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OBNK Origin Bancorp

Filed: 5 May 21, 12:35pm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the quarterly period ended March 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)
Louisiana72-1192928
(State or other jurisdiction of
incorporation or organization)
(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 ClassTrading Symbol(s)Name of Exchange on which registered
Common Stock, par value $5.00 per shareOBNKNasdaq Global Select Market
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, a 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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 23,488,884 shares of Common Stock, par value $5.00 per share, were issued and outstanding at April 30, 2021.



ORIGIN BANCORP, INC.
FORM 10-Q
MARCH 31, 2021
INDEX



Cautionary Note Regarding Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words "anticipates," "believes," "estimates," "expects," "foresees," "intends," "plans," "projects," and similar expressions or future or conditional verbs such as "could," "may," "might," "should," "will," and "would," or variations or negatives of such terms are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing words. Forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in our forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:
business and economic conditions generally and in the financial services industry, nationally and within our local market areas;
natural disasters and adverse weather events, acts of terrorism, an outbreak of hostilities, regional or national protests and civil unrest (including any resulting branch closures or property damage), widespread illness or public health outbreaks or other international or domestic calamities, and other matters beyond our control;
system failures, cybersecurity threats and/or security breaches and the cost of defending against them;
the duration and impacts of the coronavirus ("COVID-19") pandemic and efforts to contain its transmission, as well as the impact of the actions taken by governmental authorities to address the impact of COVID-19 on the United States economy, including, without limitation, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act") and any related future economic stimulus legislation;
deterioration of our asset quality;
factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions;
changes in the value of collateral securing our loans;
our ability to anticipate interest rate changes and manage interest rate risk;
the effectiveness of our risk management framework and quantitative models;
our inability to receive dividends from our bank subsidiary and to service debt, pay dividends to our common stockholders, repurchase our shares of common stock and satisfy obligations as they become due;
changes in our operation or expansion strategy or our ability to prudently manage our growth and execute our strategy;
changes in management personnel;
our ability to maintain important deposit customer relationships, our reputation or otherwise avoid liquidity risks;
increasing costs as we grow deposits;
operational risks associated with our business;
volatility and direction of market interest rates;
3


risks associated with widespread inflation;
increased competition in the financial services industry, particularly from regional and national institutions;
our level of nonperforming assets and the costs associated with resolving any problem loans, including litigation and other costs;
our ability to comply with applicable capital and liquidity requirements, including our ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets;
changes in the utility of our non-GAAP liquidity measurements and their underlying assumptions or estimates;
difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which Origin operates and in which its loans are concentrated;
an increase in unemployment levels and slowdowns in economic growth;
the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial loans in our loan portfolio;
changes in the laws, rules, regulations, interpretations or policies relating to financial institutions, as well as tax, trade, monetary and fiscal matters;
periodic changes to the extensive body of accounting rules and best practices, may change the treatment and recognition of critical financial line items and affect our profitability;
further government intervention in the U.S. financial system;
compliance with governmental and regulatory requirements, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and others relating to banking, consumer protection, securities and tax matters;
uncertainty regarding the future of the London Interbank Offered Rate and the impact of any replacement alternatives on our business;
system failures, cybersecurity threats and/or security breaches and the cost of defending against them;
other factors that are discussed in the sections titled "Item 1A. Risk Factors" in this report, in our annual report on Form 10-K for the year ended December 31, 2020, and in our other reports filed with the SEC; and
our ability to manage the risks involved in the foregoing.
The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. 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.


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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ORIGIN BANCORP, INC.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
March 31, 2021December 31, 2020
Assets(Unaudited)
Cash and due from banks$64,330 $60,544 
Interest-bearing deposits in banks200,571 316,670 
Total cash and cash equivalents264,901 377,214 
Securities:
Available for sale980,132 1,004,674 
Held to maturity, net allowance for credit losses of $66 at both March 31, 2021, and December 31, 2020 (fair value of $40,800 and $41,205 at March 31, 2021, and December 31, 2020, respectively)37,983 38,128 
Securities carried at fair value through income11,077 11,554 
Total securities1,029,192 1,054,356 
Non-marketable equity securities held in other financial institutions47,274 62,586 
Loans held for sale ($82,706 and $136,026 at fair value at March 31, 2021, and December 31, 2020, respectively)144,950 191,512 
Loans, net of allowance for credit losses of $85,136 and $86,670 at March 31, 2021, and December 31, 2020, respectively ($13,578 and $17,011 at fair value at March 31, 2021, and December 31, 2020, respectively)5,764,624 5,638,103 
Premises and equipment, net81,064 81,763 
Mortgage servicing rights17,552 13,660 
Cash surrender value of bank-owned life insurance37,757 37,553 
Goodwill and other intangible assets, net30,246 30,480 
Accrued interest receivable and other assets145,615 141,041 
Total assets$7,563,175 $7,628,268 
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$1,736,534 $1,607,564 
Interest-bearing deposits3,962,082 3,478,985 
Time deposits647,578 664,766 
Total deposits6,346,194 5,751,315 
Federal Home Loan Bank ("FHLB") advances and other borrowings325,751 984,608 
Subordinated debentures, net157,239 157,181 
Accrued expenses and other liabilities77,636 88,014 
Total liabilities6,906,820 6,981,118 
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; 23,488,884 and 23,506,312 shares issued at March 31, 2021, and December 31, 2020, respectively)117,444 117,532 
Additional paid‑in capital236,934 237,341 
Retained earnings289,792 266,628 
Accumulated other comprehensive income12,185 25,649 
Total stockholders' equity656,355 647,150 
Total liabilities and stockholders' equity$7,563,175 $7,628,268 
The accompanying notes are an integral part of these consolidated financial statements.

5

ORIGIN BANCORP, INC.
Consolidated Statements of Income
(unaudited)
(Dollars in thousands, except per share amounts)

Three Months Ended March 31,
20212020
Interest and dividend income
Interest and fees on loans$56,810 $50,049 
Investment securities-taxable3,300 2,712 
Investment securities-nontaxable1,672 758 
Interest and dividend income on assets held in other financial institutions345 1,497 
Total interest and dividend income62,127 55,016 
Interest expense
Interest-bearing deposits3,789 10,250 
FHLB advances and other borrowings1,269 1,351 
Subordinated debentures1,830 605 
Total interest expense6,888 12,206 
Net interest income55,239 42,810 
Provision for credit losses1,412 18,531 
Net interest income after provision for credit losses53,827 24,279 
Noninterest income
Service charges and fees3,343 3,320 
Mortgage banking revenue4,577 2,769 
Insurance commission and fee income3,771 3,687 
Gain on sales of securities, net1,668 54 
Loss on sales and disposals of other assets, net(38)(25)
Limited partnership investment income (loss)1,772 (429)
Swap fee income348 676 
Other fee income771 466 
Other income919 1,626 
Total noninterest income17,131 12,144 
The accompanying notes are an integral part of these consolidated financial statements.

6

ORIGIN BANCORP, INC.
Consolidated Statements of Income - Continued
(unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended March 31,
20212020
Noninterest expense
Salaries and employee benefits22,325 21,988 
Occupancy and equipment, net4,339 4,221 
Data processing2,173 2,003 
Electronic banking961 900 
Communications415 477 
Advertising and marketing680 711 
Professional services973 1,171 
Regulatory assessments1,170 615 
Loan related expenses1,705 1,142 
Office and operations1,454 1,441 
Intangible asset amortization234 299 
Franchise tax expense619 496 
Other expenses2,388 633 
Total noninterest expense39,436 36,097 
Income before income tax expense31,522 326 
Income tax expense (benefit)6,009 (427)
Net income$25,513 $753 
Basic earnings per common share$1.09 $0.03 
Diluted earnings per common share1.08 0.03 
The accompanying notes are an integral part of these consolidated financial statements.

7

ORIGIN BANCORP, INC.
Consolidated Statements of Comprehensive Income
(unaudited)
(Dollars in thousands)

Three Months Ended March 31,
20212020
Net income$25,513 $753 
Other comprehensive income (loss)
Securities available for sale and transferred securities:
Net unrealized holding (loss) gain arising during the period(15,852)12,771 
Net losses realized as a yield adjustment in interest on investment securities(3)(3)
Reclassification adjustment for net gain included in net income(1,668)(54)
Change in the net unrealized gain on investment securities, before tax(17,523)12,714 
Income tax (benefit) expense related to net unrealized (loss) gain arising during the period(3,680)2,670 
Change in the net unrealized gain on investment securities, net of tax(13,843)10,044 
Cash flow hedges:
Net unrealized gain (loss) arising during the period431 (710)
Reclassification adjustment for loss included in net income(49)(8)
Change in the net unrealized gain (loss) on cash flow hedges, before tax480 (702)
Income tax expense (benefit) related to net unrealized gain (loss) on cash flow hedges101 (147)
Change in net unrealized position on cash flow hedges, net of tax379 (555)
Other comprehensive (loss) income, net of tax(13,464)9,489 
Comprehensive income$12,049 $10,242 

The accompanying notes are an integral part of these consolidated financial statements.

8

ORIGIN BANCORP, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
(Dollars in thousands, except per share amounts)
Common Shares OutstandingCommon
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (loss)
Total
Stockholders'
Equity
Balance at January 1, 202023,480,945 $117,405 $235,623 $239,901 $6,333 $599,262 
Net income— — — 753 — 753 
Other comprehensive income, net of tax— — — — 9,489 9,489 
Impact of adoption of ASU 2016-13 - CECL— — — (760)— (760)
Recognition of stock compensation, net25,871 129 655 — — 784 
Dividends declared - common stock ($0.0925 per share)— — — (2,174)— (2,174)
Repurchase of common stock(30,868)(154)(569)— (723)
Balance at March 31, 202023,475,948 $117,380 $235,709 $237,720 $15,822 $606,631 
Common Shares OutstandingCommon
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (loss)
Total
Stockholders'
Equity
Balance at January 1, 202123,506,312 $117,532 $237,341 $266,628 $25,649 $647,150 
Net income— — — 25,513 — 25,513 
Other comprehensive income, net of tax— — — — (13,464)(13,464)
Recognition of stock compensation, net20,140 100 661 — — 761 
Dividends declared - common stock ($0.10 per share)— — — (2,349)— (2,349)
Repurchase of common stock(37,568)(188)(1,068)— (1,256)
Balance at March 31, 202123,488,884 $117,444 $236,934 $289,792 $12,185 $656,355 
The accompanying notes are an integral part of these consolidated financial statements.

9

ORIGIN BANCORP, INC.
Consolidated Statements of Cash Flows
(unaudited)
(Dollars in thousands)

Three Months Ended March 31,
Cash flows from operating activities:20212020
Net income$25,513 $753 
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses1,412 18,531 
Depreciation and amortization1,695 1,735 
Net amortization on securities1,748 552 
Amortization of investments in tax credit funds373 368 
Net realized gain on securities sold(1,668)(54)
Deferred income tax (benefit) expense(991)(4,122)
Stock-based compensation expense614 537 
Originations of mortgage loans held for sale(137,644)(97,987)
Proceeds from mortgage loans held for sale184,283 87,528 
Gain on mortgage loans held for sale, including origination of servicing rights(6,940)(1,873)
Mortgage servicing rights valuation adjustment(1,949)5,228 
Net loss on disposals of premises and equipment
Increase in the cash surrender value of life insurance(204)(554)
Net losses on sales and write downs of other real estate owned38 24 
Other operating activities, net4,786 (2,939)
Net cash provided by operating activities71,066 7,728 
Cash flows from investing activities:
Purchases of securities available for sale(71,717)(131,064)
Maturities, paydowns and calls of securities available for sale38,028 26,440 
Proceeds from sales of securities available for sale40,493 22,375 
Maturities, paydowns and calls of securities held to maturity142 138 
Net sales (purchases) of non-marketable equity securities held in other financial institutions15,353 (12,306)
Originations of mortgage warehouse loans(5,050,426)(1,259,966)
Proceeds from pay-offs of mortgage warehouse loans5,044,082 1,097,367 
Net increase in loans, excluding mortgage warehouse and loans held for sale(124,129)(174,836)
Bank-owned life insurance payout1,641 
Capital calls on limited partnership investments(225)(150)
Purchase of low income housing tax credit investments(300)
Purchases of premises and equipment(813)(1,173)
Proceeds from sales of premises and equipment51 
Proceeds from sales of other real estate owned269 20 
Net cash used in investing activities(109,192)(431,514)
The accompanying notes are an integral part of these consolidated financial statements.

10

ORIGIN BANCORP, INC.
Consolidated Statements of Cash Flows - Continued
(unaudited)
(Dollars in thousands)

Three Months Ended March 31,
Cash flows from financing activities:20212020
Net increase in deposits594,879 327,634 
Repayments on long-term FHLB advances(13,529)(211)
Proceeds from short-term FHLB advances6,053,425 400,000 
Repayments on short-term FHLB advances(6,703,425)(100,000)
Issuance of subordinated debentures, net68,847 
Net decrease in securities sold under agreements to repurchase(2,087)(1,184)
Dividends paid(2,341)(2,164)
Cash received from exercise of stock options147 248 
Common stock repurchased(1,256)(723)
Net cash (used in) provided by financing activities(74,187)692,447 
Net (decrease) increase in cash and cash equivalents(112,313)268,661 
Cash and cash equivalents at beginning of period377,214 291,518 
Cash and cash equivalents at end of period$264,901 $560,179 
Interest paid$6,999 $11,965 
Income taxes paid4,040 
Significant non-cash transactions:
Unsettled liability for investment purchases recorded at trade date1,376 8,760 
Real estate acquired in settlement of loans2,575 588 
The accompanying notes are an integral part of these consolidated financial statements.

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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 in Mississippi. The Company principally operates in 1 business segment, community banking.
Basis of Presentation.    The consolidated financial statements in this quarterly report on Form 10-Q include the accounts of the Company and all other entities in which Origin Bancorp, Inc. has a controlling financial interest, including the Bank and Davison Insurance Agency, LLC ("Davison Insurance"), doing business as Thomas & Farr Agency, and Reeves, Coon and Funderburg ("RCF"). All significant intercompany balances and transactions have been eliminated in consolidation. The Company's accounting and financial reporting policies conform, in all material respects, to generally accepted accounting principles 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.
The consolidated financial statements in this quarterly report on Form 10-Q have not been audited by an independent registered public accounting firm, excluding the figures as of December 31, 2020, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company's financial position and results of operations for the periods presented. These consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") and with the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.
These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020, included in the Company's annual report on Form 10-K ("2020 Form 10-K") filed with the SEC. Operating results for the interim periods disclosed herein are not necessarily indicative of results that may be expected for a full year. Certain prior period amounts have been reclassified to conform to the current year financial statement presentations. These reclassifications did not impact previously reported net income or comprehensive income.
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.
Effect of Recently Adopted Accounting Standards
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards Codification (ASC) 740, Income Taxes. It also clarifies certain aspects of the existing guidance to promote more consistent application, among other things. The amendments were implemented effective January 1, 2021. Implementation of this ASU did not materially impact the consolidated financial statements or disclosures.



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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)Three Months Ended March 31,
Numerator:20212020
Net income (basic and diluted)$25,513 $753 
Denominator:
Weighted average common shares outstanding23,393,356 23,353,601 
Dilutive effect of stock-based awards197,074 176,611 
Weighted average diluted common shares outstanding23,590,430 23,530,212 
Basic earnings per common share$1.09 $0.03 
Diluted earnings per common share1.08 0.03 


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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)

March 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Allowance for Credit LossesNet Carrying Amount
Available for sale:
State and municipal securities$401,450 $13,364 $(5,641)$409,173 $$409,173 
Corporate bonds68,293 2,056 (386)69,963 69,963 
U.S. government and agency securities5,811 (177)5,637 5,637 
Commercial mortgage-backed securities9,088 232 (357)8,963 8,963 
Residential mortgage-backed securities200,265 5,738 (943)205,060 205,060 
Residential collateralized mortgage obligations193,730 1,491 (1,415)193,806 193,806 
Asset-backed securities85,938 1,593 (1)87,530 87,530 
Total$964,575 $24,477 $(8,920)$980,132 $$980,132 
Held to maturity:
State and municipal securities$38,049 $2,751 $$40,800 $(66)$37,983 
Securities carried at fair value through income:
State and municipal securities(1)
$10,618 $— $— $11,077 $— $11,077 
December 31, 2020
Available for sale:
State and municipal securities$420,559 $21,884 $(258)$442,185 $$442,185 
Corporate bonds64,313 1,762 (137)65,938 65,938 
U.S. government and agency securities851 (5)849 849 
Commercial mortgage-backed securities10,814 266 11,080 11,080 
Residential mortgage-backed securities207,742 7,441 (232)214,951 214,951 
Residential collateralized mortgage obligations193,865 1,739 (261)195,343 195,343 
Asset-backed securities73,451 877 74,328 74,328 
Total$971,595 $33,972 $(893)$1,004,674 $$1,004,674 
Held to maturity:
State and municipal securities$38,194 $3,011 $$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.


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ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Securities with unrealized losses at March 31, 2021, and December 31, 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)Less than 12 Months12 Months or MoreTotal
March 31, 2021Fair ValueUnrealized LossFair ValueUnrealized LossFair ValueUnrealized Loss
Available for sale:
State and municipal securities$147,815 $(5,601)$1,520 $(40)$149,335 $(5,641)
Corporate bonds24,249 (386)24,249 (386)
U.S. government and agency securities4,851 (173)523 (4)5,374 (177)
Commercial mortgage-backed securities6,475 (357)— 6,475 (357)
Residential mortgage-backed securities54,673 (943)54,673 (943)
Residential collateralized mortgage obligations90,832 (1,415)90,832 (1,415)
Asset-backed securities6,868 (1)6,868 (1)
Total$335,763 $(8,876)$2,043 $(44)$337,806 $(8,920)
Held to maturity:
State and municipal securities$$$$$$
December 31, 2020
Available for sale:
State and municipal securities$21,979 $(258)$$$21,979 $(258)
Corporate bonds30,513 (137)30,513 (137)
U.S. government and agency securities568 (5)568 (5)
Residential mortgage-backed securities23,178 (232)23,178 (232)
Residential collateralized mortgage obligations43,911 (261)43,911 (261)
Total$119,581 $(888)$568 $(5)$120,149 $(893)
Held to maturity:
State and municipal securities$$$$$$
Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.
At March 31, 2021, the Company had 134 available for sale debt securities in an unrealized loss position without an allowance for credit losses. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, at March 31, 2021, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company’s consolidated statements of income.


15



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following table presents the activity in the allowance for credit losses for held-to-maturity debt securities.
(Dollars in thousands)Municipal Securities
Allowance for credit losses:
Balance at January 1, 2021$66 
Credit loss expense
Balance at March 31, 2021$66 
Balance at January 1, 2020$
Impact of adopting ASC 32696 
Credit loss expense
Balance at March 31, 2020$96 
Accrued interest of $5.6 million and $2.7 million was not included in the calculation of the allowance at March 31, 2021, or March 31, 2020, respectively. There were 0 past due held-to-maturity securities or held-to-maturity securities in nonaccrual status at March 31, 2021, or December 31, 2020.
Proceeds from sales and calls, and related gross gains and losses of securities available for sale, are shown below.
Three Months Ended March 31,
(Dollars in thousands)20212020
Proceeds from sales$40,493 $22,375 
Gross realized gains1,700 103 
Gross realized losses(32)(49)
The following table presents the amortized cost and fair value of securities available for sale and held to maturity at March 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)Held to MaturityAvailable for Sale
March 31, 2021Amortized CostFair ValueAmortized CostFair Value
Due in one year or less$12,857 $12,862 $4,725 $4,772 
Due after one year through five years52,044 56,192 
Due after five years through ten years25,192 27,938 111,175 113,565 
Due after ten years307,610 310,244 
Commercial mortgage-backed securities9,088 8,963 
Residential mortgage-backed securities200,265 205,060 
Residential collateralized mortgage obligations193,730 193,806 
Asset-backed securities85,938 87,530 
Total$38,049 $40,800 $964,575 $980,132 
The following table presents carrying amounts of securities pledged as collateral for deposits and repurchase agreements for the period ends presented.
(Dollars in thousands)March 31, 2021December 31, 2020
Carrying value of securities pledged to secure public deposits$232,179 $289,537 
Carrying value of securities pledged to repurchase agreements9,949 10,982 


16



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 4 - Loans
Loans consist of the following:
(Dollars in thousands)March 31, 2021December 31, 2020
Loans held for sale$144,950 $191,512 
LHFI:
Loans secured by real estate:
Commercial real estate$1,441,071 $1,370,928 
Construction/land/land development548,236 531,860 
Residential real estate904,753 885,120 
Total real estate2,894,060 2,787,908 
Commercial and industrial(1)
1,834,498 1,817,862 
Mortgage warehouse lines of credit1,090,347 1,084,001 
Consumer17,277 17,991 
Total loans accounted for at amortized cost5,836,182 5,707,762 
Loans accounted for at fair value13,578 17,011 
Total LHFI(2)
5,849,760 5,724,773 
Less: Allowance for loan losses85,136 86,670 
LHFI, net$5,764,624 $5,638,103 
____________________________
(1)Includes $584.1 million and $546.5 million of PPP loans at March 31, 2021 and December 31, 2020, respectively.
(2)Includes net deferred loan fees of $15.9 million and $13.7 million at March 31, 2021, and December 31, 2020, respectively.
Included in total loans held for investment ("LHFI") were $13.6 million and $17.0 million of commercial real estate loans for which the fair value option was elected at March 31, 2021 and December 31, 2020, respectively. The Company mitigates the interest rate component of fair value risk on loans at fair value by entering into derivative interest rate contracts. See Note 5 - Fair Value of Financial Instruments for more information on loans for which the fair value option has been elected.
The Company has been a participating lender in the Paycheck Protection Program ("PPP"). At March 31, 2021, there were approximately $584.1 million in PPP loans outstanding included in the Company’s commercial and industrial loan portfolio, including $11.5 million in net deferred loan fees. PPP loans have a maximum maturity of two years and earn interest at 1%. PPP loans are fully guaranteed by the U.S. government and can be forgiven by the SBA if the borrower uses the proceeds to pay specified expenses. The Company believes that the majority of its PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the program.
Credit quality indicators. As part of the Company's commitment to manage the credit quality of its loan portfolio, management annually updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions in the states in which the Company operates. The Company maintains an internal risk rating system where ratings are assigned to individual loans based on assessed risk. Loan risk ratings are the primary indicator of credit quality for the loan portfolio and are continually evaluated to ensure they are appropriate based on currently available information.
The following is a summary description of the Company's internal risk ratings:
• Pass (1-6)Loans within this risk rating are further categorized as follows:
Minimal risk (1)Well-collateralized by cash equivalent instruments held by the Bank.
Moderate risk (2)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.
Better than average risk (3)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.


17



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Average risk (4)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 lending policy, but possess one or more attributes that cause the overall risk profile to be higher than the majority of newly approved loans.
Watch (6)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.
• Special Mention (7)This grade is intended to be temporary and includes borrowers whose credit quality has deteriorated and is at risk of further decline.
• Substandard (8)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.
• Doubtful (9)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.
• Loss (0)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, troubled debt restructurings ("TDRs"), consumer loans greater than $100,000 with a FICO score under 625, loans greater than $100,000 in which the borrower has filed bankruptcy, and all loans 180 days or more past due. Loans under $50,000 will be evaluated collectively in designated pools unless a loss exposure has been identified. Some additional risk elements considered by loan type include:
for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;
for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;
for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and
for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral.


18



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 March 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 March 31, 2021.
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Commercial real estate:(1)
Pass$130,211 $394,179 $290,815 $289,673 $148,317 $124,443 $21,263 $1,398,901 
Special mention4,383 1,154 20,707 2,110 28,354 
Classified1,904 3,473 1,587 2,782 1,427 2,529 114 13,816 
Total commercial real estate loans$136,498 $397,652 $292,402 $293,609 $170,451 $126,972 $23,487 $1,441,071 
Current period gross charge-offs$$$$$$26 $$28 
Current period gross recoveries
Current period net charge-offs (recoveries)$$$$$$23 $$25 
(1) Excludes $13.6 million of commercial real estate loans at fair value, which are not included in the loss estimation methodology due to the fair value option election.
Construction/land/land development:
Pass$40,706 $193,152 $142,872 $119,935 $12,716 $2,505 $17,490 $529,376 
Special mention10,242 135 1,003 11,380 
Classified306 317 1,079 716 1,508 291 3,263 7,480 
Total construction/land/land development loans$41,012 $193,469 $154,193 $120,786 $15,227 $2,796 $20,753 $548,236 
Current period gross charge-offs$$$$$$$$
Current period gross recoveries
Current period net charge-offs (recoveries)$$$$$$$$
Residential real estate:
Pass$53,633 $354,359 $118,406 $114,721 $101,869 $89,887 $52,920 $885,795 
Special mention1,447 185 801 196 2,629 
Classified94 1,658 2,354 2,955 2,214 6,826 228 16,329 
Total residential real estate loans$55,174 $356,202 $120,760 $117,676 $104,884 $96,909 $53,148 $904,753 
Current period gross charge-offs$$$$$$$$
Current period gross recoveries
Current period net charge-offs (recoveries)$$$$$$(9)$$(9)


19



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20212020201920182017PriorRevolving Loans Amortized Cost BasisTotal
Commercial and industrial:
Pass$254,777 $700,996 $137,792 $103,342 $22,396 $33,753 $471,812 $1,724,868 
Special mention217 4,631 2,275 25,902 408 14,458 4,125 52,016 
Classified4,474 1,228 11,786 5,753 4,942 10,198 19,233 57,614 
Total commercial and industrial loans$259,468 $706,855 $151,853 $134,997 $27,746 $58,409 $495,170 $1,834,498 
Current period gross charge-offs$$$54 $$362 $1,282 $1,253 $2,955 
Current period gross recoveries13 11 76 108 
Current period net charge-offs (recoveries)$$$41 $$351 $1,206 $1,245 $2,847 
Mortgage Warehouse Lines of Credit:
Pass$$$$$$$1,090,347 $1,090,347 
Current period gross charge-offs$$$$$$$$
Current period gross recoveries
Current period net charge-offs (recoveries)$$$$$$$$
Consumer:
Pass$1,858 $5,477 $2,656 $1,276 $154 $148 $5,652 $17,221 
Classified28 13 56 
Total consumer loans$1,858 $5,505 $2,665 $1,277 $154 $153 $5,665 $17,277 
Current period gross charge-offs$$$22 $$$$14 $44 
Current period gross recoveries13 13 
Current period net charge-offs (recoveries)$$$22 $$$(7)$14 $31 
The following table reflects recorded investments in loans by credit quality indicator and origination year at December 31, 2020, excluding loans held for sale and loans accounted for at fair value. The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2020.
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20202019201820172016PriorRevolving Loans Amortized Cost BasisTotal
Commercial real estate:(1)
Pass$393,317 $290,394 $312,051 $154,445 $46,132 $106,994 $18,419 $1,321,752 
Special mention824 113 2,410 20,691 1,656 2,145 27,839 
Classified2,806 1,678 6,704 6,586 1,476 1,093 994 21,337 
Total commercial real estate loans$396,947 $292,185 $321,165 $181,722 $47,608 $109,743 $21,558 $1,370,928 
Current period gross charge-offs$$$$3,622 $199 $1,103 $$4,924 
Current period gross recoveries19 19 
Current period net charge-offs$$$$3,622 $199 $1,084 $$4,905 
(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.


20



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Term Loans
Amortized Cost Basis by Origination Year
(Dollars in thousands)20202019201820172016PriorRevolving Loans Amortized Cost BasisTotal
Construction/land/land development:
Pass$189,311 $150,281 $138,000 $12,907 $1,812 $1,157 $18,892 $512,360 
Special mention323 10,421 135 1,003 11,882 
Classified1,811 726 1,507 143 168 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)
Residential real estate:
Pass$367,652 $143,368 $103,450 $102,272 $41,522 $50,094 $53,854 $862,212 
Special mention188 29 1,875 9,287 803 12,182 
Classified1,857 2,403 2,982 511 1,344 1,533 96 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$94 $271 $$283 $$44 $$692 
Current period gross recoveries202 202 
Current period net charge-offs (recoveries)$94 $271 $$283 $$(158)$$490 
Commercial and industrial:
Pass$851,780 $153,722 $110,092 $29,413 $9,927 $26,964 $511,220 $1,693,118 
Special mention4,860 2,059 26,438 423 14,843 8,077 56,700 
Classified5,436 12,250 5,859 5,450 5,950 6,707 26,392 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 recoveries42 20 81 185 112 582 1,022 
Current period net charge-offs$189 $162 $67 $40 $3,043 $357 $1,822 $5,680 
Mortgage Warehouse Lines of Credit:
Pass$$$$$$$1,084,001 $1,084,001 
Current period gross charge-offs$$$$$$$$
Current period gross recoveries
Current period net charge-offs$$$$$$$$
Consumer:
Pass$6,702 $3,318 $1,578 $203 $116 $83 $5,935 $17,935 
Classified28 13 56 
Total consumer loans$6,730 $3,326 $1,578 $203 $122 $84 $5,948 $17,991 
Current period gross charge-offs$$39 $23 $$$$$76 
Current period gross recoveries24 
Current period net charge-offs (recoveries)$$39 $22 $$(5)$(3)$(2)$52 


21



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following tables present the Company's loan portfolio aging analysis at the dates indicated:
March 31, 2021
(Dollars in thousands)30-59 Days Past Due60-89 Days Past DueLoans Past Due 90 Days or MoreTotal Past DueCurrent LoansTotal Loans ReceivableAccruing Loans 90 or More Days Past Due
Loans secured by real estate:
Commercial real estate (1)
$1,055 $$571 $1,626 $1,453,023 $1,454,649 $
Construction/land/land development257 253 1,832 2,342 545,894 548,236 
Residential real estate2,287 4,361 3,116 9,764 894,989 904,753 
Total real estate3,599 4,614 5,519 13,732 2,893,906 2,907,638 
Commercial and industrial791 165 11,825 12,781 1,821,717 1,834,498 
Mortgage warehouse lines of credit1,090,347 1,090,347 
Consumer58 61 17,216 17,277 
Total LHFI$4,448 $4,780 $17,346 $26,574 $5,823,186 $5,849,760 $
____________________________
(1)Includes $13.6 million of commercial real estate loans at fair value
December 31, 2020
(Dollars in thousands)30-59 Days Past Due60-89 Days Past DueLoans Past Due 90 Days or MoreTotal Past DueCurrent LoansTotal Loans ReceivableAccruing Loans 90 or More Days Past Due
Loans secured by real estate:
Commercial real estate (1)
$1,072 $$3,172 $4,244 $1,383,695 $1,387,939 $
Construction/land/land development369 2,328 2,698 529,162 531,860 
Residential real estate3,774 134 364 4,272 880,848 885,120 
Total real estate5,215 135 5,864 11,214 2,793,705 2,804,919 
Commercial and industrial703 1,097 12,625 14,425 1,803,437 1,817,862 
Mortgage warehouse lines of credit1,084,001 1,084,001 
Consumer113 124 17,867 17,991 
Total LHFI$6,031 $1,241 $18,491 $25,763 $5,699,010 $5,724,773 $
____________________________
(1)Includes $17.0 million of commercial real estate loans at fair value


22



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 $20.2 million and $12.6 million was not included in the book value for the purposes of calculating the allowance at March 31, 2021 and March 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.
Three Months Ended March 31, 2021
(Dollars in thousands)Beginning BalanceCharge-offsRecoveries
Provision (Benefit) (1)
Ending Balance
Loans secured by real estate:
Commercial real estate$15,430 $28 $$2,992 $18,397 
Construction/land/land development8,191 (802)7,389 
Residential real estate9,418 (1,133)8,294 
Commercial and industrial51,857 2,955 108 332 49,342 
Mortgage warehouse lines of credit856 67 923 
Consumer918 44 13 (96)791 
Total$86,670 $3,027 $133 $1,360 $85,136 
____________________________
(1)The $1.4 million provision for credit losses on the consolidated statements of income includes a $1.4 million net loan loss provision, and a $52,000 provision for off-balance sheet commitments for the three months ended March 31, 2021.
Three Months Ended March 31, 2020
(Dollars in thousands)Beginning BalanceImpact of Adopting ASC 326Charge-offsRecoveries
Provision (1)
Ending Balance
Loans secured by real estate:
Commercial real estate$10,013 $(5,052)$172 $$4,463 $9,254 
Construction/land/land development3,711 1,141 202 5,054 
Residential real estate6,332 (2,526)49 149 589 4,495 
Commercial and industrial16,960 7,296 1,180 169 12,578 35,823 
Mortgage warehouse lines of credit262 29 488 779 
Consumer242 360 24 76 658 
Total$37,520 $1,248 $1,425 $324 $18,396 $56,063 
____________________________
(1)The $18.5 million provision for credit losses on the consolidated statements of income includes a $18.4 million net loan loss provision and a $135,000 provision for off-balance sheet commitments for the three months ended March 31, 2020.
The decrease in provision expense compared to the quarter ended March 31, 2020, was primarily due to improvement in forecasted economic conditions during the quarter ended March 31, 2021, as compared to forecasted worsening economic conditions during the quarter ended March 31, 2020. The Company's credit quality profile in relation to the allowance for loan credit losses drove a decline of $1.6 million in the collective reserve during the three months ended March 31, 2021, of which a $1.1 million decrease was related to qualitative factor changes across the Company’s risk pools for the three months ended March 31, 2021. NaN commercial and industrial loans, reflecting 4 loan relationships, were written down during the quarter ended March 31, 2021, totaling $2.8 million.

The provision for loan credit losses for the first quarter of 2020 was driven by a significant increase in uncertainty related to the economic impact of the current COVID-19 pandemic. Based upon the requirement 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 $11.2 million in provision expense across the Company’s risk pools. An additional $6.0 million in provision expense was due to the current and forecast effects of individually evaluated loans. The provision for commercial real estate loans includes approximately $3.0 million in increased credit allowances related to individually evaluated loans. The provision for commercial and industrial loans includes $5.4 million related to current and forecast factors as well as approximately $3.0 million related to individually evaluated loans. The only significant charge-off in commercial and industrial loans during the first quarter of 2020 was for $732,000 on an operating loan secured by equipment.


23



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following tables show the recorded investment in loans by loss estimation methodology at March 31, 2021, and December 31, 2020.
March 31, 2021
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate(1)
$1,438,054 $571 $2,446 $1,441,071 
Construction/land/land development545,796 2,112 328 548,236 
Residential real estate894,416 8,482 1,855 904,753 
Commercial and industrial1,814,453 9,388 10,657 1,834,498 
Mortgage warehouse lines of credit1,090,347 1,090,347 
Consumer17,275 17,277 
Total$5,800,341 $20,555 $15,286 $5,836,182 
____________________________
(1)Excludes $13.6 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.
December 31, 2020
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate(1)
$1,365,284 $3,173 $2,471 $1,370,928 
Construction/land/land development528,894 2,621 345 531,860 
Residential real estate879,015 2,009 4,096 885,120 
Commercial and industrial1,804,049 3,152 10,661 1,817,862 
Mortgage warehouse lines of credit1,084,001 1,084,001 
Consumer17,991 17,991 
Total$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.


24



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following tables show the allowance for loan credit losses by loss estimation methodology at March 31, 2021, and December 31, 2020.
March 31, 2021
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate$18,388 $$$18,397 
Construction/land/land development7,258 131 7,389 
Residential real estate7,992 302 8,294 
Commercial and industrial41,488 3,201 4,653 49,342 
Mortgage warehouse lines of credit923 923 
Consumer789 791 
Total$76,838 $3,334 $4,964 $85,136 
December 31, 2020
Collectively EvaluatedIndividually Evaluated
(Dollars in thousands)Probability of DefaultFair Value of CollateralDiscounted Cash FlowTotal
Loans secured by real estate:
Commercial real estate$14,896 $525 $$15,430 
Construction/land/land development8,062 128 8,191 
Residential real estate8,983 435 9,418 
Commercial and industrial44,714 1,707 5,436 51,857 
Mortgage warehouse lines of credit856 856 
Consumer918 918 
Total$78,429 $2,360 $5,881 $86,670 
Note that the Company is not using the collateral maintenance agreement practical expedient. All fair value of collateral is real estate related.
Collateral-dependent loans consist primarily of commercial real estate and commercial and industrial loans. These loans are individually evaluated when foreclosure is probable or when the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral. Loan balances are charged down to the underlying collateral value when they are deemed uncollectible.


25



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Nonaccrual LHFI were as follows:
Nonaccrual With No
Allowance for Credit Loss
Nonaccrual
(Dollars in thousands)
Loans secured by real estate:
March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Commercial real estate$1,012 $1,053 $1,085 $3,704 
Construction/land/land development955 1,319 2,431 2,962 
Residential real estate8,901 2,436 10,692 6,530 
Total real estate10,868 4,808 14,208 13,196 
Commercial and industrial76 82 19,094 12,897 
Consumer56 56 
Total nonaccrual loans$10,944 $4,890 $33,358 $26,149 
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 March 31, 2021, the Company had no funding commitments for which the terms have been modified in TDRs.
For the three months ended March 31, 2021 and 2020, gross interest income that would have been recorded had the nonaccruing loans been current in accordance with their original terms was $341,000 and $354,000, respectively. NaN interest income was recorded on these loans while they were considered nonaccrual during the three months ended March 31, 2021 and 2020.
The Company elects the fair value option for recording residential mortgage loans held for sale, as well as certain commercial real estate loans in accordance with U.S. GAAP. The Company had $963,000 of nonaccrual mortgage loans held for sale that were recorded using the fair value option election at March 31, 2021, compared to $681,000 at December 31, 2020. There were no nonaccrual LHFI that were recorded using the fair value option election at March 31, 2021, or December 31, 2020.
Certain borrowers are currently unable to meet their contractual payment obligations because of the adverse effects of COVID-19. To help mitigate these effects, loan customers may apply for a deferral of payments, or portions thereof, for up to 90 days. The CARES Act and related guidance from the federal banking agencies provide financial institutions the option to temporarily suspend requirements under GAAP related to classification of certain loan modifications as TDRs to account for the current and anticipated effects of COVID-19. The CARES Act, as amended by the Consolidated Appropriations Act, 2021, specified that COVID-19 related loan modifications executed between March 1, 2020 and the earlier of (i) 60 days after the date of termination of the national emergency declared by the President and (ii) January 1, 2022, on loans that were current as of December 31, 2019 are not TDRs. Additionally, under guidance from the federal banking agencies, other short-term modifications made on a good faith basis in response to COVID-19 to borrowers that were current prior to any relief are not TDRs under ASC Subtopic 310-40, “Troubled Debt Restructuring by Creditors.” These modifications include short-term (e.g., up to six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or delays in payment that are insignificant. At March 31, 2021, the Company had 24 loans totaling $5.3 million under COVID-19 related forbearance agreements that were not treated as TDRs pursuant to the CARES Act and interagency guidance compared to 49 loans totaling $97.7 million at December 31, 2020.


26



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Loans classified as TDRs, excluding the impact of forbearances granted due to COVID-19, were as follows:
(Dollars in thousands)March 31, 2021December 31, 2020
TDRs
Nonaccrual TDRs$5,515 $5,671 
Performing TDRs3,237 3,314 
Total$8,752 $8,985 
There were 0 loans classified as TDR's during the three months ended March 31, 2021. The tables below summarize loans classified as TDR's by loan and concession type during the three months ended March 31, 2020.
Three Months Ended March 31, 2020
(Dollars in thousands)Number of Loans RestructuredPre-Modification Recorded BalanceTerm ConcessionsInterest Rate ConcessionsCombination of Term and Rate ConcessionsTotal Modifications
Commercial and industrial$128 $127 $$$127 
Total$128 $127 $$$127 
During the three months ended March 31, 2021, 0 loans defaulted after having been modified as a TDR within the previous 12 months. During the three months ended March 31, 2020, 2 loans with a combined outstanding principal balance of $2.3 million 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 three months ended March 31, 2020, did not significantly impact the Company's determination of the allowance for loan credit losses. The Company monitors the performance of the modified loans to their restructured terms on an ongoing basis. In the event of a subsequent default, the allowance for loan credit losses continues to be reassessed on the basis of an individual evaluation of each loan.
Note 5 - Fair Value of Financial Instruments
Fair value is the exchange price that is expected to be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Certain assets and liabilities are recorded in the Company's consolidated financial statements at fair value. Some are recorded on a recurring basis and some on a non-recurring basis.
The Company utilizes fair value measurement to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach to estimate the fair values of its financial instruments. Such valuation techniques are consistently applied.
A hierarchy for fair value has been established which categorizes the valuation techniques into three levels used to measure fair value. The three levels are as follows:
Level 1 - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Fair value is based on significant other observable inputs that are generally determined based on a single price for each financial instrument provided to the Company by an unrelated third-party pricing service and is based on one or more of the following:
Quoted prices for similar, but not identical, assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in markets that are not active;
Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and
Other inputs derived from or corroborated by observable market inputs.


27



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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 March 31, 2021, and December 31, 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.
March 31, 2021
(Dollars in thousands)Level 1Level 2Level 3Total
State and municipal securities$$367,698 $41,475 $409,173 
Corporate bonds69,963 69,963 
U.S. government agency securities5,637 5,637 
Commercial mortgage-backed securities8,963 8,963 
Residential mortgage-backed securities205,060 205,060 
Residential collateralized mortgage obligations193,806 193,806 
Asset-backed securities87,530 87,530 
Securities available for sale938,657 41,475 980,132 
Securities carried at fair value through income11,077 11,077 
Loans held for sale82,706 82,706 
Loans at fair value13,578 13,578 
Mortgage servicing rights17,552 17,552 
Other assets - derivatives17,677 17,677 
Total recurring fair value measurements - assets$$1,039,040 $83,682 $1,122,722 
Other liabilities - derivatives$$(15,432)$$(15,432)
Total recurring fair value measurements - liabilities$$(15,432)$$(15,432)


28



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
December 31, 2020
(Dollars in thousands)Level 1Level 2Level 3Total
State and municipal securities$$398,120 $44,065 $442,185 
Corporate bonds65,938 65,938 
U.S. government agency securities849 849 
Commercial mortgage-backed securities11,080 11,080 
Residential mortgage-backed securities214,951 214,951 
Residential collateralized mortgage obligations195,343 195,343 
Asset-backed securities74,328 74,328 
Securities available for sale960,609 44,065 1,004,674 
Securities carried at fair value through income11,554 11,554 
Loans held for sale136,026 136,026 
Loans at fair value17,011 17,011 
Mortgage servicing rights13,660 13,660 
Other assets - derivatives23,694 23,694 
Total recurring fair value measurements - assets$$1,120,329 $86,290 $1,206,619 
Other liabilities - derivatives$$(23,020)$$(23,020)
Total recurring fair value measurements - liabilities$$(23,020)$$(23,020)
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2021 and 2020, are summarized as follows:
(Dollars in thousands)Loans at Fair ValueMSRsSecurities Available for SaleSecurities 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)
1,949 
Other noninterest income(59)(477)
Loss recognized in AOCI(489)
Purchases, issuances, sales and settlements:
Originations1,943 
Settlements(3,374)(2,101)
Balance at March 31, 2021$13,578 $17,552 $41,475 $11,077 
Balance at January 1, 2020$17,670 $20,697 $38,173 $11,513 
Gain (loss) recognized in earnings:
Mortgage banking revenue(1)
(5,228)
Other noninterest income166 729 
Gain recognized in AOCI160 
Purchases, issuances, sales and settlements:
Originations653 
Sales(1,908)
Settlements(247)
Balance at March 31, 2020$17,589 $16,122 $36,425 $12,242 
____________________________
(1)Total mortgage banking revenue includes changes in fair value due to market changes and run-off.


29



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The Company obtains fair value measurements for loans at fair value, securities available for sale and securities at fair value through income from an independent pricing service, therefore, quantitative unobservable inputs are unknown.
The following methodologies were used to measure the fair value of financial assets and liabilities valued on a recurring basis:
Securities Available for Sale
Securities classified as available for sale are reported at fair value utilizing Level 1, Level 2 or Level 3 inputs. For Level 2 securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, market consensus prepayment speeds, credit information and the security's terms and conditions, among other things. In order to ensure the fair values are consistent with Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, the Company periodically checks the fair value by comparing them to 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.
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:
March 31, 2021December 31, 2020
Range
Weighted Average(1)
Range
Weighted Average(1)
Prepayment speeds7.78% - 35.56%14.47 %11.82% - 37.95%22.08 %
Discount rates9.00 - 10.509.50 7.83 - 9.098.27 
__________________________
(1)The weighted average was calculated with reference to the principle balance of the underlying mortgages.
In recent years, there have been significant market-driven fluctuations in the assumptions listed above. Loans with higher average coupon rates have a greater likelihood of prepayment during the current interest rate environment, while loans with lower average coupon rates have a lower likelihood of prepayment. The increase in rates since the year ended December 31, 2020, has caused an 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.


30



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Fair Values of Assets Recorded on a Recurring Basis for which the Fair Value Option has been Elected
Certain assets are measured at fair value on a recurring basis due to the Company's election to adopt fair value accounting treatment for those assets. This election allows for a more effective offset of the changes in fair values of the assets and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC 815, Derivatives and Hedging. For assets for which the fair value has been elected, the earned current contractual interest payment is recognized in interest income, loan origination costs and fees on fair value option loans are recognized in earnings as incurred and not deferred. At March 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:
March 31, 2021
(Dollars in thousands)Aggregate Fair ValueAggregate Unpaid Principal BalanceDifference
Loans held for sale(1)
$82,706 $80,761 $1,945 
Commercial real estate LHFI(2)
13,578 13,386 192 
Securities carried at fair value through income11,077 10,618 459 
Total$107,361 $104,765 $2,596 
____________________________
(1)$963,000 of loans held for sale were designated as nonaccrual or 90 days or more past due at March 31, 2021. Of this balance, $826,000 was guaranteed by U.S. Government agencies.
(2)There were 0 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 March 31, 2021.
December 31, 2020
(Dollars in thousands)Aggregate Fair ValueAggregate Unpaid Principal BalanceDifference
Loans held for sale(1)
$136,026 $129,955 $6,071 
Commercial real estate LHFI(2)
17,011 16,760 251 
Securities carried at fair value through income11,554 10,618 936 
Total$164,591 $157,333 $7,258 
____________________________
(1)$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, $473,000 was guaranteed by U.S. Government agencies.
(2)There were 0 commercial real estate loans for which the fair value had been elected that were designated as nonaccrual or 90 days or more past due at December 31, 2020.
Changes in the fair value of assets for which the Company elected the fair value option are classified in the consolidated statement of income line items reflected in the following table:
(Dollars in thousands)Three Months Ended March 31,
Changes in fair value included in noninterest income:20212020
Mortgage banking revenue$(4,125)$1,046 
Other income:
Loans at fair value held for investment(59)166 
Securities carried at fair value through income(477)729 
Total impact on other income(536)895 
Total fair value option impact on noninterest income (1)
$(4,661)$1,941 
____________________________
(1)The fair value option impact on noninterest income is offset by the derivative gain/loss recognized in noninterest income. Please see Note 6 - 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:


31



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Securities at Fair Value through Income
Securities carried at fair value through income are valued using a discounted cash flow with a credit spread applied to each instrument based on the credit worthiness of each issuer. Credit spreads ranged from 83 to 227 basis points at both March 31, 2021, and December 31, 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
For LHFI for which the fair value option has been elected, fair values are calculated using a discounted cash flow model with inputs including observable interest rate curves and unobservable credit adjustment spreads based on credit risk inherent in the loan. Credit spreads ranged from 290 to 353 basis points at March 31, 2021, and 290 to 413 basis points at December 31, 2020. The Company believes the fair value approximates an exit price.
Fair Value of Assets Recorded on a Nonrecurring Basis
Equity Securities without Readily Determinable Fair Values
Equity securities without readily determinable fair values totaled $47.3 million and $62.6 million, at March 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, 0 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 $62.2 million and $55.5 million, respectively, at March 31, 2021, and December 31, 2020, for Government National Mortgage Association ("GNMA") repurchase assets included in mortgage loans held for sale on the consolidated balance sheets. The assets are valued at the lower of cost or market and, where market is lower than cost, valued using anticipated sale prices for loans allocated to a sale commitment, and those unallocated to a commitment are valued based on the interest rate and term for similar loans allocated. The Company believes the fair value approximates an exit price. Please see Note 6 - 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 $15.4 million and $12.3 million at March 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 $3.9 million and $1.6 million at March 31, 2021, and December 31, 2020, respectively. At March 31, 2021, the Company had 0 residential mortgage loans in the process of foreclosure.


32



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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.
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:
March 31, 2021December 31, 2020
Level 1 inputs:Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Cash and cash equivalents$264,901 $264,901 $377,214 $377,214 
Level 2 inputs:
Non-marketable equity securities held in other financial institutions47,274 47,274 62,586 62,586 
Accrued interest and loan fees receivable27,450 27,450 27,146 27,146 
Level 3 inputs:
Securities held to maturity37,983 40,800 38,128 41,205 
LHFI, net(1)
5,751,046 5,729,954 5,621,092 5,802,744 
Financial liabilities:
Level 2 inputs:
Deposits6,346,194 6,349,699 5,751,315 5,756,312 
FHLB advances and other borrowings325,751 312,306 984,608 991,943 
Subordinated debentures157,239 156,451 157,181 156,395 
Accrued interest payable3,445 3,445 3,556 3,556 
____________________________
(1)Does not include loans for which the fair value option had been elected at March 31, 2021, or December 31, 2020, as these loans are carried at fair value on a recurring basis.


33



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 6 - Mortgage Banking
The following table presents the Company's revenue from mortgage banking operations:
(Dollars in thousands)Three Months Ended March 31,
Mortgage banking revenue20212020
Origination$376 $275 
Gain on sale of loans held for sale6,940 1,873 
Servicing1,501 1,601 
Total gross mortgage revenue8,817 3,749 
Mortgage HFS and pipeline fair value adjustment(3,158)1,266 
MSR valuation adjustment, net of amortization1,949 (5,228)
MSR hedge impact(3,031)2,982 
Mortgage banking revenue$4,577 $2,769 
Management uses mortgage-backed securities to mitigate the impact of changes in fair value of MSRs. See Note 8 - Derivative Financial Instruments for further information.
Mortgage Servicing Rights
Activity in MSRs was as follows:
Three Months Ended March 31,
(Dollars in thousands)20212020
Balance at beginning of period$13,660 $20,697 
Addition of servicing rights1,943 653 
Valuation adjustment, net of amortization1,949 (5,228)
Balance at end of period$17,552 $16,122 
The Company receives annual servicing fee income approximating 0.28% of the outstanding balance of the underlying loans. In connection with the Company's activities as a servicer of mortgage loans, the investors and the securitization trusts have no recourse to the Company's assets for failure of debtors to pay when due.
The Company is potentially subject to losses in its loan servicing portfolio due to loan foreclosures. The Company has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loan sold violated representations or warranties made by the Company and/or the borrower at the time of the sale, which the Company refers to as mortgage loan servicing putback expenses. Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation and/or loans obtained through fraud by borrowers or other third parties. Putback claims may be made until the loan is paid in full. When a putback claim is received, the Company evaluates the claim and takes appropriate actions based on the nature of the claim. The Company is required by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to provide a response to putback claims within 60 days of the date of receipt.
The Company incurred $28,000 in mortgage loan servicing putback reserve expense for the three months ended March 31, 2021. At March 31, 2021, and December 31, 2020, the reserve for mortgage loan servicing putback expenses totaled $339,000 and $311,000, respectively. There is inherent uncertainty in reasonably estimating the requirement for reserves against future mortgage loan servicing putback expenses. Future putback expenses depend on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on loans sold with servicing released and the subsequent consequences under the representations and warranties.


34



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 $62.2 million and $55.5 million at March 31, 2021, and December 31, 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 7 - Borrowings
Borrowed funds are summarized as follows:
(Dollars in thousands)March 31, 2021December 31, 2020
Overnight repurchase agreements with depositors$6,321 $8,408 
Short-term FHLB advances650,000 
GNMA repurchase liability62,244 55,485 
Long-term FHLB advances257,186 270,715 
Total FHLB advances and other borrowings$325,751 $984,608 
Subordinated debentures, net$157,239 $157,181 
Additional details of certain FHLB advances are as follows:
(Dollars in thousands)AmountInterest RateMaturity Date
At March 31, 2021:
Long-term FHLB advance, callable quarterly, fixed rate$250,000 1.65 %8/23/2033
At December 31, 2020:
Short-term FHLB advance, fixed rate650,000 0.10 1/4/2021
Long-term FHLB advance, callable quarterly, fixed rate250,000 1.65 8/23/2033
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 March 31, 2021 and December 31, 2020, were $1.05 billion and $456.9 million, respectively.
Note 8 - Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company enters into derivative financial instruments to manage risks related to differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments, as well as to manage changes in fair values of some assets which are marked at fair value through the consolidated statement of income on a recurring basis.
Cash Flow Hedges of Interest Rate Risk
The Company is a party to an interest rate swap agreement under which the Company receives interest at a variable rate and pays at a fixed rate. The derivative instrument represented by this swap agreement is designated as a cash flow hedge of the Company's forecasted variable cash flows under a variable-rate term borrowing agreement. During the term of the swap agreement, the effective portion of changes in the fair value of the derivative instrument are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the periods that the hedged forecasted variable-rate interest payments affected earnings. There was no ineffective portion of the change in fair value of the derivative recognized directly in earnings. The entire swap fair value will be reclassified into earnings before the expiration date of the swap agreement.


35



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
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.
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 March 31, 2021, and December 31, 2020, as well as the effect of these derivative instruments on the Company's consolidated statements of income for the three months ended March 31, 2021 and 2020:
(Dollars in thousands)
Notional Amounts(1)
Fair Values
Derivatives designated as cash flow hedging instruments:March 31, 2021December 31, 2020March 31, 2021December 31, 2020
Interest rate swaps included in other (liabilities)$21,000 $21,000 $(227)$(706)
Derivatives not designated as hedging instruments:
Interest rate swaps included in other assets$334,916 $326,542 $13,881 $20,207 
Interest rate swaps included in other liabilities355,306 347,096 (14,735)(21,321)
Risk participation derivatives included in accrued expenses and other liabilities on the consolidated balance sheets63,374 63,374 (13)(18)
Forward commitments to purchase mortgage-backed securities included in other (liabilities) assets78,000 107,000 (457)(317)
Forward commitments to sell residential mortgage loans included in other liabilities115,000 107,200 1,704 (658)
Interest rate-lock commitments on residential mortgage loans included in other assets80,273 79,554 2,092 3,487 
$1,026,869 $1,030,766 $2,472 $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.


36



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The weighted-average rates paid and received for interest rate swaps at March 31, 2021, were as follows:
Weighted-Average Interest Rate
Interest rate swaps:PaidReceived
Cash flow hedges4.81 %2.93 %
Non-hedging interest rate swaps - financial institution counterparties4.49 2.70 
Non-hedging interest rate swaps - customer counterparties2.75 4.51 
Gains and losses recognized on derivative instruments not designated as hedging instruments are as follows:
(Dollars in thousands)Three Months Ended March 31,
Derivatives not designated as hedging instruments:20212020
Amount of gain (loss) recognized in mortgage banking revenue (1)
$(1,206)$2,513 
Amount of (loss) gain recognized in other non-interest income307 (685)
____________________________
(1)Gains and losses on these instruments are largely offset by market fluctuations in mortgage servicing rights. See Note 6 - 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 March 31, 2021, and December 31, 2020, the Company had cash collateral on deposit with swap counterparties totaling $12.8 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.
Note 9 - Stock and Incentive Compensation Plans
The Company has granted, and currently has outstanding, stock and incentive compensation awards subject to the provisions of the Company's 2012 Stock Incentive Plan (the "2012 Plan"). Additionally, awards have been issued prior to the establishment of the 2012 Plan, some of which were still outstanding at March 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, restricted stock units, dividend equivalent rights, performance unit awards or any combination thereof. At March 31, 2021, the maximum number of shares of the Company's common stock available for issuance under the 2012 Plan was 915,819 shares.
Share-based compensation cost charged to income for the three months ended March 31, 2021, and 2020, is presented below. There was 0 stock option expense for any of the periods shown.
Three Months Ended March 31,
(Dollars in thousands)20212020
Restricted stock$614 $537 
Related tax benefits recognized in net income129 113 
Restricted Stock Grants
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.


37



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The following table summarizes the Company's time-vested award activity:
Three Months Ended March 31,
20212020
SharesWeighted Average Grant-Date Fair ValueSharesWeighted Average Grant-Date Fair Value
Nonvested shares, January 1,103,359 $31.51 149,449 $35.15 
Granted6,286 33.82 
Vested(1,782)27.20 (2,073)25.81 
Forfeited(946)24.69 (4,129)37.14 
Nonvested shares, March 31,106,917 31.78 143,247 35.23 
At March 31, 2021, there was $1.9 million of total unrecognized compensation cost related to nonvested restricted shares awarded under the 2012 Plan. That cost is expected to be recognized over a weighted average period of 2.0 years.
Stock Option Grants
The Company issues common stock options to select officers and employees through individual agreements and as a result of obligations assumed in association with certain business combinations. As a result, both incentive and nonqualified stock options have been issued and may be issued in the future. The exercise price of each option varies by agreement and is based on either the fair value of the stock at the date of the grant in circumstances where option grants occurred or based on the previously committed exercise price in the case of options acquired through merger. No outstanding stock option has a term that exceeds twenty years, and all of the outstanding options are fully vested. The Company recognizes compensation cost for stock option grants over the required service period based upon the grant date fair-value, which is established using a Black-Scholes valuation model. The Black-Scholes valuation model uses assumptions of risk-free interest rate, expected term of stock options, expected stock price volatility and expected dividends. Forfeitures are recognized as they occur.
The table below summarizes the status of the Company's stock options and changes during the three months ended March 31, 2021 and 2020.
(Dollars in thousands, except per share amounts)Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term
 (in years)
Aggregate Intrinsic Value
Three Months Ended March 31, 2021
Outstanding at January 1, 2021224,000 $10.86 4.92$3,789 
Exercised(14,800)9.89 — — 
Outstanding and exercisable at March 31, 2021209,200 10.93 5.056,587 
Three Months Ended March 31, 2020
Outstanding at January 1, 2020254,000 $10.55 5.81$6,932 
Exercised(30,000)8.25 — — 
Outstanding and exercisable at March 31, 2020224,000 10.86 5.672,104 


38



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 10 - 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)Unrealized Gain (Loss) on AFS SecuritiesUnrealized (Loss) Gain on Cash Flow HedgesAccumulated Other Comprehensive Income
Balance at January 1, 2021$26,206 $(557)$25,649 
Net change(13,843)379 (13,464)
Balance at March 31, 2021$12,363 $(178)$12,185 
Balance at January 1, 2020$6,412 $(79)$6,333 
Net change10,044 (555)9,489 
Balance at March 31, 2020$16,456 $(634)$15,822 
Note 11 - Capital and Regulatory Matters
The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
The Company is subject to the Basel III regulatory capital framework ("Basel III Capital Rules"), which includes a 2.5% capital conservation buffer effective for the Company as of January 1, 2019. The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments. Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, which includes dividend payments and stock repurchases and to pay discretionary bonuses to executive officers.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, common equity Tier 1 capital, Tier 1 capital, Tier 1 capital, and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, at March 31, 2021, and December 31, 2020, that the Company and the Bank met all capital adequacy requirements to which they are subject, including the capital buffer requirement.
At March 31, 2021, and December 31, 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 implement CECL before the end of 2020 the option to delay for two years CECL’s adverse effects on regulatory capital. Origin elected to adopt CECL in the first quarter of 2020 and exercised the option to delay the estimated impact of the adoption of CECL on our regulatory capital for two years (from January 2020 through December 31, 2021), which resulted in a 19 basis point benefit to the common equity Tier 1 capital to risk-weighted assets capital ratio at December 31, 2020. The two-year delay will be followed by the three-year transition period of CECL's initial impact on our regulatory capital (from January 1, 2022 through December 31, 2024).


39



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
The actual capital amounts and ratios of the Company and Bank at March 31, 2021, and December 31, 2020, are presented in the following table:
(Dollars in thousands)

March 31, 2021
ActualMinimum Capital Required - Basel IIITo be Well Capitalized Under Prompt Corrective Action Provisions
Common Equity Tier 1 Capital to Risk-Weighted AssetsAmountRatioAmountRatioAmountRatio
Origin Bancorp, Inc.$626,931 10.17 %$431,516 7.00 %N/AN/A
Origin Bank660,585 10.74 430,549 7.00 $399,795 6.50 %
Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.636,315 10.32 524,097 8.50 N/AN/A
Origin Bank660,585 10.74 522,809 8.50 492,056 8.00 
Total Capital to Risk-Weighted Assets
Origin Bancorp, Inc.858,644 13.92 647,684 10.50 N/AN/A
Origin Bank804,330 13.08 645,678 10.50 614,931 10.00 
Leverage Ratio
Origin Bancorp, Inc.636,315 8.67 293,571 4.00 N/AN/A
Origin Bank660,585 9.02 292,942 4.00 366,178 5.00 
December 31, 2020
Common Equity Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.604,306 9.95 425,012 7.00 N/AN/A
Origin Bank637,863 10.53 424,010 7.00 393,724 6.50 
Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.613,682 10.11 516,107 8.50 N/AN/A
Origin Bank637,863 10.53 514,870 8.50 484,583 8.00 
Total Capital to Risk-Weighted Assets
Origin Bancorp, Inc.837,058 13.79 637,539 10.50 N/AN/A
Origin Bank782,503 12.92 636,019 10.50 605,732 10.00 
Leverage Ratio
Origin Bancorp, Inc.613,682 8.62 284,771 4.00 N/AN/A
Origin Bank637,863 8.99 283,842 4.00 354,802 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 $43.4 million at March 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. Prior to 2021, the Company had cumulatively repurchased an aggregate 330,868 common stock shares for a total purchase price of $10.8 million under the stock buyback program. As of March 31, 2021, the Company's board of directors has approved approximately $28.0 million remaining to be purchased under the program.


40



ORIGIN BANCORP, INC.
Condensed Notes to Consolidated Financial Statements
Note 12 - Commitments and Contingencies
Credit Related Commitments
In the normal course of business, the Company enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers. Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Company to varying degrees of credit risk and interest rate risk in much the same way as funded loans.
Commitments to extend credit include revolving commercial credit lines, nonrevolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and has not violated other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower's credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements of the Company.
A substantial majority of the letters of credit are standby agreements that obligate the Company to fulfill a customer's financial commitments to a third party if the customer is unable to perform. The Company issues standby letters of credit primarily to provide credit enhancement to its customers' other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.
The contract amounts of these instruments reflect the Company's exposure to credit risk. The Company undertakes the same credit evaluation in making loan commitments and assuming conditional obligations as it does for on-balance sheet instruments and may require collateral or other credit support. These off-balance sheet financial instruments are summarized below:
(Dollars in thousands)March 31, 2021December 31, 2020
Commitments to extend credit$1,390,528 $1,341,501 
Standby letters of credit48,967 42,911 
In addition to the above, the Company guarantees the credit card debt of certain customers to the merchant bank that issues the credit cards. These guarantees are in place for as long as the guaranteed credit card is open. At March 31, 2021, and December 31, 2020, these credit card guarantees totaled $205,000 and $200,000, respectively. This amount represents the maximum potential amount of future payments under the guarantee for which the Company would be responsible in the event of customer non-payment.
At March 31, 2021, the Company held 37 unfunded letters of credit from the FHLB totaling $590.9 million with expiration dates ranging from April 20, 2021, 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 $2.4 million and $2.3 million at March 31, 2021, and December 31, 2020, respectively, and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.
Loss Contingencies
From time to time the Company is also party to various legal actions arising in the ordinary course of business. At this time, management does not expect that loss contingencies, if any, arising from any such proceedings, either individually or in the aggregate, would have a material adverse effect on the consolidated financial position or liquidity of the Company.


41



Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
Unless the context indicates otherwise, references in this report 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.
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 unaudited consolidated financial statements and related condensed notes contained in Item 1 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" and in the section titled “Risk Factors” in our 2020 Form 10-K. We assume no obligation to update any of these forward looking statements.
General
We are a financial holding company headquartered in Ruston, Louisiana. Origin's wholly owned bank subsidiary, Origin Bank, was founded in 1912. Deeply rooted in Origin's history is a culture committed to providing personalized, relationship banking to its clients and communities. Origin provides a broad range of financial services to businesses, municipalities, high net-worth individuals and retail clients. Origin currently operates 44 banking centers located from Dallas/Fort Worth and Houston, Texas across North Louisiana 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 minimize 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.
2021 First Quarter Highlights
Net income for the quarter ended March 31, 2021, was $25.5 million, a historic quarterly high compared to $753,000 for the quarter ended March 31, 2020.
Pre-tax, pre-provision earnings ("PTPP")(1) also hit a historic high of $32.9 million for the quarter ended March 31, 2021, compared to $18.9 million for the quarter ended March 31, 2020.
The fully tax-equivalent net interest margin ("NIM") was 3.22% for the current quarter, compared to 3.44% for the quarter ended March 31, 2020.
Provision for credit losses was $1.4 million for the quarter ended March 31, 2021, compared to provision expense of $18.5 million for the quarter ended March 31, 2020.
Total LHFI was $5.85 billion at March 31, 2021, an increase of $125.0 million, or 2.2%, from December 31, 2020. LHFI growth, excluding PPP loans, increased $87.4 million, or 1.7%, compared to December 31, 2020.


42



Total deposits at March 31, 2021, were $6.35 billion, an increase of $594.9 million, or 10.3%, compared to $5.75 billion, at December 31, 2020.
(1)PTPP is a non-GAAP financial measure. A reconciliation has been included under "Non-GAAP Financial Measures" below.
Recent Developments and Impact of the COVID-19 Pandemic
The effects of the COVID-19 pandemic and the governmental and societal response to the virus have negatively impacted overall economic conditions, which resulted in the shuttering of businesses and significant job loss during 2020. In recent months, a number of restrictive government initiatives designed to combat the effects of the COVID-19 pandemic have been eased on a national level and specifically in the Company's markets of Texas, Louisiana and Mississippi, allowing businesses to reopen at varying capacity levels, which has bolstered commercial activity to some degree. At the end of 2020, the U.S. Food and Drug Administration (“FDA”) approved the first two COVID-19 vaccines, and in February 2021, approved a third COVID-19 vaccine, for deployment and distribution in the United States. Since such time, many American adults have been vaccinated against the virus. However, the risk of a resurgence in infections and possible reimplementation of new or additional restrictions at the national and local level to combat the COVID-19 pandemic remains present. The duration and severity of the COVID-19 pandemic remain impossible to predict. As the trend in the number of COVID-19 cases continues to fluctuate nationally, the potential exists for further resurgences to occur.
We have continued to meet our customers' needs while keeping the safety and well-being of our employees and customers as our top priority. While we allowed restricted access to our offices and branches during the height of the pandemic, our offices and branches have fully opened as of March 15, 2021. We continue to maintain social distancing measures for our employees, including the requirement to wear face masks unless working in an office or other location that permits social distancing. We have continued to follow enhanced sanitation protocols and also continue to encourage our employees to wash their hands thoroughly and frequently and to sanitize work areas when necessary to promote the safety and health of our employees and customers. Thermal kiosks for temperature checks are in use at the entrance of each location and customers are encouraged to wear face masks when entering Origin bank facilities. The Company continues to provide pandemic paid time off to employees and a dedicated hotline is available to quickly assist employees with any COVID-19 related questions or issues.
Beginning in early 2020, we proactively offered a range of policies and programs to accommodate customer hardship across our business in conjunction with the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Paycheck Protection Program and Health Care Enhancement Act (the “PPP/HCE Act”), which were intended to provide emergency relief to several groups and individuals impacted by the COVID-19 pandemic. We established a SBA Paycheck Protection Program task force and we continue to approve loans under this program as a result of the CARES Act. We also offered forbearance (90 day extensions) and modification agreements to our customers affected by the COVID-19 pandemic, primarily during 2020. We continue to track pandemic impacted relationships and general economic conditions in our markets.
Due to the economic impact of the COVID-19 pandemic and governmental efforts to contain it, we believe that certain business sectors of the U.S. economy may be more affected than others. Some of the sectors in which we operate that may experience a more significant impact include hotel, non-essential retail, restaurant and assisted living. Excluding PPP loans, at March 31, 2021, we had $510.5 million, or 9.7%, of our LHFI invested in these sectors. The allowance for loan credit losses on these sectors was $13.0 million at March 31, 2021, and the allowance for loan credit losses on COVID-19-impacted sectors to total LHFI in these sectors was 2.55%. Nonperforming LHFI in these key sectors impacted by the COVID-19 pandemic was $1.1 million at March 31, 2021, while past due LHFI, defined as loans 30 days or more past due, as a percentage of LHFI, excluding PPP loans, in these key sectors impacted by the COVID-19 pandemic, was 0.2% at March 31, 2021.
Our allowance for loan credit losses as a percentage of total LHFI was 1.46% at March 31, 2021, compared to 1.51% and 1.25% at December 31, 2020, and March 31, 2020, respectively, primarily due to the deterioration in macroeconomic variables related to the COVID-19 pandemic.
See "Item 1A - Risk Factors" for additional information regarding risks and significant uncertainties relating to the COVID-19 pandemic.


43



Comparison of Results of Operations for the Three Months Ended March 31, 2021 and 2020
Net Interest Income and Net Interest Margin
Net interest income for the three months ended March 31, 2021, was $55.2 million, an increase of $12.4 million over the three months ended March 31, 2020. The improvement was due to increases of $6.4 million and $6.1 million in interest income from mortgage warehouse lines of credit, and PPP loans, respectively, and a $6.5 million decrease in interest expense on deposits. These increases were offset by a $5.9 million decrease in the total interest earned on the LHFI portfolio, excluding mortgage warehouse loans and PPP loans, during the three months ended March 31, 2021, compared to the three months ended March 31, 2020.
The $6.4 million increase in interest income on mortgage warehouse lines of credit for the three months ended March 31, 2021, over the three months ended March 31, 2020, was due to higher mortgage activity driven by the low interest rate environment, coupled with additional mortgage warehouse clients being onboarded during the intervening period leading to higher average balances during the three months ended March 31, 2021. The $5.9 million decrease in interest income earned on LHFI portfolio, excluding mortgage warehouse loans and PPP loans, was primarily due to the impact of lower interest rates. The increase in interest income on PPP loans was entirely due to higher balances as we did not fund any PPP loans during the three months ended March 31, 2020.
Deposit interest expense decreased to $3.8 million during the three months ended March 31, 2021, compared to $10.3 million during the three months ended March 31, 2020, due to the reduction in deposit rates between the two periods. The average rate on savings and interest-bearing transaction accounts was 0.26% for the current period, down from 1.05% for the three months ended March 31, 2020, accounting for $6.9 million of the decrease in interest expense from the three months ended March 31, 2020. The average rate on time deposits decreased to 0.95% for the three months ended March 31, 2021, down from 1.98% for the three months ended March 31, 2020, providing an additional decrease of $1.7 million in interest expense. These rate-driven interest expense declines were offset by a $2.8 million increase in interest expense due to an increase in the average balances of savings and interest-bearing transaction accounts when comparing the three months ended March 31, 2021, to the same period in 2020.
The net interest margin was 3.22% for the three months ended March 31, 2021, a 22 basis point decrease from the three months ended March 31, 2020. The yield earned on interest-earning assets for the three months ended March 31, 2021, was 3.58%, a 79 basis point decrease from 4.37% for the three months ended March 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 three months ended March 31, 2021, was 0.57%, representing a decrease of 80 basis points compared to the three months ended March 31, 2020. The margin compression we experienced since the three months ended March 31, 2020, was primarily caused by decreasing loan yields driven by declining short-term interest rates over the last several quarters. The results for the first quarter of 2021 have improved from the quarterly results achieved during 2020, due primarily to the acceleration of PPP fees accreted into earnings, but as a result of the uncertainty surrounding the economic outlook and concern that there may be a resurgence of COVID-19, the current low interest rate environment may continue to put pressure on our net interest margin due to both maturing assets and floating rate assets potentially repricing at lower rates.


44



The following table presents average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended March 31, 2021 and 2020.
Three Months Ended March 31,
(Dollars in thousands)20212020
Assets
Average Balance(1)
Income/ExpenseYield/Rate
Average Balance(1)
Income/ExpenseYield/Rate
Commercial real estate$1,421,819 $14,593 4.16 %$1,274,633 $15,477 4.88 %
Construction/land/land development541,782 5,465 4.09 545,076 7,064 5.21 
Residential real estate888,208 8,848 4.04 695,040 8,272 4.79 
PPP565,653 6,138 4.40 — — — 
Commercial and industrial excl. PPP1,255,436 12,223 3.95 1,372,801 16,168 4.74 
Commercial and industrial1,821,089 18,361 4.09 1,372,801 16,168 4.74 
Mortgage warehouse lines of credit961,808 8,707 3.67 210,480 2,332 4.46 
Consumer17,649 253 5.81 19,687 332 6.77 
LHFI5,652,355 56,227 4.03 4,117,717 49,645 4.85 
Loans held for sale87,177 583 2.71 33,288 404 4.89 
Loans receivable5,739,532 56,810 4.01 4,151,005 50,049 4.85 
Investment securities-taxable750,801 3,300 1.78 450,576 2,712 2.42 
Investment securities-non-taxable295,000 1,672 2.30 102,954 758 2.96 
Non-marketable equity securities held in other financial institutions60,326 216 1.45 40,494 311 3.09 
Interest-bearing deposits in banks196,616 129 0.27 319,953 1,186 1.49 
Total interest-earning assets7,042,275 62,127 3.58 5,064,982 55,016 4.37 
Noninterest-earning assets(2)
340,220 335,722 
Total assets$7,382,495 $5,400,704 
Liabilities and Stockholders' Equity
Liabilities
Interest-bearing liabilities
Savings and interest-bearing transaction accounts$3,513,281 $2,256 0.26 %$2,444,953 $6,397 1.05 %
Time deposits656,255 1,533 0.95 781,907 3,853 1.98 
Total interest-bearing deposits4,169,536 3,789 0.37 3,226,860 10,250 1.28 
FHLB advances & other borrowings557,798 1,269 0.92 314,616 1,351 1.73 
Subordinated debentures157,221 1,830 4.72 51,308 605 4.74 
Total interest-bearing liabilities4,884,555 6,888 0.57 3,592,784 12,206 1.37 
Noninterest-bearing liabilities
Noninterest-bearing deposits1,700,523 1,097,646 
Other liabilities(2)
139,554 99,112 
Total liabilities6,724,632 4,789,542 
Stockholders' Equity657,863 611,162 
Total liabilities and stockholders' equity$7,382,495 $5,400,704 
Net interest spread3.01 %3.00 %
Net interest income and margin$55,239 3.18 $42,810 3.40 
Net interest income and margin - (tax equivalent)(3)
$55,988 3.22 $43,315 3.44 
____________________________
(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.
(2)Includes Government National Mortgage Association ("GNMA") repurchase average balances of $59.0 million, $27.9 million for the three months ended March 31, 2021 and 2020, 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 6 - Mortgage Banking in the condensed notes to our consolidated financial statements.
(3)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%.


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Rate/Volume Analysis
The following tables present the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and those due to changes in interest rates. The change in interest attributable to rate changes has been determined by applying the change in rate between periods to average balances outstanding in the earlier period. The change in interest due to volume has been determined by applying the rate from the earlier period to the change in average balances outstanding between periods. For purposes of this table, changes attributable to both rate and volume that cannot be segregated, including the difference in day count, have been allocated to rate.
(Dollars in thousands)
Three Months Ended March 31, 2021 vs.
Three Months Ended March 31, 2020
Interest-earning assetsIncrease (Decrease)
due to Change in
Loans:VolumeYield/RateTotal Change
Commercial real estate$1,787 $(2,671)$(884)
Construction/land/land development(43)(1,556)(1,599)
Residential real estate2,299 (1,723)576 
PPP6,138 — 6,138 
Commercial and industrial excl. PPP(858)(3,087)(3,945)
Mortgage warehouse lines of credit8,325 (1,950)6,375 
Consumer(34)(45)(79)
Loans held for sale655 (476)179 
Loans receivable18,269 (11,508)6,761 
Investment securities-taxable1,807 (1,219)588 
Investment securities-non-taxable1,414 (500)914 
Non-marketable equity securities held in other financial institutions153 (248)(95)
Interest-bearing deposits in banks(457)(600)(1,057)
Total interest-earning assets21,186 (14,075)7,111 
Interest-bearing liabilities
Savings and interest-bearing transaction accounts2,795 (6,936)(4,141)
Time deposits(619)(1,701)(2,320)
FHLB advances & other borrowings1,044 (1,126)(82)
Subordinated debentures1,249 (24)1,225 
Total interest-bearing liabilities4,469 (9,787)(5,318)
Net interest income$16,717 $(4,288)$12,429 
Provision for Credit Losses
The provision for credit losses, which includes the provisions for loan losses, off-balance sheet commitments and security credit losses, is based on management's assessment of the adequacy of our allowance for credit losses ("ACL") for loans, securities and our reserve for off-balance sheet lending commitments. Factors impacting the provision include inherent risk characteristics in our loan portfolio, the level of nonperforming loans and net charge-offs, both current and historic, local economic and credit conditions, the direction of the change in collateral values, reasonable and supportable forecasts, and the funding probability on unfunded lending commitments. The provision for credit losses is charged against earnings in order to maintain our ACL, which reflects management's best estimate of life of loan credit losses inherent in our loan portfolio at the balance sheet date, and our reserve for off-balance sheet lending commitments, which reflects management's best estimate of losses inherent in our legally binding lending-related commitments. The allowance is increased by the provision for loan credit losses and decreased by charge-offs, net of recoveries.



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We recorded provision expense of $1.4 million for the three months ended March 31, 2021, a decrease of $17.1 million from $18.5 million for the three months ended March 31, 2020. This decrease in provision expense reflects an improvement in forecasted economic conditions compared to worsening forecasted economic conditions at March 31, 2020. Net charge-offs were $2.9 million during the three months ended March 31, 2021, compared to $1.1 million during the three months ended March 31, 2020. The increase was primarily due to six commercial and industrial loans, reflecting four loan relationships, that were written down during the quarter ended March 31, 2021, totaling $2.8 million.
On January 1, 2020, we adopted CECL and recognized a one-time cumulative effect adjustment to the allowance for loan credit losses of $1.2 million. CECL requires recording life-of-loan projected losses in the loan portfolio based on reasonable and supportable forecasts and related loan portfolio credit performance. At adoption on January 1, 2020, the economic effects resulting from the COVID-19 pandemic were unknown. As such, the economic scenario used to develop our estimate of CECL as of the adoption date assumed a continued moderate U.S. economic expansion compared to 2019. The prior accounting standard recorded reserves based on probable losses at the balance sheet date, generally resulting in lower reserve levels at the outset of an economic downturn.
Pursuant to rules of the federal banking agencies, we have elected to use a two-year delay of CECL’s impact on our regulatory capital (from January 1, 2020 through December 31, 2021) followed by a three-year transition period of CECL’s initial impact on our regulatory capital (from January 1, 2022 through December 31, 2024).
Our provision expense for the three months ended March 31, 2021, was reduced from the amounts we recorded in each of the four individual quarters in 2020, which were significantly impacted by the COVID-19 pandemic and the uncertainty surrounding the economic outlook. Economic events during 2020 shaped the forecast we used in our calculation of the CECL estimate at March 31, 2020, and caused us to significantly increase our allowance for loan credit losses during the period. While there are improvements in economic forecasts, uncertainty remains particularly related to the first half of 2021 and the deployment and effectiveness of a vaccine.
We continue to gather the latest information available, and as more information becomes available concerning the economic impact and duration of the COVID-19 pandemic, we will update our forecast and related qualitative factors, which could lead to further increases to our allowance for loan credit losses.


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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)Three Months Ended March 31,
Noninterest income:20212020$ Change% Change
Service charges and fees$3,343 $3,320 $23 0.7 %
Mortgage banking revenue4,577 2,769 1,808 65.3 
Insurance commission and fee income3,771 3,687 84 2.3 
Gains on sales of securities, net1,668 54 1,614 N/M
Loss on sales and disposals of other assets, net(38)(25)(13)52.0 
Limited partnership investment income (loss)1,772 (429)2,201 N/M
Swap fee income348 676 (328)(48.5)
Other fee income771 466 305 65.5 
Other income919 1,626 (707)(43.5)
Total noninterest income$17,131 $12,144 $4,987 41.1 
____________________________
N/M = Not meaningful.
Noninterest income for the three months ended March 31, 2021, increased by $5.0 million, or 41.1%, to $17.1 million, compared to $12.1 million for the three months ended March 31, 2020. The increase was largely driven by increases of $2.2 million, $1.8 million, and $1.6 million in limited partnership investment income, mortgage banking revenue, and gains on sales of securities, net. The increases were partially offset by a decrease of $707,000 in other income.
Limited partnership investment income. The $2.2 million increase in the limited partnership investment income during the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020 was primarily due to valuation increases as a result of investment performance in two limited partnership funds.
Mortgage banking revenue. The $1.8 million increase in mortgage banking revenue compared to the three months ended March 31, 2020, was primarily driven by an increase in the MSR valuation of $7.2 million and a $5.1 million increase in gain on sales of loans held for sale due to higher volumes of purchases and refinance activity between the two quarters driven by falling interest rates, offset by a decrease in the impact of the MSR hedge of $6.0 million and a $4.4 million decrease in mortgage held for sale and pipeline fair value adjustment. After the historic purchase and re-finance market that we experienced in 2020, we expect refinance activity to decrease in 2021 which could reduce our mortgage banking revenue from the 2020 historically high levels.
Gain on sales of securities, net. The $1.6 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.
Other income. The $707,000 decrease in other income compared to the three months ended March 31, 2020, included a $351,000 decrease in bank owned life insurance income driven by a death benefit payout to us that exceeded cash surrender value by $316,000 during the quarter ended March 31, 2020, which did not recur in the current quarter. Additionally, the valuation-related changes in the fair value option loans and securities and related interest rate swaps we carry on our balance sheet are recorded through other income. The net impact of valuation changes for these items was a negative $229,000 for the quarter ended March 31, 2021, compared to a positive $210,000 for the quarter ended March 31, 2020, causing a decrease in income from these items of $439,000 in the comparative periods.


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Noninterest Expense
The following table presents the significant components of noninterest expense for the periods indicated:
(Dollars in thousands)Three Months Ended March 31,
Noninterest expense:20212020$ Change% Change
Salaries and employee benefits$22,325 $21,988 $337 1.5 %
Occupancy and equipment, net4,339 4,221 118 2.8 
Data processing2,173 2,003 170 8.5 
Electronic banking961 900 61 6.8 
Communications415 477 (62)(13.0)
Advertising and marketing680 711 (31)(4.4)
Professional services973 1,171 (198)(16.9)
Regulatory assessments1,170 615 555 90.2 
Loan related expenses1,705 1,142 563 49.3 
Office and operations1,454 1,441 13 0.9 
Intangible asset amortization234 299 (65)(21.7)
Franchise tax expense619 496 123 24.8 
Other2,388 633 1,755 N/M
Total noninterest expense$39,436 $36,097 $3,339 9.3 
Noninterest expense for the three months ended March 31, 2021, increased by $3.3 million, or 9.3%, to $39.4 million, primarily due to increases of $1.8 million, $563,000, $555,000, and $337,000 in other expenses, loan related expenses, regulatory assessments, and salaries and employee benefits expenses.
Other. 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 quarter ended March 31, 2021. We terminated the advances early due to the relatively high cost of the funding and offset prepayment fees with gains on the sale of underperforming investment securities as referenced under "Gain on sales of securities, net" above.
Loan related expenses. The increase in loan related expenses was primarily driven by a $252,000 increase in the loan related legal fees, which was primarily due to the significant increase in our total loan portfolio during the last 12 months.
Regulatory assessments. The $555,000 increase in regulatory assessments was primarily due to the significant growth in our assets during the last 12 months.
Income Tax Expense
For the three months ended March 31, 2021, we recognized income tax expense of $6.0 million, compared to an income tax benefit of $427,000 for the three months ended March 31, 2020. Our effective tax rate for the three months ended March 31, 2021, was 19.1%, compared to negative 131.0% for the three months ended March 31, 2020. The increase in our effective tax rate for the three months ended March 31, 2021, was primarily due to the increase in our pre-tax income compared to 2020, which made the proportional effect of the tax-exempt items larger on the effective income tax rate.
Our quarterly provision for income taxes has historically been calculated using the AETR method, which applies an estimated annual effective tax rate to pre-tax income or loss. However, we recorded our interim income tax provision using the actual effective tax rate as of March 31, 2021 and March 31, 2020, as allowed under ASC 740-270, Accounting for Income Taxes - Interim Reporting. We utilized the actual effective rate to record tax expense, rather than the AETR method, as a reliable estimate of ordinary income. Significant permanent items are not able to be made at this time, primarily driven by the COVID-19 pandemic, which results in significant variations in income tax expense and would have resulted in a disproportionate and unreliable effective tax rate under the AETR method. We determined current and deferred income tax expense as if the interim period were an annual period.


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Our effective income tax rates have differed from the applicable U.S. statutory rates of 21% at March 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.
Comparison of Financial Condition at March 31, 2021, and December 31, 2020
General
Total assets decreased by $65.1 million, or 0.9%, to $7.56 billion at March 31, 2021, from $7.63 billion at December 31, 2020. The decrease was primarily attributable to $112.3 million decrease in cash and cash equivalents and a $46.6 million decrease in loans held for sale, offset by a $125.0 million increase in LHFI.
Loan Portfolio
Our loan portfolio is our largest category of interest-earning assets and interest income earned on our loan portfolio is our primary source of income. At March 31, 2021, 74.8% of the loan portfolio held for investment was comprised of commercial and industrial loans, including PPP loans, mortgage warehouse lines of credit and commercial real estate loans, which were primarily originated within our market areas of Texas, North Louisiana, and Mississippi.
The following table presents the ending balance of our loan portfolio held for investment at the dates indicated.
(Dollars in thousands)March 31, 2021December 31, 2020
Real estate:AmountPercentAmountPercent$ Change% Change
Commercial real estate (1)
$1,454,649 24.9 %$1,387,939 24.2 %$66,710 4.8 %
Construction/land/land development548,236 9.4 531,860 9.3 16,376 3.1 
Residential real estate904,753 15.5 885,120 15.5 19,633 2.2 
Total real estate2,907,638 49.8 2,804,919 49.0 102,719 3.7 
PPP584,148 10.0 546,519 9.5 37,629 6.9 
Commercial and industrial1,250,350 21.3 1,271,343 22.3 (20,993)(1.7)
Mortgage warehouse lines of credit1,090,347 18.6 1,084,001 18.9 6,346 0.6 
Consumer17,277 0.3 17,991 0.3 (714)(4.0)
Total LHFI$5,849,760 100.0 %$5,724,773 100.0 %$124,987 2.2 %
___________________________
(1)Includes $13.6 million and $17.0 million of commercial real estate loans for which the fair value option was elected at March 31, 2021 and December 31, 2020, respectively.
At March 31, 2021, total LHFI were $5.85 billion, an increase of $125.0 million, or 2.2%, compared to $5.72 billion at December 31, 2020. The increase reflected growth in all significant loan categories except for commercial and industrial loans. The largest increases are primarily reflected in commercial real estate and PPP loans, which increased $66.7 million and $37.6 million, respectively. Our lending focus is on operating companies, including commercial loans and lines of credit as well as owner-occupied commercial real estate loans. We currently do not plan to significantly alter the real estate concentrations within our loan portfolio, however, we believe the volume within our mortgage warehouse lines of credit portfolio will decline over the next year.
Under the CARES Act, Congress allocated funds to the PPP, which is designed to provide short-term loans to certain qualifying businesses who retain employees during the COVID-19 pandemic. These loans, totaling $584.1 million for the Company at March 31, 2021, have a maximum maturity of five years, bear a fixed rate of interest at one percent for the entire term, and we anticipate many of them will be forgiven by the Small Business Administration under the terms of the PPP before their respective maturity dates. As of March 31, 2021, $160.4 million of Origin Bank originated PPP loans have been forgiven under this program.


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Loan Portfolio Maturity Analysis
The table below presents the maturity distribution of our LHFI at March 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.
March 31, 2021
(Dollars in thousands)One Year
or Less
Over One Year
Through Five
Years
Over Five
Years
Total
Real estate:
Commercial real estate$232,951 $870,622 $351,076 $1,454,649 
Construction/land/land development177,424 308,026 62,786 548,236 
Residential real estate loans117,030 391,422 396,301 904,753 
Total real estate527,405 1,570,070 810,163 2,907,638 
Commercial and industrial loans594,666 1,123,249 116,583 1,834,498 
Mortgage warehouse lines of credit1,090,347 — — 1,090,347 
Consumer loans5,781 10,360 1,136 17,277 
Total LHFI$2,218,199 $2,703,679 $927,882 $5,849,760 
Amounts with fixed rates$274,524 $1,834,943 $317,351 $2,426,818 
Amounts with variable rates1,943,675 868,736 610,531 3,422,942 
Total$2,218,199 $2,703,679 $927,882 $5,849,760 
Loan Portfolio COVID-19 Impact
The COVID-19 pandemic has had a severe impact on the U.S. economy which has led to severe unemployment and a recession. In recent months, a number of restrictive government initiatives designed to combat the effects of the COVID-19 pandemic have been eased, allowing businesses to reopen at varying capacity levels, which has bolstered commercial activity to some degree. While it appears the negative effects of the pandemic have eased, there is still much uncertainty surrounding the course of the COVID-19 pandemic, which may include the possible implementation of new or additional restrictions on economic activity. The deteriorating economic outlook caused us to significantly increase our allowance for loan credit losses during 2020, resulting in additional provision expense and reduced earnings during the period. Due to the ongoing economic impact of the COVID-19 pandemic and governmental efforts to contain it, certain sectors of the U.S. economy were more affected than others. Some of the sectors in which we operate that appear to have experienced a more significant impact include hotel, non-essential retail, restaurant and assisted living. At March 31, 2021, we had $510.5 million, or 9.7%, of our LHFI, excluding PPP loans, invested in these sectors. Nonperforming LHFI in the sectors impacted by the COVID-19 pandemic was $1.1 million at March 31, 2021, while past due LHFI, defined as loans 30 days or more past due, as a percentage of LHFI in these sectors, excluding PPP loans, was 0.2% at March 31, 2021. Loans in COVID-19 related forbearance totaled $5.3 million and represented 0.1% of LHFI, excluding PPP loans, at March 31, 2021.
Certain key data regarding the sectors that may experience a more significant impact due to the COVID-19 pandemic at March 31, 2021, is reflected in the table below. The information presented excludes PPP loans.
(Dollars in thousands)

Selected sectors
Outstanding BalanceLoans Under ForbearancePast DueNPL
Hotel$62,319 $301 $— $— 
Non-Essential retail180,394 — 58 381 
Restaurant119,700 1,595 — — 
Assisted living148,077 — 750 750 
Selected sectors510,490 1,896 808 1,131 
All other LHFI4,755,122 3,397 25,766 32,227 
Total LHFI, excluding PPP loans$5,265,612 $5,293 $26,574 $33,358 


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Nonperforming Assets
Nonperforming assets consist of nonperforming loans and property acquired through foreclosures or repossession, as well as bank-owned property not currently in use and listed for sale.
Loans are considered past due when principal and interest payments have not been received at the date such payments are contractually due. We discontinue accruing interest on loans when we determine the borrower's financial condition is such that collection of interest and principal payments in accordance with the terms of the loan are not reasonably assured. Loans may be placed on nonaccrual status even if the contractual payments are not past due if information becomes available that causes substantial doubt about the borrower's ability to meet the contractual obligations of the loan. All interest accrued but not collected for loans that are placed on nonaccrual status is reversed against interest income. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal outstanding. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. If a loan is determined by management to be uncollectible, regardless of size, the portion of the loan determined to be uncollectible is then charged to the allowance for loan credit losses.
We manage the quality of our lending portfolio in part through a disciplined underwriting policy and through continual monitoring of loan performance and borrowers' financial condition. There can be no assurance, however, that our loan portfolio will not become subject to losses due to declines in economic conditions or deterioration in the financial condition of our borrowers.
Although we have seen an impact from the COVID-19 pandemic, the ultimate impact is still unknown. The ongoing economic uncertainty, possibility of additional governmental restrictions on economic activity and relatively high unemployment rate has created conditions that could cause an increase in nonperforming loans in future periods.


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The following table shows our nonperforming loans and nonperforming assets at the dates indicated:
(Dollars in thousands)
Nonperforming LHFIMarch 31, 2021December 31, 2020
Commercial real estate$1,085 $3,704 
Construction/land/land development2,431 2,962 
Residential real estate10,692 6,530 
Commercial and industrial19,094 12,897 
Consumer56 56 
Total nonperforming LHFI33,358 26,149 
Nonperforming loans held for sale963 681 
Total nonperforming loans34,321 26,830 
Other real estate owned
Commercial real estate2,575 266 
Residential real estate1,318 1,318 
Total other real estate owned3,893 1,584 
Other repossessed assets owned— 343 
Total repossessed assets owned3,893 1,927 
Total nonperforming assets$38,214 $28,757 
Troubled debt restructuring loans - nonaccrual$5,515 $5,671 
Troubled debt restructuring loans - accruing3,237 3,314 
Total LHFI5,849,760 5,724,773 
Ratio of nonperforming LHFI to total LHFI0.57 %0.46 %
Ratio of nonperforming assets to total assets0.51 0.38 
At March 31, 2021, total nonperforming LHFI increased by $7.2 million, or 27.6%, from December 31, 2020. The increase in nonperforming commercial and industrial loans at March 31, 2021, is primarily due to one loan for $7.1 million that was not considered nonperforming at December 31, 2020. The increase in nonperforming residential real estate loans is primarily due to two loans totaling $4.5 million that were not considered nonperforming at December 31, 2020. Please see Note 4 - Loans within our condensed notes to our consolidated financial statements for more information on nonperforming loans.
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.
Information regarding the internal risk ratings of our loans at March 31, 2021, is included in Note 4 - Loans in the condensed notes to our consolidated financial statements included in Item 1 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 included in the Company's 2020 Form 10-K filed with the SEC for a description of policy revisions resulting from the Company's adoption of ASU 2016-13.


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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 March 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.
The amount of the allowance for loan credit losses is affected by loan charge-offs, which decrease the allowance, recoveries on loans previously charged off, which increase the allowance, as well as the provision for loan credit losses charged to income, which increases the allowance. In determining the provision for loan credit losses, management monitors fluctuations in the allowance resulting from actual charge-offs and recoveries and periodically reviews the size and composition of the loan portfolio in light of current and forecasted economic conditions. If actual losses exceed the amount of the allowance for loan credit losses, it would materially and adversely affect our earnings.
As a general rule, when it becomes evident that the full principal and accrued interest of a loan may not be collected, or at 90 days past due, we will reflect that loan as nonperforming. It will remain nonperforming until it performs in a manner that it is reasonable to expect that we will collect principal and accrued interest in full. When the amount or likelihood of a loss on a loan has been confirmed, a charge-off will be taken in the period it is determined.
We establish general allocations for each major loan category and credit quality. The general allocation is based, in part, on historical charge-off experience and loss given default methodology, derived from our internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. We give consideration to trends, changes in loan mix, delinquencies, prior losses, reasonable and supportable forecasts and other related information.
In connection with the review of our loan portfolio, we consider risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements we consider include:
for commercial real estate loans, the debt service coverage ratio, operating results of the owner in the case of owner occupied properties, the loan to value ratio, the age and condition of the collateral and the volatility of income, property value and future operating results typical of properties of that type;
for construction, land and land development loans, the perceived feasibility of the project, including the ability to sell developed lots or improvements constructed for resale or the ability to lease property constructed for lease, the quality and nature of contracts for presale or prelease, if any, experience and ability of the developer and loan to value ratio;
for residential mortgage loans, the borrower's ability to repay the loan, including a consideration of the debt to income ratio and employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral; and
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.


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Our allowance for loan credit losses decreased by $1.5 million or 1.8%, to $85.1 million at March 31, 2021, from $86.7 million at December 31, 2020. The ratio of allowance for loan credit losses to total LHFI at March 31, 2021 and 2020, was 1.46% and 1.51%, respectively.
The following table presents an analysis of the allowance for loan credit losses and other related data at the periods indicated.
(Dollars in thousands)Three Months Ended March 31,Year Ended December 31,
Allowance for loan credit losses202120202020
Balance at beginning of period$86,670 $37,520 $37,520 
Impact of adopting ASC 326— 1,248 1,248 
Provision for loan losses1,360 18,396 59,028 
Charge-offs:
Commercial real estate28 172 4,924 
Construction/land/land development— — — 
Residential real estate— 49 692 
Commercial and industrial2,955 1,180 6,702 
Mortgage warehouse lines of credit— — — 
Consumer44 24 76 
Total charge-offs3,027 1,425 12,394 
Recoveries:
Commercial real estate19 
Construction/land/land development— — 
Residential real estate149 202 
Commercial and industrial108 169 1,022 
Mortgage warehouse lines of credit— — — 
Consumer13 24 
Total recoveries133 324 1,268 
Net charge-offs2,894 1,101 11,126 
Balance at end of period$85,136 $56,063 $86,670 
Ratio of allowance for loan credit losses to:
Nonperforming LHFI255.22 %169.72 %331.45 %
LHFI1.46 1.25 1.51 
Net annualized charge-offs as a percentage of:
Provision for loan credit losses863.00 24.07 18.85 
Allowance for loan credit losses13.79 7.90 12.84 
Average LHFI0.21 0.11 0.22 
Securities
Our securities portfolio totaled $1.03 billion at March 31, 2021, representing a decrease of $25.2 million, or 2.4%, from $1.05 billion at December 31, 2020. The decrease was the result of the sales of lower-yielding securities, as well as decline in value of available for sale securities during the three months ended March 31, 2021, due to rising long-term interest rates. For additional information regarding our securities portfolio, please see Note 3 - Securities in the condensed notes to our consolidated financial statements contained in Part I, Item 1 of this report.


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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.
We manage our interest expense on deposits through specific deposit product pricing that is based on competitive pricing, economic conditions and current and anticipated funding needs. We may use interest rates as a mechanism to attract or deter additional deposits based on our anticipated funding needs and liquidity position. We also consider potential interest rate risk caused by extended maturities of time deposits when setting the interest rates in periods of future economic uncertainty.
The following table presents our deposit mix at the dates indicated:
March 31, 2021December 31, 2020
(Dollars in thousands)Balance% of TotalBalance% of Total$ Change% Change
Noninterest-bearing demand$1,736,534 27.4 %$1,607,564 28.0 %$128,970 8.0 %
Interest-bearing demand1,038,135 16.4 1,052,639 18.3 (14,504)(1.4)
Money market2,123,727 33.4 1,789,914 31.0 333,813 18.6 
Time deposits647,578 10.2 664,766 11.6 (17,188)(2.6)
Brokered571,673 9.0 431,180 7.5 140,493 32.6 
Savings228,547 3.6 205,252 3.6 23,295 11.3 
Total deposits$6,346,194 100.0 %$5,751,315 100.0 %$594,879 10.3 %

Increases of $333.8 million, $140.5 million and $129.0 million, in money market, brokered, and noninterest-bearing demand deposits, respectively, drove the increase in total deposits compared to December 31, 2020, partially due to depositors moving into a statistically higher percentage of personal savings rates during the period and the use of short-term brokered deposits to partially fund the growth in warehouse lines.
The following table reflects the classification of our average deposits and the average rate paid on each deposit category for the periods indicated:
Three Months Ended March 31,
20212020
(Dollars in thousands)Average
Balance
Interest ExpenseAnnualized
Average
Rate Paid
Average
Balance
Interest ExpenseAnnualized
Average
Rate Paid
Interest-bearing demand$1,044,163 $648 0.25 %$806,075 $1,605 0.80 %
Money market1,817,619 1,487 0.33 1,320,443 4,123 1.26 
Time deposits656,255 1,533 0.95 781,907 3,853 1.98 
Brokered436,609 83 0.08 162,480 606 1.50 
Savings214,890 38 0.07 155,955 63 0.16 
Total interest-bearing4,169,536 3,789 0.37 3,226,860 10,250 1.28 
Noninterest-bearing demand1,700,523 1,097,646 
Total average deposits$5,870,059 $3,789 0.26 %$4,324,506 $10,250 0.95 %


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Our average deposit balance was $5.87 billion for the three months ended March 31, 2021, an increase of $1.55 billion, or 35.7%, from $4.32 billion for the three months ended March 31, 2020. The average annualized rate paid on our interest-bearing deposits for the three months ended March 31, 2021, was 0.37%, compared to 1.28% for the three months ended March 31, 2020. The decrease in the average cost of our deposits was primarily the result of steadily falling interest rates that occurred since March 31, 2020. 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 was not fully absorbed by the markets until later in 2020, though the reduction occurred in March 2020. When the target rate reductions began, we took action to lower deposit rates on nonmaturity deposits. Our Louisiana market deposits also increased $556.5 million compared to March 31, 2020, which historically carry lower cost of deposits than those in Texas, helping to lower our overall cost of deposits.
Average noninterest-bearing deposits at March 31, 2021, were $1.70 billion, compared to $1.10 billion at March 31, 2020, an increase of $602.9 million, or 54.9%, and represented 29.0% and 25.4% of average total deposits for the three months ended March 31, 2021 and 2020, respectively.
Borrowings
During the quarter ended March 31, 2021, we increased our average outstanding short-term FHLB advances to $278.1 million from $64.9 million during the quarter ended December 31, 2020. Period end short-term FHLB advances decreased $650.0 million at March 31, 2021 compared to December 31, 2020, due to increases in deposits which were used to pay down the advances. Additionally, using funds generated from the sale of investment securities during the quarter, we prepaid $13.1 million in long-term FHLB advances during the quarter ended March 31, 2021, and incurred related prepayment fees of $1.6 million. Shifts in funding costs and sources and the movement out of lower-yielding investment positions drove the changes in our FHLB balances during the period, as we supported the ongoing mortgage warehouse loan growth.
The table below shows FHLB advances by maturity and weighted average rate at March 31, 2021:
(Dollars in thousands)BalanceWeighted Average Rate
After five years$257,186 1.70 %
At March 31, 2021, we were eligible to borrow an additional $1.05 billion from the FHLB.
Liquidity and Capital Resources
Overview
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.
The Company, which is a separate legal entity apart from the Bank, must provide for its own liquidity, including payment of any dividends that may be declared for its common stockholders and interest and principal on any outstanding debt or trust preferred securities incurred by the Company. The cash held at the holding Company is available for general corporate purposes described above, as well as providing capital support to the Bank. In addition, the Company has up to $50.0 million available under a line of credit.


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The table below shows the liquidity measures for the Company at the dates indicated:
(Dollars in thousands)March 31, 2021December 31, 2020
Available cash balances at the holding company (unconsolidated)$42,628 $42,908 
Cash and liquid securities as a percentage of total assets12.7 %13.6 %
There are regulatory restrictions on the ability of the Bank to pay dividends under federal and state laws, regulations and policies, please see Note 11 - Capital and Regulatory Matters in the condensed notes to our consolidated financial statements for more information on the availability of Bank dividends.
COVID -19
As previously discussed, in light of the volatility and disruptions in the capital and credit markets resulting from the COVID-19 pandemic and its negative impact on the economy, we took a number of precautionary actions to enhance our financial flexibility by bolstering our liquidity to ensure we have adequate cash readily available to meet both expected and unexpected funding needs. We have accessed and repaid liquidity both under the PPPLF and FHLB advance window during mid-2020, and currently have access to $3.69 billion of contingent liquidity sources including FHLB availability. We believe we currently have sufficient liquidity from the available on- and off-balance sheet liquidity sources. We continue to review actions that we may take to further enhance our financial flexibility in the event that market conditions change.
Liquidity Sources
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 Federal Reserve Bank ("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 our cash flow needs. Maintaining the ability to acquire these funds as needed in a variety of markets is the key to assuring our liquidity.
Our 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 liquidity 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 unsecured 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.
We also had unsecured federal funds lines of credit available to us, with no amounts outstanding at either March 31, 2021, or December 31, 2020. These lines of credit primarily provide short-term liquidity and in order to ensure the 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 March 31, 2021.
Please see the "Stock Repurchases" section below for information on the Company's stock buy-back program.


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Off-Balance Sheet Arrangements and Contractual Obligations
In the normal course of business as a financial services provider, we enter into financial instruments, such as certain contractual obligations and commitments to extend credit and letters of credit, to meet the financing needs of our customers. These commitments involve elements of credit risk, interest rate risk and liquidity risk. Some instruments may not be reflected in our consolidated financial statements until they are funded, and a significant portion of commitments to extend credit may expire without being drawn, although they expose us to varying degrees of credit risk and interest rate risk in much the same way as funded loans.
The table below presents the funding requirements of our most significant financial commitments, excluding interest and purchase discounts, at the date indicated:
(Dollars in thousands)Payments Due by Period
March 31, 2021Less than
One Year
One-Three
Years
Three-Five
Years
Greater than
Five Years
Total
FHLB advances$— $— $— $257,186 $257,186 
Time deposits494,807 144,448 8,323 — 647,578 
Subordinated debentures— — — 160,826 160,826 
Operating lease obligations4,685 8,506 4,773 11,640 29,604 
Overnight repurchase agreements with depositors6,321 — — — 6,321 
Limited partnership investments(1)
2,945 — — — 2,945 
Low income housing tax credits436 165 274 319 1,194 
Total contractual obligations$509,194 $153,119 $13,370 $429,971 $1,105,654 
____________________________
(1)These commitments represent amounts we are obligated to contribute to various limited partnership investments in accordance with the provisions of the respective limited partnership agreements. The capital contributions may be required at any time, and are therefore reflected in the Less than One Year category.
Credit Related Commitments
Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines. The availability of funds under commercial credit lines and loan commitments generally depends on whether the borrower continues to meet credit standards established in the underlying contract and has not violated other contractual conditions. Loan commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the borrower. Credit card and personal credit lines are generally subject to cancellation if the borrower's credit quality deteriorates. A number of commercial and personal credit lines are used only partially or, in some cases, not at all before they expire, and the total commitment amounts do not necessarily represent future cash requirements.
A substantial majority of the letters of credit are standby agreements that obligate us to fulfill a customer's financial commitments to a third party if the customer is unable to perform. We issue standby letters of credit primarily to provide credit enhancement to our customers' other commercial or public financing arrangements and to help them demonstrate financial capacity to vendors of essential goods and services.
The table below presents our commitments to extend credit by commitment expiration date for the date indicated:
March 31, 2021
(Dollars in thousands)Less than
One Year
One-Three
Years
Three-Five
Years
Greater than
Five Years
Total
Commitments to extend credit(1)
$687,663 $401,253 $198,928 $102,684 $1,390,528 
Standby letters of credit41,323 7,644 — — 48,967 
Total off-balance sheet commitments$728,986 $408,897 $198,928 $102,684 $1,439,495 
____________________________
(1)Includes $532.0 million of unconditionally cancellable commitments at March 31, 2021.


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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)Total
Stockholders'
Equity
Balance at January 1, 2021$647,150 
Net income25,513 
Other comprehensive income, net of tax(13,464)
Dividends declared - common stock ($0.10 per share)(2,349)
Other(495)
Balance at March 31, 2021$