$20.70
$59.20
bear $20.70
base $46.80
bull $59.20
margin of safety $26.00
market price* $51.60
Origin Bancorp is the holding company for Origin Bank, founded in 1912 in Choudrant, Louisiana and headquartered in Ruston. At the end of 2025 the bank ran banking centers in North Louisiana, the Dallas-Fort Worth, East Texas and Houston areas of Texas, the Ridgeland area of Mississippi, South Alabama and the Florida Panhandle. It earns money from the spread between loan interest and deposit costs, plus mortgage and other fees. How we measured earnings. We started from cash generated by operations and removed swings in working capital, which for this bank chiefly means the cash tied up in mortgage loans it originates before selling them (this swung cash flow by roughly $111 million in 2020 alone). We then subtracted stock compensation and the part of capital spending needed just to stay in business. One judgement matters for a bank: provisions for loan losses are added back as non-cash in the cash flow statement, but they are the ongoing cost of lending, so we deducted them. Realised losses on securities sales, about $14 million a year in each of 2023 to 2025, were not deducted; they come from repositioning the securities book and the proceeds are reinvested. Owner earnings per share by year: 2018 $2.72, 2019 $2.40, 2020 $1.84, 2021 $5.15, 2022 $4.34, 2023 $3.83, 2024 $2.74, 2025 $2.97. 2021 is inflated by a $10.8 million release of loan loss reserves and is not used for the starting level. Per-share earnings have not grown over the period (share count rose from about 22 million to 31 million after stock issuance). Starting level. We use $3.40 per share, the median of 2022 to 2025. That window reflects the current, larger bank. In its 2025 10-K the company disclosed that 2025 was affected by a borrower fraud impacting its Tricolor Holdings, LLC loan relationship, which produced $29.5 million of net charge-offs; excluding it, charge-offs would have been $10.1 million, which suggests 2025 would have been closer to $3.90 per share. We did not lift the starting level for this, since the median of the reported years already sits between the depressed and normal years. Owner earnings grew 8% from 2024 to 2025 and we assume no growth in year 1, which is below that pace. Growth. We credit none. Per-share results have been flat for seven years, the bank has repeatedly issued stock, and we cannot point to secured or proven growth beyond that. Loan growth, new markets and rising rates are left out. Base case, about $46.80 per share. Owner earnings stay at $3.40 for 30 years and then nothing is assumed. The support is a bank that has operated since 1912, held its deposit franchise and stayed profitable through 2020, when it set aside $59.9 million for loan losses. Discounted at 6%. Bear case, about $20.70 per share. A credit downturn like 2020 and further borrower-fraud or large-loan losses like the disclosed Tricolor loss (and four commercial loans charged off in 2024) hold owner earnings near $2.20, between the 2019 and 2020 levels, for 10 years, then fade to zero over the following 10 years as the bank loses competitiveness. The bank is leveraged as banks are, which is why the downside is meaningful. Bull case, about $59.20 per share. Credit costs normalise, with charge-offs around the $10 million level seen in 2025 excluding Tricolor, and owner earnings hold at $4.30, near the 2022 level and above 2025 excluding the Tricolor loss, for 30 years. Margin-of-safety price. The margin-of-safety price is about $26, well below the base case, because this is a leveraged, credit-sensitive business that has just taken a large loss on a loan relationship affected by borrower fraud, as disclosed in its 2025 10-K, and margin of safety should key off the bear case. What could make this wrong. Further hidden loan losses, or pressure on funding costs, would push results toward the bear case. Conversely, a bank that simply earns its 2022 to 2023 levels again would be worth more than our base case. Note that we could not read the most recent quarterly filing, so results after December 2025 are not reflected.