,715
984,608
157,181
$
$
$
____________________________
(1)
Includes a FHLB advance of $250.0 million at December 31, 2021 and 2020, callable quarterly with a final maturity in 2033, carrying a rate of 1.65%.
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 0.08% and 0.22% for the years ended December
31, 2021 and 2020, respectively.
Our long-term debt consists of advances from the FHLB with original maturities greater than one year and the
subordinated indebtedness captioned and described below. Interest rates for FHLB long-term advances outstanding at
December 31, 2021, ranged from 1.65% to 4.57% and were subject to restrictions or penalties in the event of prepayment.
65
At December 31, 2021, we held 43 unfunded letters of credit from the FHLB totaling $599.3 million with expiration
dates ranging from January 20, 2022, to March 22, 2023. 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, 2021 and 2020, were $982.2 million and
$456.9 million, respectively.
Additionally, at December 31, 2021, we had the ability to borrow $856.8 million from the discount window at the
Federal Reserve Bank of Dallas ("FRB"), with $1.09 billion in commercial and industrial loans pledged as collateral. There
were no borrowings against this line at December 31, 2021.
Subordinated Indebtedness
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, subject to customary fallback provision upon the discontinuation of LIBOR. 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
SOFR 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.
The Company has two wholly-owned, unconsolidated subsidiary grantor trusts that were established for the purpose
of issuing trust preferred securities. For additional information regarding these trusts, please see Note 11 - Borrowings in the
consolidated financial statements contained in Item 8 of this report.
Liquidity and Capital Resources
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, 2021 and 2020, our cash and liquid
securities totaled 23.2% and 13.6% 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 to
fund payment of any dividends that may be declared for our common stockholders and interest and principal on any
outstanding debt or trust preferred securities incurred by the Company. The Company had available cash balances of $28.9
million and $42.9 million at December 31, 2021 and 2020, 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 a line of credit under the terms of which the loan amount shall not exceed an aggregate principal
balance of $100 million, consisting of an initial $50 million extension of credit and any one or more potential incremental
revolving loan amounts that the lender may make in its sole discretion, up to an aggregate principal of $50 million, upon the
request of the Company. See Note 11 - Borrowings to our consolidated financial statements contained in Item 8 of this report
for more information on the holding company line of credit.
66
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.
During 2020, we took a number of precautionary actions to enhance our financial flexibility by bolstering our
liquidity to ensure we had adequate cash readily available to meet both expected and unexpected funding needs. Currently,
we believe we have sufficient liquidity from our available on- and off-balance sheet liquidity sources, however, should
market conditions change, we may take further actions to enhance our financial flexibility.
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 to our consolidated financial statements
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, 2021 or 2020. 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, 2021.
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 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. The notes provided us with $68.8
million and $78.6 million, respectively, in additional liquidity.
In the normal course of business as a financial services provider, we enter into various 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 are discussed in more detail in Note 18 - Commitments and Contingencies to our consolidated
financial statements contained in Item 8 of this report.
67
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. Changes in stockholders' equity is reflected below:
(Dollars in thousands)
Balance at January 1, 2021
Net income
Other comprehensive income, net of tax
Dividends declared - common stock ($0.49 per share)
Stock Issuance - Lincoln Agency and Pulley-White Acquisitions
Other
Balance at December 31, 2021
Stock Repurchases
Total
Stockholders' Equity
$
$
647,150
108,546
(19,920)
(11,539)
7,458
(1,484)
730,211
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 SEC. The stock buyback program was initially approved for a period of 36 months, but
may be extended, terminated or amended by our board of directors. The stock buyback program does not obligate us to
purchase any shares at any time.
During the first quarter of the year ended December 31, 2021, the Company repurchased an aggregate of 37,568
shares of its common stock pursuant to its stock buyback program at an average price per share of $33.42, for an aggregate
purchase price of $1.3 million. There were no stock repurchases after March 2021. Prior to December 31, 2020, the Company
had cumulatively repurchased an aggregate of 330,868 shares of its common stock shares pursuant to its stock buyback
program for an aggregate purchase price of $10.8 million. As of December 31, 2021, there remained approximately
$28.0 million of capacity under the 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, 2021, and December 31, 2020, we and the Bank were in compliance with
all applicable regulatory capital requirements, and the Bank was classified as "well capitalized" for purposes of the prompt
corrective action regulations of the Federal Reserve. As we deploy capital and continue to grow operations, regulatory capital
levels may decrease depending on the level of earnings. However, we expect to monitor and control growth in order to
remain "well capitalized" under applicable regulatory guidelines and in compliance with all applicable regulatory capital
standards. While we are currently classified as well capitalized, an extended economic recession could adversely impact our
reported and regulatory capital ratios.
68
The following table presents our regulatory capital ratios, as well as those of the Bank, at the dates indicated:
(Dollars in thousands)
Origin Bancorp, Inc.
December 31, 2021
December 31, 2020
Amount
Ratio
Amount
Ratio
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 total consolidated 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 total consolidated assets)
Non-GAAP Financial Measures
681,039
690,448
897,503
690,448
724,440
724,440
852,825
724,440
11.20 % $
11.36
14.77
9.20
11.97 % $
11.97
14.09
9.66
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
Our accounting and reporting policies conform to U.S.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 U.S. 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.
We believe non-GAAP measures and ratios, when taken together with the corresponding U.S. 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 U.S. GAAP. In the following table, we have provided a reconciliation of pre-tax, pre-provision earnings to
net income and the detail of the calculation of tangible book value per common share.
(Dollars in thousands, except per share amounts)
Calculation of PTPP Earnings:
Net Income
Plus: provision for credit losses
Plus: income tax expense
PTPP Earnings
December 31,
2021
2020
2019
$
108,546 $
36,357 $
(10,765)
23,885
59,900
7,996
$
121,666 $
104,253 $
53,882
9,568
12,666
76,116
599,262
31,540
567,722
Calculation of Tangible Book Value per Common Share:
Total common stockholders' equity
Less: goodwill and other intangible assets, net
Tangible Common Equity
$
730,211 $
647,150 $
51,330
678,881
30,480
616,670
Divided by common shares outstanding at the end of the period
23,746,502
23,506,312
23,480,945
Tangible Book Value per Common Share
$
28.59 $
26.23 $
24.18
69
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 includes 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 are marginally modeling
outside of policy in most negative 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.
70
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:
Change in Interest Rates (basis points)
+400
+300
+200
+100
Base
-100
-200
December 31, 2021
% Change in Net
Interest Income
% Change in Fair
Value of Equity
27.7 %
20.0
13.2
9.1
(9.0)
(16.4)
3.4 %
1.8
1.7
2.8
(5.6)
(11.6)
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 versus 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 financial statements included herein have been prepared in accordance with U.S. GAAP. U.S. GAAP presently
requires us to measure financial position and operating results primarily in terms of historic dollars. Changes in the relative
value of money due to inflation or recession are generally not considered. The primary effect of inflation on our operations is
reflected in increased operating costs. In management’s opinion, changes in interest rates affect the financial condition of a
financial institution to a far greater degree than changes in the inflation rate. While interest rates are greatly influenced by
changes in the inflation rate, they do not necessarily change at the same rate or in the same magnitude as the inflation rate.
Interest rates are highly sensitive to many factors that are beyond our control, including changes in the expected rate of
inflation, the influence of general and local economic conditions and the monetary and fiscal policies of the United States
government, its agencies and various other governmental regulatory authorities.
Market Risk
Regulators expect 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 eighteen months, ahead of the FCA's announced cessation of the remaining LIBOR settings
by June 30, 2023. Please see "Item 1A Risk Factors - Risks Related to Our Business" included in this report for further
information.
71
Item 8.
Financial Statements and Supplementary Data
ORIGIN BANCORP, INC.
Financial Statements
DECEMBER 31, 2021, 2020 and 2019
INDEX
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID 686)
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
73
76
77
79
80
81
83
72
Report of Independent Registered Public Accounting Firm
To the Shareholders, Board of Directors and Audit Committee
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, 2021 and 2020, 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2021, 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, 2021, 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 February 23, 2022, 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, and the related
amendments.
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 matter communicated below is a matter arising from the current-period audit of the financial
statements that was 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,
73
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 matter
below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Allowance for Credit Losses
The Company’s loan portfolio totaled $5.23 billion as of December 31, 2021 and the allowance for credit losses on
loans was $64.6 million. The Company’s unfunded loan commitments totaled $1.6 billion, with an allowance for
credit loss of $2.3 million. The Company’s available-for-sale and held-to-maturity securities portfolios totaled $1.5
billion as of December 31, 2021, and the allowance for credit losses on securities was $167,000. 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
cancelable 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, 2021 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 at January 1, 2020 and as of December 31,
2021, to address this critical audit matter included:
•
•
ACL, including:
Obtained an understanding of the Company’s process for establishing the ACL.
Tested the design and operating effectiveness of controls, including those related to technology, over the
o
o
o
o
o
o
o
o
o
o
o
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,
management’s review and disclosure controls over the ACL
•
relevance and reliability of such information
Tested the completeness and accuracy of the information utilized in the ACL, including evaluating the
Tested the ACL model’s computational accuracy such as probability of default, loss given default and
•
estimated remaining lives of loans
•
reasonableness of the significant assumptions including consideration of impact of the COVID-19 pandemic
Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the
74
•
•
Tested the loan review functions and evaluated the reasonableness of loan credit risk ratings
Evaluated the reasonableness of specific allowances on individually evaluated loans
•
within peer groups
Evaluated the overall reasonableness of assumptions used by management considering trends identified
•
statements
Evaluated the accuracy and completeness of Topic 326 disclosures in the consolidated financial
•
•
Evaluated credit quality trends in delinquencies, non-accruals, charge-offs and loan risk ratings;
Tested estimated utilization rate of unfunded loan commitments
•
securities for reasonableness
Reviewed documentation prepared to assess the methodology utilized in the ACL calculation for
/s/ BKD, LLP
We have served as the Company’s auditor since 2016.
Little Rock, Arkansas
February 23, 2022
75
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 $167 and $66 at December 31,
2021, and December 31, 2020, respectively (fair value of $25,117 and $41,205 at
December 31, 2021, and December 31, 2020, respectively)
Securities carried at fair value through income
Total securities
Non-marketable equity securities held in other financial institutions
Loans held for sale ($37,032 and $136,026 at fair value at December 31, 2021, and
December 31, 2020, respectively)
Loans, net of allowance for credit losses of $64,586 and $86,670 at December 31, 2021,
and December 31, 2020, respectively ($17,011 at fair value at December 31, 2020)
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 indebtedness, net
Accrued expenses and other liabilities
Total liabilities
Commitments and contingencies - See Note 18 - 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; 23,746,502 and
23,506,312 shares issued at December 31, 2021, and December 31, 2020, respectively)
Additional paid‑in capital
Retained earnings
Accumulated other comprehensive income
Total stockholders' equity
Total liabilities and stockholders' equity
December 31, 2021
December 31, 2020
$
133,334 $
572,284
705,618
60,544
316,670
377,214
1,504,728
1,004,674
22,767
7,497
1,534,992
45,192
38,128
11,554
1,054,356
62,586
80,387
191,512
5,166,745
5,638,103
80,691
16,220
38,352
51,330
141,758
$
$
7,861,285 $
2,163,507 $
3,864,058
543,128
6,570,693
309,801
157,417
93,163
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
7,131,074
6,981,118
—
118,733
242,114
363,635
5,729
730,211
—
117,532
237,341
266,628
25,649
647,150
$
7,861,285 $
7,628,268
The accompanying notes are an integral part of these consolidated financial statements.
76
ORIGIN BANCORP, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
Years Ended December 31,
2020
2019
2021
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 indebtedness
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 on sales of securities, net
Loss on sales and disposals of other assets, net
Limited partnership investment income (loss)
Swap fee income
Other fee income
Other income
Total noninterest income
$
218,781 $
209,114 $
14,555
6,337
1,983
241,656
13,418
4,654
7,332
25,404
216,252
(10,765)
227,017
15,049
12,927
13,098
1,748
(185)
5,701
814
2,879
10,162
62,193
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
64,652
206,899
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
1,490
4,777
46,478
The accompanying notes are an integral part of these consolidated financial statements.
77
ORIGIN BANCORP, INC.
Consolidated Statements of Income - Continued
(Dollars in thousands, except per share amounts)
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
Basic earnings per common share
Diluted earnings per common share
Years Ended December 31,
2020
2019
2021
93,026
17,347
9,117
3,563
1,574
3,438
3,644
2,904
7,688
6,399
844
2,538
4,697
156,779
132,431
23,885
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
$
$
108,546 $
36,357 $
4.63 $
4.60
1.56 $
1.55
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
53,882
2.30
2.28
The accompanying notes are an integral part of these consolidated financial statements.
78
ORIGIN BANCORP, INC.
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
Net income
Other comprehensive income (loss)
Securities available for sale and transferred securities:
Years Ended December 31,
2021
2020
2019
$
108,546 $
36,357 $
53,882
Net unrealized holding (loss) gain arising during the period
(24,061)
25,646
11,439
Net losses realized as a yield adjustment in interest on investment
securities
Reclassification adjustment for net gain included in net income
Change in the net unrealized (loss) gain on investment securities, before tax
Income tax (benefit) expense related to net unrealized (loss) gain arising
during the period
Change in the net unrealized (loss) gain on investment securities, net of tax
Cash flow hedges:
Net unrealized gain (loss) arising during the period
Reclassification adjustment for (loss) gain included in net income
Change in the net unrealized gain (loss) on cash flow hedges, before tax
Income tax expense (benefit) related to net unrealized gain (loss) on cash
flow hedges
Change in net unrealized position on cash flow hedges, net of tax
(10)
(1,748)
(25,819)
(5,422)
(20,397)
400
(204)
604
127
477
(10)
(580)
25,056
5,262
19,794
(739)
(134)
(605)
(127)
(478)
Other comprehensive (loss) income, net of tax
Comprehensive income
(19,920)
19,316
$
88,626 $
55,673 $
(10)
(20)
11,409
2,396
9,013
(216)
37
(253)
(53)
(200)
8,813
62,695
The accompanying notes are an integral part of these consolidated financial statements.
79
ORIGIN BANCORP, INC.
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands, except per share amounts)
Common Shares
Outstanding
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (loss)
Total
Stockholders'
Equity
23,726,559 $
118,633 $
242,041 $
191,585 $
(2,480) $
—
—
—
54,386
—
(300,000)
23,480,945
—
—
—
56,235
—
(30,868)
—
—
—
272
—
(1,500)
117,405
—
—
—
281
—
(154)
—
—
—
2,141
—
(8,559)
235,623
—
—
—
2,287
—
(569)
23,506,312
117,532
237,341
—
—
100,410
125,386
51,962
—
(37,568)
—
—
502
627
260
—
(188)
—
—
(730)
4,646
1,925
—
(1,068)
53,882
—
321
—
(5,887)
—
239,901
36,357
—
(760)
—
(8,870)
—
266,628
108,546
—
—
—
—
(11,539)
—
—
8,813
—
—
—
—
6,333
—
19,316
—
—
—
—
25,649
—
(19,920)
—
—
—
—
—
23,746,502 $
118,733 $
242,114 $
363,635 $
5,729 $
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)
647,150
108,546
(19,920)
(228)
5,273
2,185
(11,539)
(1,256)
730,211
Balance at January 1, 2019
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
Net income
Other comprehensive loss, net of tax
Recognition of stock compensation, net
Stock Issuance - Lincoln Agency Acquisition
Stock Issuance - Pulley-White Acquisition
Dividends declared - common stock $0.49 per share)
Repurchase of common stock
Balance at December 31, 2021
The accompanying notes are an integral part of these consolidated financial statements.
80
ORIGIN BANCORP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
Cash flows from operating activities:
2021
2020
2019
Net income
$
108,546 $
36,357 $
53,882
Adjustments to reconcile net income to net cash provided by
Year Ended December 31,
operating activities:
Provision for credit losses
Depreciation and amortization
Net amortization on securities
Amortization of investments in tax credit funds
Net realized gain on securities sold
Deferred income tax expense (benefit)
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
Gain on fair value of previously held interest in Lincoln Agency
Other operating activities, net
Net cash provided by operating activities
Cash flows from investing activities:
Cash paid for business combinations
Purchases of securities available for sale
Maturities, pay downs and calls of securities available for sale
Proceeds from sales of securities available for sale
Purchase of securities held to maturity
Maturities, pay downs and calls of securities held to maturity
Pay downs of securities carried at fair value
Net sales (purchases) of non-marketable equity securities held in
other financial institutions
Originations of mortgage warehouse loans
Proceeds from pay-offs of mortgage warehouse loans
Net decrease (increase) in loans, excluding mortgage warehouse
and loans held for sale
Surrender (purchase) of bank-owned life insurance
Return of capital on limited partnership investments
Capital calls on limited partnership investments
Purchase of low-income housing tax credit investments
Purchases of premises and equipment
Proceeds from sales of premises and equipment
Proceeds from sales of other real estate owned
Net cash provided by (used in) investing activities
(10,765)
6,830
7,758
1,825
(1,748)
6,279
2,295
(478,325)
542,638
(17,015)
2,593
82
(810)
(19)
103
(5,213)
6,431
171,485
(7,457)
(717,028)
146,941
44,893
—
15,250
3,243
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
17,583
(16,121,464)
16,578,387
(22,401)
3,386
(13,665,295)
(4,306,171)
12,855,955
4,239,381
55,020
(788,719)
(290,278)
11
—
(225)
(1,254)
(5,015)
18
3,949
12,852
—
818
(525)
—
(7,198)
—
4,451
(4,500)
503
(1,521)
—
(11,152)
27
470
(2,115,732)
(291,185)
The accompanying notes are an integral part of these consolidated financial statements.
81
ORIGIN BANCORP, INC.
Consolidated Statements of Cash Flows - Continued
(Dollars in thousands)
Cash flows from financing activities:
2021
2020
2019
Year Ended December 31,
Net increase in deposits
$
819,378 $
1,522,703
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
Issuance of subordinated indebtedness, net
Net increase (decrease) in securities sold under agreements to
repurchase
Dividends paid
Cash received from exercise of stock options
Common stock repurchased
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Interest paid
Income taxes paid
Significant non-cash transactions:
—
(13,716)
—
—
5,726,000
(6,376,000)
—
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
—
1,039
(11,525)
146
(1,256)
144,066
328,403
377,214
(8,309)
(8,854)
248
(723)
2,200,541
85,696
291,518
$
$
705,617 $
377,214 $
26,265 $
21,164
36,432 $
24,974
(23,597)
(5,863)
166
(10,059)
404,472
174,840
116,678
291,518
53,227
10,023
2,659
1,577
Unsettled liability for investment purchases recorded at trade date
Real estate acquired in settlement of loans
8,191
3,889
1,514
2,446
The accompanying notes are an integral part of these consolidated financial statements.
82
ORIGIN BANCORP, INC.
Condensed 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 Lincoln Agency, LLC (the "Lincoln Agency"), Lincoln Agency
Transportation Insurance, Pulley-White Insurance Agency ("Pulley-White"), Reeves, Coon & Funderburg, Simoneaux &
Wallace Agency and Thomas & Farr Agency. 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.
83
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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.
At December 31, 2021 and 2020 the Company had cash collateral required to be held with counterparties on certain
derivative transactions as discussed in Note 12 - Derivative Financial Instruments.
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 on 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.
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 $15.7 million and
$12.1 million at December 31, 2021 and 2020, 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, 2021, 2020 and 2019.
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. Please see Mortgage Servicing Rights and Transfers of
Financial Assets below for information on the GNMA repurchase asset which represents the difference between the total
loans held for sale on the face of the balance sheet and the loans held for sale at fair value also shown on the face of the
balance sheet.
84
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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.
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 at December 31, 2020, 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. Loans may be placed on nonaccrual status even if the contractual
payments are not past due if information becomes available that causes substantial doubt about the borrower's ability to meet
the contractual obligations of the loan. When accrual of interest is discontinued, all unpaid accrued interest is reversed. Past
due status is based on 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 contractual 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. 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.
85
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 2021. 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.
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.
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.
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. 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.
86
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Leases.
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.
Right of use ("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.
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.
87
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 2021 and 2020, the balance of OREO was $1.5
million and $1.6 million, respectively, and included as a component of accrued interest receivable and 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.
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.
88
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 2021 and 2020.
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, 2021, 2020 or 2019. Federal income
tax expense or benefit has been allocated to subsidiaries on a separate return basis.
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, 2021 and 2020, investments in limited partnerships, LLCs and other privately held companies
totaled $21.4 million and $15.7 million, respectively, and were included in accrued interest receivable and other assets in the
accompanying consolidated balance sheets.
89
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 2021 and 2020, the Company had investments in tax credit
entities of $11.1 million and $7.6 million, respectively, which are included in accrued interest receivable and other assets in
the accompanying consolidated balance sheets.
Earnings Per Share.
Basic and diluted earnings per common share are calculated using the treasury method,
under which 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.
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 anti-dilutive.
90
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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. 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 Accounting Standards Codification ("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.
•
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.
91
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The adoption of ASC Topic 326 was recorded on its 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 on
January 1, 2020, and did not have a significant impact on our financial statements.
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 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 became effective for fiscal years beginning after December 15, 2020, including interim periods
within those fiscal years, and did not have a significant impact on the Company's consolidated financial statements or
disclosures.
ASU No. 2021-06, Presentation of Financial Statements (Topic 205), Financial Services —Depository and
Lending(Topic 942), and Financial Services — Investment Companies (Topic 946) —Amendments to SEC Paragraphs
Pursuant to SEC Final Rule Releases No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed
Businesses, and No. 33-10835, Update of Statistical Disclosures for Bank and Savings and Loan Registrants amends the
Accounting Standards Codification in order to agree the Codification to the new SEC releases 33-10786 and 33-10835 (the
"Releases"). The Releases clearly define whether an acquired or disposed business subsidiary is significant; update, expand
and eliminate certain disclosures; eliminate overlap with certain SEC and U.S.GAAP rules; and add a new subpart of
Regulation S-K. The ASU is effective upon issuance, however, the SEC release on which the ASU is based is effective for
registrants with the first fiscal year ending after December 15, 2021, while Guide 3 will be rescinded effective January 1,
2023. Implementation of this ASU is not expected to materially impact the Company's financial statement disclosures.
Effect of Newly Issued But Not Yet Effective Accounting Standards
ASU No. 2021-08, Business Combinations (Topic 805) — Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers. The amendments in this update affect accounting for acquired revenue contracts with
customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an
acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The ASU
is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.
Implementation of this ASU is not expected to materially impact the Company's financial statements or disclosures.
92
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 2 - Earnings Per Share
Basic and diluted earnings per common share 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. Information regarding the Company's basic and diluted earnings per common share
is presented in the following table:
(Dollars in thousands, except per share amounts)
Numerator:
Net income
Denominator:
Years Ended December 31,
2021
2020
2019
$
108,546 $
36,357 $
53,882
Weighted average common shares outstanding
Dilutive effect of stock-based awards
23,431,504
23,367,221
23,470,746
177,082
144,731
203,319
Weighted average diluted common shares outstanding
23,608,586
23,511,952
23,674,065
Basic earnings per common share
Diluted earnings per common share
$
4.63 $
4.60
1.56 $
1.55
2.30
2.28
93
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 3 - Securities
The following table is a summary of the amortized cost and estimated fair value, including the allowance for credit
losses and 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, 2021
Available for sale:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Allowance
for Credit
Losses
Net
Carrying
Amount
State and municipal securities
$ 394,046 $
14,095 $
(2,323) $ 405,818 $
— $ 405,818
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:
80,498
98,892
65,691
559,655
20,000
196,691
81,985
2,509
2
—
3,751
2
460
1,077
(273)
(1,236)
(1,448)
(5,605)
82,734
97,658
64,243
557,801
(330)
19,672
(3,411)
193,740
—
83,062
—
—
—
—
—
—
—
82,734
97,658
64,243
557,801
19,672
193,740
83,062
$ 1,497,458 $
21,896 $
(14,626) $ 1,504,728 $
— $ 1,504,728
State and municipal securities
$
22,934 $
2,183 $
— $
25,117 $
(167) $
22,767
Securities carried at fair value through income:
State and municipal securities(1)
$
7,375 $
— $
— $
7,497 $
— $
7,497
December 31, 2020
Available for sale:
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
____________________________
(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.
94
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Securities with unrealized losses at December 31, 2021 and 2020, 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, 2021
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
$
82,627 $
(1,651) $
16,617 $
(672) $
99,244 $
(2,323)
Corporate bonds
U.S. government and agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Commercial collateralized mortgage obligations
Residential collateralized mortgage obligations
Total
Held to maturity:
13,299
97,010
57,703
409,382
14,568
127,080
(201)
(1,234)
(1,167)
(5,577)
(330)
2,928
440
6,540
1,693
—
(72)
(2)
(281)
(28)
—
16,227
97,450
64,243
411,075
14,568
(2,623)
31,301
(788)
158,381
(273)
(1,236)
(1,448)
(5,605)
(330)
(3,411)
$ 801,669 $
(12,783) $
59,519 $
(1,843) $ 861,188 $
(14,626)
State and municipal securities
$
— $
— $
— $
— $
— $
—
December 31, 2020
Available for sale:
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
$
— $
— $
— $
— $
— $
—
Management evaluates available for sale debt securities in unrealized loss positions to determine whether the
impairment is due to credit-related factors or non credit-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.
Management does not have the intent to sell any of the securities in an unrealized loss position 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, 2021, management believes that the unrealized losses detailed in the previous table are
due to non credit-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,
Impact of adopting ASC 326
Credit loss allowance (recovery)
Balance at December 31,
Municipal Securities
2021
2020
$
$
66 $
—
101
167 $
—
96
(30)
66
95
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Accrued interest of $6.1 million and $5.4 million was not included in the calculation of the allowance at December
31, 2021 or 2020, respectively. There were no past due held-to-maturity securities or held-to-maturity securities in nonaccrual
status at December 31, 2021 or 2020.
Proceeds from sales and calls, and related gross gains and losses of securities available for sale, are shown below.
(Dollars in thousands)
Proceeds from sales/calls
Gross realized gains
Gross realized losses
Year Ended December 31,
2021
2020
2019
$
44,893 $
64,702 $
1,780
(32)
774
(194)
27,766
161
(141)
The following table presents the amortized cost and fair value of securities available for sale and held to maturity at
December 31, 2021, grouped by contractual maturity. Mortgage-backed securities, collateralized mortgage obligations and
asset-backed securities, 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 loans.
(Dollars in thousands)
December 31, 2021
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
Commercial collateralized mortgage obligations
Residential collateralized mortgage obligations
Asset-backed securities
Total
Held to Maturity
Available for Sale
Amortized Cost
Fair Value
Amortized Cost
Fair Value
$
— $
—
— $
—
22,934
25,117
—
—
—
—
—
—
—
—
—
—
—
—
5,618 $
117,609
153,260
296,949
65,691
559,655
20,000
196,691
81,985
5,623
120,398
155,903
304,286
64,243
557,801
19,672
193,740
83,062
$
22,934 $
25,117 $
1,497,458 $
1,504,728
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, 2021
December 31, 2020
Carrying value of securities pledged to secure public deposits
$
331,651 $
Carrying value of securities pledged to repurchase agreements
10,312
289,537
10,982
96
ORIGIN BANCORP, INC.
Condensed 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, 2021
December 31, 2020
$
$
80,387 $
191,512
1,693,512 $
1,370,928
530,083
909,739
3,133,334
1,454,235
627,078
16,684
5,231,331
—
5,231,331
64,586
$
5,166,745 $
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
____________________________
(1)
(2)
Includes $105.8 million and $546.5 million of PPP loans at December 31, 2021 and December 31, 2020, respectively.
Includes net deferred loan fees of $9.6 million and $13.7 million at December 31, 2021, and December 31, 2020, respectively.
There were no loans held for investment ("LHFI") for which the fair value option was elected at December 31, 2021,
and $17.0 million of commercial real estate loans for which the fair value option was elected at December 31, 2020. 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 was a participating lender in the Paycheck Protection Program ("PPP") in 2020 and 2021. There were
approximately $105.8 million and $546.5 million in PPP loans outstanding included in the Company’s commercial and
industrial loan portfolio at December 31, 2021 and 2020, respectively, which included $3.0 million and $9.6 million in net
deferred loan fees at December 31, 2021 and 2020, respectively. PPP loans have a maximum maturity of five years and earn
interest at 1%. PPP loans are fully guaranteed by the U.S. government and can be forgiven by the Small Business
Administration ("SBA") if the borrower uses the proceeds to pay specified expenses. The Company believes that the vast
majority of its PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the program, and as of
December 31, 2021, forgiveness has been granted on $648.4 million of PPP loans.
Credit quality indicators. As part of the Company's commitment to manage the credit quality of its loan portfolio,
management annually and periodically 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 cities and
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.
97
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following is a summary description of the Company's internal risk ratings:
• Pass (1-6)
Minimal risk (1)
Moderate risk (2)
Better than average risk (3)
Average risk (4)
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.
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 has
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
98
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
•
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.
99
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following table reflects recorded investments in loans by credit quality indicator and origination year at
December 31, 2021, 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, 2021.
Term Loans
Amortized Cost Basis by Origination Year
2021
2020
2019
2018
2017
Prior
Revolving
Loans
Amortized
Cost Basis
Total
$ 556,218 $ 369,128 $ 278,045 $ 236,543 $ 111,308 $ 86,498 $
22,904 $ 1,660,644
—
2,045
—
625
—
772
8,392
2,456
15,828
—
299
2,288
—
163
24,220
8,648
Commercial real estate:
Pass
Special mention
Classified
Total commercial real estate loans
$ 558,263 $ 369,753 $ 278,817 $ 247,391 $ 127,435 $ 88,786 $
23,067 $ 1,693,512
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
— $
— $
— $
120 $
24 $
26 $
— $
—
—
—
48
3
14
—
— $
— $
— $
72 $
21 $
12 $
— $
170
65
105
Construction/land/land development:
Pass
Special mention
Classified
$ 256,212 $ 102,459 $ 85,442 $ 32,128 $
5,422 $
553 $
30,729 $ 512,945
—
443
—
297
8,126
—
272
1,677
1,003
158
—
—
—
5,162
9,129
8,009
Total construction/land/land development loans
$ 256,655 $ 102,756 $ 93,840 $ 33,805 $
6,583 $
553 $
35,891 $ 530,083
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
— $
— $
— $
— $
— $
— $
— $
—
—
—
—
—
—
—
— $
— $
— $
— $
— $
— $
— $
—
—
—
Residential real estate:
Pass
Special mention
Classified
$ 313,898 $ 252,115 $ 109,564 $ 52,515 $ 45,042 $ 59,690 $
60,342 $ 893,166
—
1,398
174
191
—
421
2,393
2,848
477
1,819
—
6,606
—
246
1,072
15,501
Total residential real estate loans
$ 315,296 $ 252,480 $ 111,957 $ 55,784 $ 47,338 $ 66,296 $
60,588 $ 909,739
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
— $
7 $
61 $
— $
— $
10 $
— $
—
21
19
—
25
52
—
78
117
— $
(14) $
42 $
— $
(25) $
(42) $
— $
(39)
100
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Term Loans
Amortized Cost Basis by Origination Year
2021
2020
2019
2018
2017
Prior
Revolving
Loans
Amortized
Cost Basis
Total
(Dollars in thousands)
Commercial and industrial:
Pass
Special mention
Classified
$ 448,377 $ 164,910 $ 93,488 $ 64,791 $ 14,742 $ 24,014 $ 599,144 $ 1,409,466
259
14,378
2,170
167
—
2,978
1,519
3,849
—
—
3,849
3,008
3,752
8,840
7,700
37,069
Total commercial and industrial loans
$ 463,014 $ 167,247 $ 96,466 $ 70,159 $ 18,591 $ 27,022 $ 611,736 $ 1,454,235
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
Mortgage Warehouse Lines of Credit:
Pass
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
$
$
$
9 $
1,172 $
54 $
5 $
1,467 $
6,354 $
2,862 $ 11,923
—
18
51
3
102
204
339
717
9 $
1,154 $
3 $
2 $
1,365 $
6,150 $
2,523 $ 11,206
— $
— $
— $
— $
— $
— $ 627,078 $ 627,078
— $
— $
— $
— $
— $
— $
— $
—
—
—
—
—
—
—
— $
— $
— $
— $
— $
— $
— $
—
—
—
Consumer:
Pass
Classified
$
6,976 $
2,169 $
1,467 $
443 $
55 $
67 $
5,407 $ 16,584
Total consumer loans
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
$
26
21
1
—
—
1
51
100
7,002 $
2,190 $
1,468 $
443 $
55 $
68 $
5,458 $ 16,684
— $
5 $
29 $
2 $
— $
9 $
18 $
—
—
20
7
1
17
4
— $
5 $
9 $
(5) $
(1) $
(8) $
14 $
63
49
14
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
$
— $
— $
— $ 3,622 $
199 $
1,103 $
— $
4,924
Current period gross recoveries
—
—
—
—
—
19
—
19
Current period net charge-offs (recoveries)
(1)
4,905
Excludes $17.0 million of commercial real estate loans at fair value at December 31, 2020, which are not included in the loss estimation methodology
due to the fair value option election.
— $ 3,622 $
1,084 $
199 $
— $
— $
— $
$
101
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)
2020
2019
2018
2017
2016
Prior
Revolving
Loans
Amortized
Cost Basis
Total
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
Commercial and industrial:
Pass
Special mention
Classified
$ 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
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 (recoveries)
$
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 (recoveries)
$
$
$
— $
— $
— $
— $
— $
— $ 1,084,001 $ 1,084,001
— $
— $
— $
— $
— $
— $
— $
—
—
—
—
—
—
—
— $
— $
— $
— $
— $
— $
— $
—
—
—
Consumer:
Pass
Classified
Total consumer loans
Current period gross charge-offs
Current period gross recoveries
Current period net charge-offs (recoveries)
$
$
$
$
6,702 $
3,318 $
1,578 $
203 $
116 $
83 $
5,935 $ 17,935
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
102
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following tables present the Company's loan portfolio aging analysis at the dates indicated:
December 31, 2021
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
$
22 $
— $
197 $
219 $ 1,693,293 $ 1,693,512 $
—
2,245
2,267
77
—
90
129
352
481
1,172
—
—
52
10,331
10,580
10,927
—
21
181
12,928
529,902
896,811
530,083
909,739
13,328
3,120,006
3,133,334
12,176
1,442,059
1,454,235
—
111
627,078
627,078
16,573
16,684
$
2,434 $
1,653 $
21,528 $
25,615 $ 5,205,716 $ 5,231,331 $
—
—
—
—
—
—
—
—
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
Construction/land/land development
Residential real estate
Total real estate
Commercial and industrial
Mortgage warehouse lines of credit
Consumer
Total LHFI
(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.
103
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following tables detail activity in the allowance for loan credit losses by portfolio segment. Accrued interest of
$15.9 million and $20.3 million was not included in the book value for the purposes of calculating the allowance at December
31, 2021, and December 31, 2020, respectively. Allocation of a portion of the allowance to one category of loans does not
preclude its availability to absorb losses in other categories.
Year Ended December 31, 2021
(Dollars in thousands)
Loans secured by real estate:
Beginning
Balance
Charge-
offs
Recoveries
Provision(1)
Ending
Balance
Average
Balance
Net
Charge-
offs to
Loan
Average
Balance
Commercial real estate
$
15,430 $
170 $
65 $
(1,900) $
13,425 $ 1,501,890
0.01 %
Construction/land/land
development
Residential real estate
8,191
9,418
—
78
Commercial and industrial
51,857
11,923
Mortgage warehouse lines of
856
918
—
63
credit
Consumer
Total
—
117
717
—
49
(4,180)
(3,341)
(505)
(516)
(356)
4,011
6,116
528,618
916,039
40,146
1,627,077
340
548
753,588
16,764
—
—
0.69
—
0.08
0.21
$
86,670 $
12,234 $
948 $
(10,798) $
64,586 $ 5,343,976
(1)
The $10.8 million provision for credit losses net benefit on the consolidated statements of income includes a $10.8 million provision for loan losses
net benefit, a $68,000 provision for off-balance sheet commitments net benefit and a $101,000 provision for held to maturity securities credit losses
for the year ended December 31, 2021.
Year Ended December 31, 2020
Beginning
Balance
Impact of
Adopting
ASC 326
Charge-
offs
Recoveries Provision(1)
Ending
Balance
Average
Balance
Net
Charge-
offs to
Loan
Average
Balance
(Dollars in thousands)
Loans secured by real
estate:
Commercial real estate $
10,013 $
(5,052) $
4,924 $
19 $
15,374 $
15,430 $ 1,322,477
0.37 %
Construction/land/land
development
Residential real estate
Commercial and
industrial
Mortgage warehouse
lines of credit
Consumer
Total
3,711
6,332
1,141
(2,526)
—
692
1
202
3,338
6,102
8,191
9,418
554,038
769,838
—
0.06
16,960
7,296
6,702
1,022
33,281
51,857
1,710,648
0.33
262
242
29
360
—
76
—
24
565
368
856
918
574,837
18,707
$
37,520 $
1,248 $
12,394 $
1,268 $
59,028 $
86,670 $ 4,950,545
—
0.28
0.22
(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 provision benefit for held to maturity securities credit losses for the year ended December
31, 2020.
104
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Year Ended December 31, 2019
(Dollars in thousands)
Loans secured by real estate:
Beginning
Balance
Charge-
offs
Recoveries
Provision(1)
Ending
Balance
Average
Balance
Net
Charge-
offs to
Loan
Average
Balance
Commercial real estate
$
8,999 $
1,420 $
341 $
2,093 $
10,013 $ 1,247,941
0.09 %
Construction/land/land
development
Residential real estate
Commercial and industrial
Mortgage warehouse lines of
credit
Consumer
Total
3,331
5,705
15,616
316
236
38
265
8,231
29
148
40
185
3,627
—
48
378
707
3,711
6,332
505,795
661,581
5,948
16,960
1,324,002
(25)
106
262
242
212,733
20,809
$
34,203 $
10,131 $
4,241 $
9,207 $
37,520 $ 3,972,861
—
0.01
0.35
0.01
0.48
0.15
(1)
The $9.6 million provision for credit losses on the consolidated statements of income includes a $9.2 million net loan loss provision, a $361,000
provision for off-balance sheet commitments for the year ended December 31, 2019.
The decrease in provision expense compared to the year ended December 31, 2020, was primarily due to
improvement in forecasted economic conditions during the year ended December 31, 2021, as compared to continuing
uncertainty related to ongoing economic impact and duration of the COVID-19 pandemic during the year ended December
31, 2020. The Company's credit quality profile in relation to the allowance for loan credit losses drove a decline of
$25.1 million in the collectively evaluated portion of the reserve during the year ended December 31, 2021, of which a
$19.6 million decrease was related to qualitative factor changes across the Company's risk pools for the year ended December
31, 2021. These declines were partially offset by an increase in certain specific loan reserves, at December 31, 2021.
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 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 tables show the recorded investment in loans by loss estimation methodology, excluding loans for
which the fair value option was elected at December 31, 2020. There were no LHFI for which the fair value option was
elected at December 31, 2021.
(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, 2021
Individually Evaluated
Probability of
Default
Fair Value of
Collateral
Discounted
Cash Flow
Total
$
1,691,269 $
166 $
2,077 $
1,693,512
529,789
898,456
1,441,204
627,078
16,682
—
8,150
8,547
—
2
294
3,133
4,484
—
—
530,083
909,739
1,454,235
627,078
16,684
$
5,204,478 $
16,865 $
9,988 $
5,231,331
105
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
(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 tables show the allowance for loan credit losses by loss estimation methodology at December 31,
2021, and 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
(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, 2021
Individually Evaluated
Probability of
Default
Fair Value of
Collateral
Discounted
Cash Flow
Total
$
13,416 $
— $
9 $
3,997
5,017
29,995
340
546
—
19
6,680
—
2
14
1,080
3,471
—
—
13,425
4,011
6,116
40,146
340
548
$
53,311 $
6,701 $
4,574 $
64,586
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
Note that the Company is not using the collateral maintenance agreement practical expedient. The fair value of
equipment collateral that secures commercial and industrial loans is estimated by third-party valuation experts.
106
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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.
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
Nonaccrual With No
Allowance for Credit Loss
Nonaccrual
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
$
453 $
1,053 $
512 $
52
7,684
8,189
58
—
1,319
2,436
4,808
82
—
338
11,647
12,497
12,306
100
3,704
2,962
6,530
13,196
12,897
56
26,149
Total nonaccrual loans
$
8,247 $
4,890 $
24,903 $
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, 2021, the Company had
no funding commitments for which the terms have been modified in TDRs.
For the years ended December 31, 2021, 2020 and 2019, gross interest income that would have been recorded had
the nonaccruing loans been current in accordance with their original terms was $1.9 million, $1.5 million and $1.5 million,
respectively. No interest income was recorded on these loans while they were considered nonaccrual during the years ended
December 31, 2021, 2020 and 2019.
The Company elects the fair value option for recording residential mortgage loans held for sale, as well as for certain
commercial real estate loans at December 31, 2020, in accordance with U.S. GAAP. The Company had $1.8 million of
nonaccrual mortgage loans held for sale that were recorded using the fair value option election at December 31, 2021,
compared to $681,000 at December 31, 2020. There were no LHFI that were recorded using the fair value option election at
December 31, 2021.
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, 2021
December 31, 2020
$
$
4,064 $
2,763
6,827 $
5,671
3,314
8,985
The tables below summarize loans classified as TDRs by loan and concession type during the dates indicated.
(Dollars in thousands)
Residential real estate
Commercial and industrial
Total
Year Ended December 31, 2021
Number of
Loans
Restructured
Pre-
Modification
Recorded
Balance
Term
Concessions
Interest Rate
Concessions
Combination
of Term and
Rate
Concessions
Total
Modifications
1 $
1
2 $
31 $
100
131 $
107
26 $
100
126 $
— $
—
— $
— $
—
— $
26
100
126
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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
(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
During the year ended December 31, 2021, one loan with an outstanding principal balance of $9,000 defaulted after
having been modified as a TDR within the previous 12 months. During the year ended December 31, 2020, 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 an 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, 2021, 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.
108
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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; and
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, 2021 and 2020, 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 2021 or 2020.
Securities available for sale
92,245
1,371,022
(Dollars in thousands)
State and municipal securities
Corporate bonds
U.S. treasury securities
U.S. government agency securities
Commercial mortgage-backed securities
Residential mortgage-backed securities
Commercial collateralized mortgage obligations
Residential collateralized mortgage obligations
Asset-backed securities
Securities carried at fair value through income
Loans held for sale
Mortgage servicing rights
Other assets - derivatives
Total recurring fair value measurements - assets
Other liabilities - derivatives
Total recurring fair value measurements - liabilities
$
$
$
December 31, 2021
Level 1
Level 2
Level 3
Total
$
— $
364,357 $
41,461 $
405,818
—
92,245
—
—
—
—
—
—
82,734
—
5,413
64,243
557,801
19,672
193,740
83,062
—
—
—
—
—
37,032
—
11,459
—
—
—
—
—
—
—
—
41,461
7,497
—
16,220
—
82,734
92,245
5,413
64,243
557,801
19,672
193,740
83,062
1,504,728
7,497
37,032
16,220
11,459
92,245 $
1,419,513 $
65,178 $
1,576,936
— $
— $
(11,494) $
(11,494) $
— $
— $
(11,494)
(11,494)
109
ORIGIN BANCORP, INC.
Condensed 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
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
Total recurring fair value measurements - assets
Other liabilities - derivatives
Total recurring fair value measurements - liabilities
$
$
$
— $
1,120,329 $
86,290 $
1,206,619
— $
— $
(23,020) $
(23,020) $
— $
— $
(23,020)
(23,020)
110
ORIGIN BANCORP, INC.
Condensed 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, 2021 and 2020, 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, 2021
$
17,011 $
13,660 $
44,065 $
11,554
Gain (loss) recognized in earnings:
Mortgage banking revenue(1)
Other noninterest income
Loss recognized in AOCI
Purchases, issuances, sales and settlements:
Originations
Purchases
Sales
Settlements
$
$
Balance at December 31, 2021
Balance at January 1, 2020
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
—
(251)
—
—
—
—
(16,760)
(2,593)
—
—
5,153
—
—
—
— $
16,220 $
—
—
(1,263)
—
1,000
—
(2,341)
41,461 $
—
(814)
—
—
—
—
(3,243)
7,497
17,670 $
20,697 $
38,173 $
11,513
—
(53)
—
—
—
—
(606)
(12,746)
—
—
5,709
—
—
—
—
—
1,575
—
6,478
(140)
—
493
—
—
—
—
(2,021)
44,065 $
(452)
11,554
Balance at December 31, 2020
$
17,011 $
13,660 $
____________________________
(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 1 securities, the Company obtains the fair value measurements for those identical assets from an independent pricing
service. 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 ASC 820, Fair Value Measurements and
Disclosures, the Company periodically checks the fair value by comparing them to other pricing sources, 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.
111
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Mortgage Servicing Rights ("MSRs")
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:
Prepayment speeds
Discount rates
December 31, 2021
December 31, 2020
Range
Weighted
Average(1)
Range
Weighted
Average(1)
9.10% - 36.51%
15.63 % 11.82% - 37.95%
8.89 - 10.39
9.32
7.83 - 9.09
22.08 %
8.27
__________________________
(1)
The weighted average was calculated with reference to the principal 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 comparatively low interest rate environments,
while loans with lower average coupon rates have a lower likelihood of prepayment. The increase in rates since the year
ended December 31, 2020, has caused a decrease in our weighted average prepayment speed and an increase in our discount
rate 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 Topic 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, 2021, and December 31,
2020, 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)
Securities carried at fair value through income
Total
December 31, 2021
Aggregate Fair
Value
Aggregate Unpaid
Principal Balance
Difference
$
$
37,032 $
36,072 $
7,497
7,375
44,529 $
43,447 $
960
122
1,082
____________________________
(1)
$1.8 million of loans held for sale were designated as nonaccrual or 90 days or more past due at December 31, 2021. Of this balance, $1.2 million was
guaranteed by U.S. Government agencies.
112
ORIGIN BANCORP, INC.
Condensed 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, 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.
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:
2021
2020
2019
Mortgage banking revenue (loans held for sale)
$
(5,111) $
5,131 $
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)
$
(251)
(814)
(1,065)
(6,176) $
550
124
586
710
(53)
493
440
5,571 $
1,260
____________________________
(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 creditworthiness of each issuer. Credit spreads ranged from 83 to 227 basis points at both
December 31, 2021 and 2020. 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
There are no LHFI for which the fair value option had been elected at December 31, 2021. For LHFI for which the
fair value option has been elected at December 31, 2020, 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 December 31, 2020. The Company believes the fair value
approximates an exit price.
113
ORIGIN BANCORP, INC.
Condensed 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 $45.2 million and $62.6 million, at December 31,
2021, and December 31, 2020, 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 $43.4 million and $55.5 million, respectively, at December 31, 2021, and December 31,
2020, for Government National Mortgage Association ("GNMA") repurchase assets included in 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 $4.8 million and $12.3 million at December 31, 2021, and December 31, 2020,
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 $1.5 million and $1.6 million
at December 31, 2021 and 2020, respectively. At December 31, 2021, the Company had $5.9 million in principal amount of
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.
114
ORIGIN BANCORP, INC.
Condensed 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, 2021
December 31, 2020
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
$
705,618 $
705,618 $
377,214 $
377,214
Non-marketable equity securities held in other financial
institutions
Accrued interest and loan fees receivable
45,192
23,402
45,192
23,402
62,586
27,146
62,586
27,146
Level 3 inputs:
Securities held to maturity
LHFI, net(1)
Financial liabilities:
Level 2 inputs:
Deposits
FHLB advances and other borrowings
Subordinated indebtedness
Accrued interest payable
22,767
25,117
38,128
41,205
5,166,745
5,133,257
5,621,092
5,802,744
6,570,693
6,572,215
5,751,315
5,756,312
309,801
157,417
2,696
305,374
156,629
2,696
984,608
157,181
3,556
991,943
156,395
3,556
____________________________
(1)
Does not include loans for which the fair value option had been elected at December 31, 2020, as these loans are carried at fair value on a recurring
basis. There are no loans for which the fair value option had been elected at December 31, 2021.
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,
2021
2020
$
87,313 $
28,454
17,864
1,377
135,008
(54,317)
$
80,691 $
85,108
28,599
16,715
1,142
131,564
(49,801)
81,763
Depreciation expense for premises and equipment totaled $6.0 million, $5.8 million and $5.4 million for the years
ended December 31, 2021, 2020 and 2019, respectively.
115
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 2021
December 31, 2020
Operating lease right of use assets (included in Accrued interest receivable and other
assets)
$
23,732
$
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
25,691
2,852
9.47
2.89 %
21,667
23,445
3,148
9.22
3.44 %
December 31,
2021
Years Ended
December 31,
2020
December 31,
2019
(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
$
$
$
4,553 $
4,680 $
369
4,922 $
5,776 $
265
4,945 $
1,338 $
Maturities of operating lease liabilities at December 31, 2021, were as follows:
December 31, 2021
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6 and thereafter
Total lease payments
Less: Imputed interest
Total lease obligations
$
$
4,716
245
4,961
1,256
5,035
4,530
3,336
2,666
2,385
11,820
29,772
4,081
25,691
Supplemental cash flow related to leases was as follows:
Cash paid for operating leases
Note 8 - Goodwill and Other Intangible Assets
Year Ended
December 31, 2021
December 31, 2020
$
4,890 $
4,791
During 2021, the Company recorded goodwill totaling $7.6 million and other intangible assets totaling $14.1 million
in connection with the acquisitions of the Lincoln Agency and Pulley-White. There were no changes to the carrying amount
of the Company's goodwill during the year ended December 31, 2020.
116
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The components of the Company's goodwill and other intangible assets are as follows:
(Dollars in thousands)
December 31, 2021
Goodwill
Other intangible assets:
Core deposit intangibles
Relationship based intangibles
Tradename
Non-compete
Total
December 31, 2020
Goodwill
Other intangible assets:
Core deposit intangibles
Relationship based intangibles
Tradename
Non-compete
Total
Gross
Accumulated
Amortization
Net
$
34,368 $
— $
34,368
1,260
19,650
1,004
903
(1,248)
(4,421)
(186)
—
12
15,229
818
903
57,185 $
(5,855) $
51,330
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
Amortization expense on other intangible assets totaled $844,000, $1.1 million and $1.3 million for the years ended
December 31, 2021, 2020 and 2019, 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, 2021, was as follows:
(Dollars in thousands)
Years Ended December 31,
2022
2023
2024
2025
2026
Thereafter
Total
$
$
2,072
1,971
1,610
1,467
1,327
8,515
16,962
117
ORIGIN BANCORP, INC.
Condensed 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
Originations of MSRs
Servicing
Total gross mortgage revenue
MSR valuation adjustments, net
Mortgage HFS and pipeline fair value adjustment
MSR hedge impact
Mortgage banking revenue
Years Ended December 31,
2021
2020
2019
$
1,379 $
1,880 $
11,862
5,153
5,990
24,384
(2,593)
(6,897)
(1,967)
13,481
5,709
6,116
27,186
(12,746)
7,351
7,812
$
12,927 $
29,603 $
1,000
4,348
2,595
6,547
14,490
(7,012)
979
3,852
12,309
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)
Fair Value at Beginning of Period
Originations of MSRs
MSR valuation adjustments, net
Fair Value at End of Period
Years Ended December 31,
2021
2020
2019
$
$
13,660 $
20,697 $
5,153
(2,593)
5,709
(12,746)
16,220 $
13,660 $
25,114
2,595
(7,012)
20,697
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 put back 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. Put back claims may be made until
the loan is paid in full. When a put back claim is received, the Company evaluates the claim and takes appropriate actions
based on the nature of the claim. The Company is required by the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation to provide a response to put back claims within 60 days of the date of receipt.
At December 31, 2021 and 2020, the reserve for mortgage loan servicing put back expenses totaled $379,000 and
$311,000, respectively. There is inherent uncertainty in reasonably estimating the requirement for reserves against future
mortgage loan servicing put back expenses. Future put back 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.
118
ORIGIN BANCORP, INC.
Condensed 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 $43.4 million and $55.5 million at December 31, 2021 and 2020, 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
Time deposits
Savings
Total
December 31,
2021
2020
$
2,163,507 $
1,412,089
2,204,109
543,128
247,860
1,607,564
1,478,818
1,794,915
664,766
205,252
$
6,570,693 $
5,751,315
Municipal deposits totaled $814.8 million and $689.3 million at December 31, 2021 and 2020, respectively.
Included in time deposits at December 31, 2021 and 2020, are $222.7 million and $271.3 million, respectively, of
time deposits in denominations of $250,000 or more.
Maturities of time deposits, at December 31, 2021, are as follows:
(Dollars in thousands)
Years Ended December 31,
2022
2023
2024
2025
2026
2027
Total
$
$
427,558
65,602
34,370
7,841
7,246
511
543,128
At December 31, 2021 and 2020, overdrawn deposits of $1.9 million and $462,000, respectively, were reclassified
as unsecured loans.
119
ORIGIN BANCORP, INC.
Condensed 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 indebtedness, net
December 31,
2021
2020
9,447 $
—
43,355
256,999
309,801 $
157,417 $
8,408
650,000
55,485
270,715
984,608
157,181
$
$
$
Additional details of certain FHLB advances are as follows:
(Dollars in thousands)
At December 31, 2021:
Amount
Interest Rate
Maturity Date
Long-term FHLB advance, callable quarterly, fixed rate
$
250,000
1.65 %
8/23/2033
At December 31, 2020:
Short-term FHLB advance, fixed rate
Long-term FHLB advance, callable quarterly, fixed rate
Short-Term Borrowings
650,000
250,000
0.10
1.65
1/4/2021
8/23/2033
The Company had unsecured lines of credit for the purchase of federal funds in the amount of $140.0 million and
$190.0 million at December 31, 2021 and 2020, respectively. The Company also had a $75.0 million secured repurchase line
of credit at December 31, 2021 and 2020. 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 0.08% and 0.22% for the years ended
December 31, 2021 and 2020, respectively.
Long-Term Borrowings
Interest rates for FHLB long-term advances outstanding at December 31, 2021, ranged from 1.65% to 4.57%.
Interest rates for FHLB long-term advances outstanding at December 31, 2020, ranged from 1.65% to 5.72%. 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, 2021, are as follows:
(Dollars in thousands)
Years Ended December 31,
2022
2023
2024
2025
2026
Thereafter (1)
Total
$
$
258
267
276
285
703
255,210
256,999
__________________________
(1)
Includes a FHLB advances totaling $250.0 million callable quarterly with a final maturity in 2033, carrying a rate of 1.65%.
120
ORIGIN BANCORP, INC.
Condensed 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, 2021 and 2020, were $982.2 million and $456.9 million, respectively.
Additionally, at December 31, 2021 and December 31, 2020, the Company had the availability to borrow
$856.8 million and $793.2 million, respectively, from the discount window at the Federal Reserve Bank of Dallas, with
$1.09 billion and $999.7 million in commercial and industrial loans pledged as collateral, respectively. There were no
borrowings against this line at December 31, 2021 or 2020.
Holding Company Line of Credit
On October 5, 2018, the Company entered into a Loan Agreement (the "Loan Agreement"), along with certain
ancillary instruments, with NexBank SSB ("Lender") pursuant to which the Lender would make one or more revolving credit
loans of up to $50 million to the Company, maturing October 5, 2021, which the Company could use for working capital and
general corporate purposes. On October 5, 2021, the Company entered into a first amendment to the Loan Agreement
extending the maturity to November 5, 2021. On October 29, 2021, the Company entered into a second amendment (the
"Amendment") to the Loan Agreement. Pursuant to the Amendment, the loan may not exceed an aggregate principal amount
of $100 million, consisting of the $50 million existing loan amount and any one or more potential incremental revolving loan
commitments that the Lender may make in its sole discretion, up to an aggregate principal of $50 million, upon the request of
the Company. The Lender has no obligation to agree to extend any incremental revolving loan or to increase the loan amount.
The principal amounts borrowed under the Loan Agreement bears interest at a variable rate equal to the applicable Term
SOFR for the then-current SOFR Interest Period plus 3.35% (as such terms are defined in the Loan Agreement). Pursuant to
the Amendment, the line of credit available to the Company expires on October 28, 2022, or such date of the acceleration of
the obligation pursuant to the Loan Agreement, as amended, at which time all amounts borrowed, together with applicable
interest, fees and other amounts owed by the Company shall be due and payable. The Company may extend the maturity date
to a date that is three hundred and sixty-four (364) days after the then-effective maturity date, no more than two times upon
(i) delivery of a written request therefor to Lender at least thirty (30) days, but no more than (60) days, prior to the maturity
date then in effect; and (ii) receipt by the Lender of a certificate of the Company dated the date of such request. There were
no outstanding revolving credit loans under the Loan Agreement at December 31, 2021 or 2020.
121
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Subordinated Indebtedness
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, subject to customary fallback provision upon the discontinuation of LIBOR. 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 1 capital for regulatory purposes, subject to certain limitations.
The following table is a summary of the terms of the current junior subordinated debentures at December 31, 2021:
(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
3.43 %
2.00
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 28, 2021.
The trust preferred securities reprice quarterly based on the three-month LIBOR plus 1.80%, with the last reprice date on December 13, 2021.
The balance of the subordinated indebtedness varies from the amounts carried on the consolidated balance sheets
due to the remaining purchase discount of $3.4 million and $3.6 million, at December 31, 2021, and December 31, 2020,
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.
122
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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.
123
ORIGIN BANCORP, INC.
Condensed 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, 2021, and December 31, 2020:
(Dollars in thousands)
Derivatives designated as cash flow hedging instruments:
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
Notional Amounts(1)
Fair Values
21,000 $
21,000 $
(103) $
(706)
Interest rate swaps included in other liabilities
Derivatives not designated as hedging instruments:
Interest rate swaps included in other assets
$
$
315,188 $
326,542 $
10,417 $
Interest rate swaps included in other liabilities
327,510
347,096
(10,762)
Risk participation derivatives included in accrued
expenses and other liabilities on the consolidated
balance sheets
Forward commitments to purchase mortgage-backed
securities included in other liabilities
Forward commitments to sell residential mortgage
loans included in other assets (liabilities)
Interest rate-lock commitments on residential
mortgage loans included in other assets
63,374
63,374
80,000
107,000
52,000
107,200
(2)
(627)
1
36,694
79,554
1,041
$
874,766 $
1,030,766 $
68 $
20,207
(21,321)
(18)
(317)
(658)
3,487
1,380
____________________________
(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 the dates indicated were as follows:
Interest rate swaps:
Cash flow hedges
Weighted-Average Interest Rate
December 31, 2021
December 31, 2020
Paid
Received
Paid
Received
4.81 %
2.89 %
4.81 %
2.94 %
Non-hedging interest rate swaps - financial institution
counterparties
Non-hedging interest rate swaps - customer counterparties
4.32
2.68
2.68
4.33
4.18
2.52
2.48
4.19
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 (loss) gain recognized in mortgage banking revenue (1)
Amount of gain (loss) recognized in other non-interest income
Years Ended December 31,
2021
2020
2019
$
(3,118) $
4,081 $
816
(307)
3,079
(530)
____________________________
(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.
At December 31, 2021 and 2020, the Company had cash collateral on deposit with swap counterparties totaling
$16.5 million and $22.2 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.
124
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 13 - Stock and Incentive Compensation Plans
On April 28, 2021, an employee stock purchase plan ("ESPP") was approved by the Company's stockholders and
qualified as an ESPP under IRS guidelines. The ESPP provides for the purchase of up to an aggregate one million shares of
the Company's common stock by employees pursuant to the terms of the ESPP. Under the ESPP, employees of the Company
who elect to participate have the right to purchase a limited number of shares of the Company's common stock at a 15%
discount from the lower of the market value of the common stock at the beginning or the end of each one year offering
period, beginning on June 1st. The ESPP benefit is treated as compensation to the employee and the compensation expense
will be recognized over the service period based on the fair value of the rights on the grant date, adjusted for forfeitures and
certain modifications.
There were no shares of common stock issued pursuant to the ESPP during the year ended December 31, 2021.
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 (the "2012 Plan"). Additionally, awards have been issued prior to the
establishment of the 2012 Plan, some of which were still outstanding at December 31, 2021. 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 ("RSA"), restricted stock units ("RSU"), dividend equivalent rights,
performance unit awards or any combination thereof. At December 31, 2021, the maximum number of shares of the
Company's common stock available for issuance under the 2012 Plan was 664,668 shares.
Share-based compensation cost charged to income for the years ended December 31, 2021, 2020 and 2019, is
presented below. There was no stock option expense for any of the periods shown.
(Dollars in thousands)
RSA & RSU
ESPP
Total stock compensation expense
Related tax benefits recognized in net income
Restricted Stock Grants
Years Ended December 31,
2021
2020
2019
2,100 $
2,320 $
195
2,295 $
482 $
—
2,320 $
487 $
2,247
—
2,247
472
$
$
$
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:
Year Ended December 31,
2021
2020
2019
Weighted
Average
Grant-Date
Fair Value
Shares
Weighted
Average
Grant-Date
Fair Value
Shares
Weighted
Average
Grant-Date
Fair Value
Shares
Nonvested RSA shares, January 1,
103,359 $
Granted RSA
Vested RSA
Forfeited RSA
Nonvested RSA shares, December 31,
Nonvested RSU, January 1,
Granted RSU
Nonvested RSU, December 31
13,460
(67,825)
(946)
48,048
— $
73,977
73,977
31.51
42.26
31.07
24.69
35.27
—
40.64
40.64
125
149,449 $
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
—
—
—
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
At December 31, 2021, there was $1.1 million and $2.7 million of total unrecognized compensation cost related to
nonvested RSA shares and RSU shares under the 2012 Plan, respectively. Those costs are expected to be recognized over a
weighted-average period of 1.2 years and 2.7 years for RSA shares and RSU shares, respectively.
Stock Option Grants
The Company issued common stock options to select officers and employees primarily through individual
agreements. 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 the fair value of the stock at the date of the grant. 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, 2021, 2020 and 2019 .
(Dollars in thousands, except per share amounts)
Number of
Shares
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic Value
Outstanding at January 1, 2019
274,000 $
Exercised
Outstanding at December 31, 2019
Exercised
Outstanding at December 31, 2020
Exercised
Outstanding at December 31, 2021
Exercisable at December 31, 2021
Note 14 - Employee Retirement Plan - 401(k)
Defined Contribution Retirement Plan
(20,000)
254,000
(30,000)
224,000
(184,800)
39,200
39,200
10.38
8.25
10.55
8.25
10.86
10.88
10.73
10.73
6.75
$
—
5.81
—
4.92
—
2.28
2.28
6,493
—
6,932
—
3,789
—
1,262
1,262
The Company maintains the Origin Bancorp, Inc. Employee Retirement Plan (the "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 $2.1 million, $2.0 million
and $1.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.
126
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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 $10.4 million and $11.3 million at December 31, 2021
and 2020, respectively. The expense recorded for the deferred compensation plan totaled $1.1 million, $1.9 million, and
$1.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.
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,
2021
2020
2019
$
17,022 $
18,157 $
6,077
(11,545)
584
202
1,723
(339)
$
23,885 $
7,996 $
14,232
(2,513)
1,030
(83)
12,666
A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is below:
Years Ended December 31,
2021
2020
2019
(Dollars in thousands)
Amount
%
Amount
%
Amount
%
Income taxes computed at statutory rate
$
27,811
21.00 % $
9,314
21.00 % $
13,975
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
Nondeductible expense
Other
(1,339)
(468)
(1,218)
(170)
662
(1.01)
(0.35)
(0.92)
(0.13)
0.50
(1,272)
(0.96)
106
(227)
0.08
(0.17)
(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
Total income tax expense
$
23,885
18.04 % $
7,996
18.04 % $
12,666
19.03 %
127
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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
December 31,
2021
2020
$
14,565 $
4,795
1,170
278
20,808
(974)
19,834 $
2,461 $
127
3,504
1,144
7,236
19,315
4,504
1,240
1,064
26,123
(994)
25,129
3,089
118
2,951
146
6,304
12,598 $
18,825
$
$
$
At December 31, 2021, the Company has $3.4 million in Federal gross net operating loss carryforwards acquired in
previous business combinations expiring between 2022 and 2028, and $15.0 million in state net operating losses expiring
between 2022 and 2041. 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 $974,000 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 2018.
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, 2019
Net change
Balance at December 31, 2019
Net change
Balance at December 31, 2020
Net change
Balance at December 31, 2021
Unrealized Gain
(Loss) on AFS
Securities
Unrealized
(Loss) Gain on
Cash Flow
Hedges
Accumulated
Other
Comprehensive
Income
$
(2,601) $
121 $
(2,480)
9,013
6,412
19,794
26,206
(20,397)
(200)
(79)
(478)
(557)
477
$
5,809 $
(80) $
8,813
6,333
19,316
25,649
(19,920)
5,729
128
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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. 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.
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 total consolidated assets (as defined). Management believes, at December 31, 2021 and 2020, that the
Company and the Bank met all capital adequacy requirements to which they are subject, including the capital buffer
requirement.
At December 31, 2021 and 2020, 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 were required to 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 the Company's regulatory capital for two years (from
January 2020 through December 31, 2021), which resulted in a 14 basis point benefit to the common equity Tier 1 capital to
risk-weighted assets capital ratio at December 31, 2021. The two-year delay is followed by a three-year transition period of
CECL's initial impact on our regulatory capital (from January 1, 2022 through December 31, 2024).
129
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The actual capital amounts and ratios of the Company and Bank at December 31, 2021, and December 31, 2020, are
presented in the following table:
(Dollars in thousands)
December 31, 2021
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, 2020
$ 681,039
11.20 % $ 425,475
7.00 %
N/A
N/A
724,440
11.97
423,819
7.00
$ 393,546
6.50 %
690,448
724,440
11.36
11.97
516,648
514,637
8.50
8.50
N/A
N/A
484,365
8.00
897,503
852,825
14.77
14.09
638,212
635,727
10.50
10.50
N/A
N/A
605,454
10.00
690,448
724,440
9.20
9.66
300,195
299,932
4.00
4.00
N/A
N/A
374,915
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
604,306
637,863
9.95
10.53
425,012
424,010
613,682
637,863
10.11
10.53
516,107
514,870
7.00
7.00
8.50
8.50
N/A
N/A
393,724
6.50
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
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
$110.8 million at December 31, 2021.
Stock Repurchases
During the first quarter of 2021, the Company repurchased a total of 37,568 shares of its common stock pursuant to
its stock buyback program at an average price per share of $33.42, for an aggregate purchase price of $1.3 million. There
have been no common stock repurchases since the first quarter of the 2021 year. Prior to December 31, 2020, the Company
had cumulatively repurchased an aggregate of 330,868 shares of common stock for a total purchase price of $10.8 million
under the stock buyback program. As of December 31, 2021, the Company's board of directors has approved approximately
$28.0 million remaining to be purchased under the program.
130
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 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 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. The table below presents the Company's commitments to
extend credit by commitment expiration date for the dates indicated:
(Dollars in thousands)
December 31, 2021
Commitments to extend credit(1)
Standby letters of credit
Total off-balance sheet commitments
December 31, 2020
Commitments to extend credit(1)
Standby letters of credit
Total off-balance sheet commitments
$
$
$
$
Less than
One Year
One-Three
Years
Three-Five
Years
Greater than
Five Years
Total
643,089 $
620,741 $
300,863 $
56,525 $
1,621,218
42,516
6,633
—
—
49,149
685,605 $
627,374 $
300,863 $
56,525 $
1,670,367
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 $513.0 million and $504.6 million of unconditionally cancellable commitments at December 31, 2021 and 2020, respectively.
At December 31, 2021, the Company held 43 unfunded letters of credit from the FHLB totaling $599.3 million with
expiration dates ranging from January 20, 2022, to March 22, 2023. 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.
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 at both December 31, 2021, and December 31,
2020, respectively, and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.
131
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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, 2021 and 2020, 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
2021
2020
1,392 $
907
(1,544)
(284)
471 $
1,093
1,092
(793)
—
1,392
833 $
2,702
$
$
$
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, 2021 and 2020, amounted to $30.0 million and
$30.4 million, respectively.
Note 20 - Business Combinations
On December 31, 2021, the Company acquired the remaining 62% equity interest in the Lincoln Agency for
$5.3 million in cash and $5.3 million in Company common stock. The Company previously acquired a 38% minority interest
in Lincoln Agency that was accounted for as an equity method investment, which had an immaterial carrying value at the
acquisition date. The acquisition of the remaining equity interest was considered a step acquisition, whereby the Company re-
measured the previously held equity method investment to its fair value of $5.2 million, resulting in the recognition of a gain
of $5.2 million, which is recorded as a component of noninterest income in the accompanying consolidated statements of
income. The acquisition date fair value of the previously held equity method investment was calculated using multiple
factors, including the total consideration for the acquired ownership interest of Lincoln Agency and an analysis of control
premiums paid for similar transactions.
The purchase agreement for Lincoln Agency includes potential earnout payments of up to $250,000 based on net
product line revenue for fiscal year 2023 and up to an additional $750,000 based on compound annual revenue growth for
fiscal year 2024. The Company included the $795,000 fair value of this contingent liability as a component of other liabilities
on the accompanying consolidated balance sheet.
Additionally, the Company acquired 100% of the book of business, and certain assets, and assumed certain liabilities
of Pulley-White on December 31, 2021, for $2.2 million in cash and $2.2 million in Company common stock. The purchase
agreement for Pulley-White also includes potential earnout payments of up to an additional $250,000 provided the revenue
attributable to the legacy operations of Pulley-White for the two years ended December 31, 2023, achieve certain
compounded annual growth rate metrics and payments of up to $500,000 provided the revenue attributable to the legacy
operations of Pulley-White for the three years ended December 31, 2024, achieve certain compounded annual growth rate
metrics. The Company included the $574,000 fair value of this contingent liability as a component of other liabilities on the
accompanying consolidated balance sheet.
132
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
A preliminary summary of the fair value of assets acquired and liabilities assumed from the acquisitions is as
follows:
(Dollars in thousands)
Assets Acquired:
Definite-lived intangibles
Operating lease right of use assets
Prepaid expense and other assets
Total assets acquired
Liabilities Assumed:
Operating lease liability
Accounts payable and accrued expenses
Total liabilities assumed
Net assets acquired
Total consideration
Goodwill
Estimated Fair Value
$
$
14,067
1,488
47
15,602
1,488
244
1,732
13,870
21,497
7,627
With these acquisitions, the Company continues to expand the scope of product offerings to its banking customers.
$4.6 million of goodwill associated with these acquisitions is deductible for income tax purposes.
A summary of total consideration is as follows:
(Dollars in thousands)
Cash paid
Common stock issued (177,348 shares)
Contingent consideration
Fair value of previously held interest in Lincoln Agency
Total consideration
December 31, 2021
7,457
7,458
1,369
5,213
21,497
$
$
The Company has determined the above noted acquisitions constitute a business combination as defined by ASC
Topic 805, which establishes principles and requirements for how the acquirer of a business recognizes and measures in its
financial statements the identifiable assets acquired and the liabilities assumed. The Company has recorded the assets
purchased and liabilities assumed at their estimated fair value in accordance with ASC Topic 805.
The fair value of assets acquired and liabilities assumed are preliminary and based on valuation estimates and
assumptions. The accounting for business combinations require estimates and judgments regarding expectations of future
cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets. The
estimates and assumptions underlying the preliminary valuations are subject to collection of information necessary to
complete the valuations (specifically related to projected financial information) within the measurement periods, which are up
to one year from the acquisition date. Although the Company does not currently expect material changes to the initial value
of net assets acquired, the Company continues to evaluate assumptions related to the valuation of the assets acquired and
liabilities assumed. Any adjustments to our estimates of purchase price allocation will be made in the periods in which the
adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been
completed as of the acquisition date.
Pro forma results of operations for these acquisitions in the aggregate are not presented because these acquisitions
are not material to the Company's consolidated results of operations.
133
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Acquisition costs, which primarily consists of professional services, are expensed as incurred as a component of
noninterest expense. The Company incurred total acquisition costs of approximately $214,000 during the year ended
December 31, 2021.
Note 21 - 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 indebtedness, 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,
2021
2020
$
$
$
28,904 $
774,840
16,343
820,087 $
88,405 $
1,471
89,876
118,733
242,114
363,635
5,729
730,211
Total liabilities and stockholders' equity
$
820,087 $
42,908
684,410
10,198
737,516
88,258
2,108
90,366
117,532
237,341
266,628
25,649
647,150
737,516
(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,
2021
2020
2019
$
19,200 $
17,250 $
1,608
20,808
4,313
221
1,079
5,613
15,195
762
15,957
92,589
12
17,262
1,333
214
1,182
2,729
14,533
549
15,082
21,275
17,500
470
17,970
563
728
1,565
2,856
15,114
502
15,616
38,266
53,882
Net income
$
108,546 $
36,357 $
134
ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
(Dollars in thousands)
Condensed Statements of Cash Flows
Cash flows from operating activities:
Years Ended December 31,
2021
2020
2019
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
$
108,546
$
36,357 $
53,882
7
(92,589)
147
(5,898)
10,213
(7,457)
—
(3,612)
(513)
(11,582)
(11,525)
146
—
(1,256)
(12,635)
(14,004)
42,908
(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
—
—
—
—
—
(5,863)
166
—
(10,059)
(15,756)
27
5,882
5,909
$
28,904
$
42,908 $
Deferred income taxes
Equity in undistributed net income of subsidiaries
Amortization of subordinated indebtedness discount
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Lincoln Agency and Pulley-White acquisitions
Capital contributed to subsidiaries
Net purchases of non-marketable equity securities held in other financial
institutions
Capital calls on limited partnership investments
Net cash used in investing activities
Cash flows from financing activities:
Dividends paid
Cash received on exercise of stock options
Proceeds from issuance of subordinated indebtedness
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
135
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, 2021, 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, 2021, based on those criteria. The effectiveness of our internal control over financial reporting at December 31,
2021, 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 year
ended December 31, 2021, 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.
136
Report of Independent Registered Public Accounting Firm
To the Shareholders, Board of Directors and Audit Committee
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, 2021, 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, 2021, 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 February 23, 2022,
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
February 23, 2022
137
Item 9B.
Other Information
The Company entered into a Restricted Stock Unit Award Agreement and a Performance Unit Award Agreement
(the "Award Agreements") with each of its five (5) named executive officers, pursuant to which restricted stock units
("Restricted Stock Units") and performance units (the "Performance Units") were awarded and issued to such officers under
the Origin Bancorp, Inc. 2012 Stock Incentive Plan (the “Plan”). The Restricted Stock Units and Performance Units awarded
and issued to the Company's named executive officers were as follows:
Officer
Restricted Stock Units
Performance Units (Target)
Drake Mills
M. Lance Hall
Stephen Brolly
Preston Moore
Jim Crotwell
4,667
2,792
1,758
1,758
1,465
4,667
2,792
1,758
1,758
1,465
The grants of Restricted Stock Units were previously approved by the Compensation Committee (the “Committee”)
of the Board of Directors of the Company (the "Board") on February 17, 2022, and were issued on February 18, 2022 (the
“Date of Grant”). Each Award Agreement sets forth the total number of Restricted Stock Units subject to each individual
grant. Each Restricted Stock Unit represents a right for the officer to receive shares of Company common stock or cash equal
to the fair market value of such stock, as determined by the Committee, subject to vesting. The Restricted Stock Units will
vest on the earliest of the following: (a) a specified vesting date, provided the officer remains employed by the Company or
an affiliate through that date; (b) the officer's voluntary termination of employment upon six (6) months' prior written notice
to the Company on or after attaining age sixty-five (65); (c) the officer's death; or (d) the officer's disability (as defined in the
Plan). Upon the occurrence of a change in control of the Company, all Restricted Stock Units will vest as of the date of such
change in control, provided the Company is not the surviving corporation following the change in control and the acquiror
either does not assume the Restricted Stock Units or does not provide a suitable substitute equivalent award. If the Company
is the surviving corporation following the change in control or the acquiror either assumes the Restricted Stock Units or
provides a suitable substitute equivalent award, the Restricted Stock Units (or such substitutes) will remain outstanding and
be governed by their respective terms (including the vesting condition as set forth in the Award Agreement). Upon an
officer's termination of service by the Company for any reason prior to vesting, the Restricted Stock Units will be forfeited.
The grants of Performance Units were previously approved by the Committee on February 17, 2022. Each Award
Agreement sets forth the target number of Performance Units subject to each individual grant. Each Performance Unit to
which the officer becomes entitled represents a right for the officer to receive shares of Company common stock or cash
equal to the fair market value of such stock, as determined by the Committee. The number of Performance Units to which the
officer will be entitled will vary from 0% to 150% of the target number of Performance Units, based on the Company’s
achievement of specified performance criteria during the performance period compared to performance benchmarks adopted
by the Committee and, further, the officer's continuous service with the Company through the third anniversary of the Date of
Grant. The performance period is the 3-year period commencing on January 1, 2022 and ending on December 31, 2024.
Upon the occurrence of a change in control of the Company, the target number of Performance Units will vest as of the date
of such change in control, provided the Company is not the surviving corporation following the change in control and the
acquiror either does not assume the Performance Units or does not provide a suitable substitute equivalent award. If the
Company is the surviving corporation following the change in control or the acquiror either assumes the Performance Units
or provides a suitable substitute equivalent award, the Award (or such substitute) will remain outstanding and be governed by
their respective terms, provided that, subject to the officer’s continuous employment, the target number of Performance Units
will vest on the 3rd anniversary of the Date of Grant without regard to the Company’s satisfaction of the specified
performance criteria. Upon an officer's termination of service by the Company for any reason prior to vesting, the
Performance Units will be forfeited. Notwithstanding the foregoing, in the event of a change in control, Performance Units
will become immediately vested upon an officer's termination of service without cause (as defined in the Plan) within twelve
(12) months of a change in control.
The forms of the Award Agreements are filed herewith as Exhibit 10.30 and Exhibit 10.31 and are incorporated by
reference into this Item 9.B.
138
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 2022 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 2022 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 2022 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,
2021 is presented in the table below. Additional information regarding stock-based compensation plans is presented in Note
13 - Stock and Incentive Compensation Plans 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
— $
39,200
39,200
—
10.73
10.73
664,668
—
664,668
____________________________
(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 report.
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
2022 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 2022 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 2022 Annual Meeting of Stockholders to be filed with the SEC within 120 days of our fiscal year end.
139
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.
(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
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 *
Description
Amended and Restated Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Company's 10-Q filed for
the quarter ended September 30, 2021 (File No. 001-38487)
Bylaws, incorporated by reference to Exhibit 3.2 to the Company's 10-Q filed for the quarter ended September 30, 2021
(File No. 001-38487)
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)
Origin Bancorp, Inc. 2012 Stock Incentive Plan incorporated by reference to Exhibit 10.1 to the Company's 10-
Q filed for the quarter ended March 31, 2021 (File No. 001-38487)
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 to 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 to
Amendment No. 2 to the Company's Registration Statement on Form S-1 filed April 27, 2018 (File No. 333-224225)
140
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
10.28
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 to 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 to 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 to 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 to 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)
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)
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)
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
incorporated by reference to Exhibit 10.31 to the Company's 10-K for the year ended December 31, 2020 (file No.
001-38487)
First Amendment to Loan Agreement, dated as of October 5, 2021, by and between Origin Bancorp, Inc. and NexBank, SSB
Second Amendment to Loan Agreement, dated as of October 29, 2021, by and between Origin Bancorp, Inc. and NexBank,
SSB
141
Exhibit
Number
10.29 *
10.30 *
10.31 *
21
23
31.1
31.2
32.1
32.2
101
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Change in Control Agreement, dated June 14, 2018, among Origin Bank, Origin Bancorp, Inc. and Jimmy R. Crotwell
Form of Performance Stock Unit Agreement under the Origin Bancorp, Inc. 2012 Stock Incentive Plan
Form of Restricted Stock Unit Agreement under the Origin Bancorp, Inc. 2012 Stock Incentive Plan
Description
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), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
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, 2021, is formatted in Inline 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
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
* Management contract or compensatory plan or arrangement.
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: February 23, 2022
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)
142
Date
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
/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/ A. La'Verne Edney
A. La'Verne Edney, Director
/s/ Meryl Farr
Meryl Farr, 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/ Elizabeth E. Solender
Elizabeth E. Solender, Director
/s/ Steven Taylor
Steven Taylor, Director
143
THE BOARD OF DIRECTORS
ORIGIN BANCORP, INC. / ORIGIN BANK
James D’Agostino, Jr.
Managing Director
Encore Interests LLC
1,2
Richard Gallot, Jr.
President
Grambling State University
Michael Jones
Certified Public Accountant
4
James Davison, Jr.
Investments
3
A. La’Verne Edney
Litigation Partner
Butler Snow LLP
Meryl Farr
President & Owner
Kennedy Rice Mill
Stacey Goff
General Counsel &
Chief Administrative Officer
Lumen Technologies, Inc.
*
Lance Hall
President &
Chief Executive Officer
Origin Bank
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
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
Warrie Birdwell
Regional President
North Texas
Steve Brolly
Chief Financial Officer
Russ Chase
Chief Community Banking
Officer
Jim Crotwell
Chief Risk Officer
Josh Hammett
Chief Information Officer
Derek McGee
Chief Legal Counsel
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
Ashlea Price
Chief Human Resources
Officer
Larry Ratzlaff
State President
Mississippi
Lonnie Scarborough
Chief Dream Manager &
Talent Development
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