Origin Bancorp, Inc. (NASDAQ:OBNK) Q2 2020 Earnings Conference Call - Final Transcript

Jul 23, 2020 • 09:00 am ET


Origin Bancorp, Inc. (NASDAQ:OBNK) Q2 2020 Earnings Conference Call - Final Transcript


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Stephen Brolly

loans had an impact on our margin of 6 basis points.

On Slide 16, we report trends of yields and costs. You could see the impact of falling rates had on our loan yields declining 63 basis points, when excluding PPP loans. With the focus of reducing deposit cost we were able to decrease our overall cost of deposits by over 40% during the quarter to 54 basis points. Our mix of fixed and floating-rate loans at quarter end had not changed significantly from the prior quarter.

On Slide 17, I want to go over some of the changes in our non-interest income. We typically have about 20% of our net revenue from non-interest income, but this quarter we performed particularly well in mortgage banking revenue and saw our non-interest income increased by nearly $7 million as a result. Other changes in non-income category, included a reduction in insurance commissions quarter-over-quarter, which is expected due to seasonality of the business. Our insurance revenues this quarter were greater than the same period last year. Also swap fee income this quarter was extremely positive for us as our customers were able to take advantage of the low interest rate environment.

Slide 18, covers our non-interest expenses. As we look at the trend over the past five quarters, you could see the progress in our operating leverage, especially in the most current quarter. While we see improvement in these metrics, our expenses did increase in the core -- current quarter based on a few factor. Our mortgage bankers earned $1 million more in commissions, due to the high mortgage production during the quarter. And as Drake mentioned in our earnings call for the first quarter, we took a small portion of our PPP loan fees to pay incentives to bankers who worked around the clock to deliver to our customers.

Lastly, we experienced higher medical insurance expense of approximately $600,000 due to increased claims this quarter. One of the areas of focus is centered around technology strategy and the pandemic has given us a stronger focus on this strategy. Lance and his team are consistently examining how our customers are engaging with us through our online and mobile channels and we are focused on providing value and building loyalty through those channels, as well as looking at ways to enhance our service delivery. We believe that in the future we will be able to hold our expenses in line or see reductions from the Q1 2020 in Q4 2019 levels.

Now, I'll turn it back over to Drake.

Drake Mills

Thank you, Steve. On slide 19, as we look at our capital ratios, we remain well capitalized going into the second half of the year, when we funded the PPP loans, we were able to retain most of the resulting deposits on our balance sheet and the increase in our average balances caused reduction in our leverage capital ratio. As we evaluated number of factors late in the quarter, we began to use Federal Reserve