Capital and Regulatory Matters

3 Months Ended

Mar. 31, 2024

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. 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 include dividend payments, 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 and Tier 1 capital to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average total consolidated assets (as defined). Management believes, at March 31, 2024, and December 31, 2023, that the Company and the Bank met all capital adequacy requirements to which they are subject, including the capital buffer requirement.

At March 31, 2024, and December 31, 2023, 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 risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. A final rule adopted by the federal banking agencies in February 2019 provides banking organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the adoption of CECL. In addition, on March 27, 2020, the federal banking agencies issued an interim final rule that gives banking organizations that were required to implement CECL before the end of 2020 the option to delay for two years CECL’s adverse effects on regulatory capital. The Bank elected to adopt CECL in the first quarter of 2020 and exercised the option to delay the estimated impact of the adoption of CECL on the Company’s regulatory capital for two years (from January 2020 through December 31, 2021). The two-year delay is followed by a three-year transition period of CECL’s initial impact on the Company’s regulatory capital (from January 1, 2022, through December 31, 2024). The amount representing the CECL impact to the Company’s regulatory capital that will be ratably transitioning back into regulatory capital over the transition period is $1.9 million and $2.5 million at March 31, 2024, and December 31, 2023, respectively.

The actual capital amounts and ratios of the Company and the Bank at March 31, 2024, and December 31, 2023, are presented in the following table:


(Dollars in thousands) March 31, 2024	Actual				Minimum Capital Required - Basel III				To be Well Capitalized Under Prompt Corrective Action Provisions
Common Equity Tier 1 Capital to Risk-Weighted Assets	Amount		Ratio		Amount		Ratio		Amount		Ratio
Origin Bancorp, Inc.	$	1,034,347	11.97	%	$	604,669	7.00	%	N/A		N/A
Origin Bank	1,040,139		12.08		602,730		7.00		$	559,677	6.50	%
Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.	1,050,183		12.15		734,696		8.50		N/A		N/A
Origin Bank	1,040,139		12.08		731,886		8.50		688,834		8.00
Total Capital to Risk-Weighted Assets
Origin Bancorp, Inc.	1,294,542		14.98		907,389		10.50		N/A		N/A
Origin Bank	1,209,498		14.05		903,968		10.50		860,922		10.00
Leverage Ratio
Origin Bancorp, Inc.	1,050,183		10.66		393,987		4.00		N/A		N/A
Origin Bank	1,040,139		10.60		392,550		4.00		490,687		5.00
December 31, 2023
Common Equity Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.	1,012,916		11.83		599,455		7.00		N/A		N/A
Origin Bank	1,019,732		11.95		597,548		7.00		554,866		6.50
Tier 1 Capital to Risk-Weighted Assets
Origin Bancorp, Inc.	1,028,729		12.01		727,907		8.50		N/A		N/A
Origin Bank	1,019,732		11.95		725,593		8.50		682,912		8.00
Total Capital to Risk-Weighted Assets
Origin Bancorp, Inc.	1,286,604		15.02		899,184		10.50		N/A		N/A
Origin Bank	1,188,000		13.92		896,320		10.50		853,638		10.00
Leverage Ratio
Origin Bancorp, Inc.	1,028,729		10.50		391,822		4.00		N/A		N/A
Origin Bank	1,019,732		10.45		390,246		4.00		487,807		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 $50.5 million at March 31, 2024.

Stock Repurchases

In July 2022, the Board of Directors of the Company authorized a stock repurchase program pursuant to which the Company may, from time to time, purchase up to $50 million of its outstanding common stock. The shares may be repurchased in the open market or in privately negotiated transactions from time to time, depending upon market conditions and other factors, and in accordance with applicable regulations of the Securities and Exchange Commission. The stock repurchase program is intended to expire in three years but may be terminated or amended by the Board of Directors at any time. The stock repurchase program does not obligate the Company to purchase any shares at any time.

There have been no stock repurchases during the three months ended March 31, 2024 or 2023.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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