What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-22 compared with 2022-02-23 · 794 added, 577 removed, 1532 unchanged (47% of the section changed)

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Ruston, Louisiana

Opinion on the Financial Statements

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Origin Bancorp, Inc.

(the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

(the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 23, 2022, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for the allowance for credit losses in 2020 due to the adoption of ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, and the related amendments.

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 22, 2023, expressed an unqualified opinion thereon .

Basis for Opinion

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for Credit Losses

The Company’s loan portfolio totaled $7.09 billion as of December 31, 2022, and the allowance for credit losses on loans was $87.2 million.

The Company’s unfunded loan commitments totaled $1.6 billion, with an allowance for credit loss of $2.3 million.

The Company’s unfunded loan commitments totaled $2.7 billion, with an allowance for credit losses of $4.6 million.

The Company’s available-for-sale and held-to-maturity securities portfolios totaled $1.7 billion as of December 31, 2022, and the allowance for credit losses on securities was $899,000.

Together these amounts represent the allowance for credit losses (“ACL”).

As more fully described in Notes 1, 3 and 4 to the Company’s consolidated financial statements, the Company estimates its exposure to expected credit losses as of the balance sheet date, for existing financial instruments held at amortized cost, securities classified as available for sale and off-balance sheet exposures, such as unfunded loan commitments, letters of credit and other financial guarantees that are not unconditionally cancelable by the Company.

Report of Independent Registered Public Accounting Firm

As more fully described in Notes 1, 4, 5 and 19 to the Company’s consolidated financial statements, the Company estimates its exposure to expected credit losses as of the balance sheet date, for existing financial instruments held at amortized cost, securities classified as available for sale and off-balance sheet exposures, such as unfunded loan commitments, letters of credit and other financial guarantees that are not unconditionally cancellable by the Company.

The determination of the ACL requires management to exercise significant judgment and consider numerous subjective factors, including determining qualitative factors utilized to adjust historical loss rates, loan credit risk grading and identifying loans requiring individual evaluation among others.

As disclosed by management, different assumptions and conditions could result in a materially different amount for the estimate of the ACL.

We identified the ACL at December 31, 2021 as a critical audit matter.

Auditing the ACL involved a high degree of subjectivity in evaluating management’s estimates, such as evaluating management’s identification of credit quality indicators, grouping of loans determined to be similar into pools, estimating the remaining life of loans in a pool, assessment of economic conditions and other environmental factors, evaluating the adequacy of specific allowances associated with individually evaluated loans and assessing the appropriateness of loan credit risk grades.

The primary procedures we performed at initial adoption of Topic 326 at January 1, 2020 and as of December 31, 2021, to address this critical audit matter included:

We identified the valuation of the ACL at December 31, 2022 as a critical audit matter.

Auditing the valuation of the ACL involved a high degree of subjectivity in evaluating management's estimates, such as evaluating management's identification of credit quality indicators, grouping of loans determined to be similar into pools, estimating the remaining life of loans in a pool, assessment of economic conditions and other environmental factors, evaluating the adequacy of specific allowances associated with individually evaluated loans and assessing the appropriateness of loan credit risk grades.

The primary procedures we performed as of December 31, 2022, to address this critical audit matter included:

• Obtained an understanding of the Company’s process for establishing the ACL.

• Tested the design and operating effectiveness of controls, including those related to technology, over the ACL, including:

o loan data completeness and accuracy

o reconciliation of loan balances accounted for at amortized cost and underlying detail

o classifications of loans by loan pool

o historical charge-off data

o the calculation of loss rates given probability of default and loss given default

o review of commercial real-estate appraisals

o the calculation of estimated remaining lives of the loans

o the establishment of qualitative adjustments

o loan credit risk ratings

o establishment of specific ACL on individually evaluated loans,

o management’s review and disclosure controls over the ACL

• Tested the completeness and accuracy of the information utilized in the ACL, including evaluating the relevance and reliability of such information

• Tested the design and operating effectiveness of controls, including those related to technology, over the allowance for loan credit losses, including:

◦ loan data completeness and accuracy,

◦ reconciliation of loan balances accounted for at amortized cost to underlying detail,

◦ classifications of loans by loan pool,

◦ historical charge-off data,

◦ the calculation of loss rates given probability of default and loss given default,

◦ review of commercial real-estate appraisals,

◦ the calculation of estimated remaining lives of the loans,

◦ the establishment of qualitative adjustments,

◦ loan credit risk ratings,

◦ establishment of specific ACL on individually evaluated loans,

◦ and management’s review and disclosure controls over the ACL;

• Tested of completeness and accuracy of the information utilized in the ACL, including evaluating the relevance and reliability of such information;

• Tested the ACL model’s computational accuracy such as probability of default, loss given default and estimated remaining lives of loans;

• Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the reasonableness of the significant assumptions including consideration of impact of the COVID-19 pandemic

• Evaluated the qualitative adjustments to the ACL including assessing the basis for adjustments and the reasonableness of the significant assumptions;

• Tested the loan review functions and evaluated the reasonableness of loan credit risk ratings;

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• Evaluated the overall reasonableness of assumptions used by management considering trends identified within peer groups;

• Evaluated the accuracy and completeness of Topic 326 disclosures in the consolidated financial statements

Report of Independent Registered Public Accounting Firm

• Evaluated the accuracy and completeness of Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) , disclosures in the consolidated financial statements;

• Evaluated credit quality trends in delinquencies, non-accruals, charge-offs and loan risk ratings;

• Tested estimated utilization rate of unfunded loan commitments;

• Reviewed documentation prepared to assess the methodology utilized in the ACL calculation for securities for reasonableness

• Evaluated documentation prepared to assess the methodology utilized by third party performing the ACL calculation for securities for reasonableness.

As described in Note 3 to the Company’s consolidated financial statements, the Company consummated the acquisition of BT Holdings, Inc.

and its wholly-owned subsidiary, BTH Bank, on August 1, 2022, resulting in goodwill of approximately $94.5 million being recognized on the Company’s consolidated balance sheet.

As part of the acquisition, management assessed that the acquisition qualified as a business combination and all identifiable assets and liabilities acquired were valued at fair value as part of the purchase price allocation as of the acquisition date.

The identification and valuation of such acquired assets and assumed liabilities requires management to exercise significant judgment.

Management utilized outside vendors to assist with estimating the fair value.

We identified the consummated acquisition and the valuation of acquired assets and assumed liabilities as a critical audit matter.

Auditing the acquired assets and assumed liabilities and other acquisition-related considerations involved a high degree of subjectivity in evaluating management’s fair value estimates and purchase price allocations, including the use of our internal valuation specialists.

The primary procedures we performed to address this critical audit matter included:

• Obtained and read the executed Agreement and Plan of Merger documents to gain an understanding of the underlying terms of the consummated acquisition;

• Testing the design and operating effectiveness of controls including:

◦ Proper approval of the acquisition,

◦ Completeness and accuracy of opening balance sheet items,

◦ Accuracy of the loan level data,

◦ Accuracy of the valuations of significant assets acquired and liabilities assumed,

◦ Completeness and accuracy of the purchase price allocation, including tax impact,

◦ Completeness and accuracy of day 1 journal entries and general ledger mapping,

◦ Gap controls are in place from the acquisition date through the date of conversion,

• Assessed management’s application of accounting guidance related to the business combination and management’s determination of whether the transaction was an acquisition of a business as defined within the ASC 805, Business Combinations , framework;

• Assessed the completeness and accuracy of management’s purchase accounting model, including the balance sheet acquired and related fair value purchase price allocations made to identified assets acquired and liabilities assumed;

• Obtained and evaluated significant outside vendor valuation estimates, and challenging management’s review of the appropriateness of the valuations including but not limited to, testing critical inputs, assumptions applied and valuation models utilized by the outside vendors;

• Tested the completeness and accuracy of management’s calculation of total consideration paid;

Report of Independent Registered Public Accounting Firm

• Tested the accuracy of the goodwill calculation resulting from the acquisition, which was the difference between the total consideration paid and the fair value of the net assets acquired;

• Utilized internal valuation specialists to assist with testing the related fair value valuations and purchase price allocations made to identified assets acquired and liabilities assumed;

• Read and evaluated the adequacy of the disclosures made in the notes to the Company’s consolidated financial statements.

/s/ FORVIS, LLP (Formerly BKD, LLP)

We have served as the Company’s auditor since 2016.

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Available for sale 1,641,484 1,504,728

Held to maturity, net allowance for credit losses of $ 167 and $ 66 at December 31, 2021, and December 31, 2020, respectively (fair value of $ 25,117 and $ 41,205 at December 31, 2021, and December 31, 2020, respectively)

Held to maturity, net allowance for credit losses of $ 899 and $ 167 at December 31, 2022 and 2021, respectively (fair value of $ 11,970 and $ 25,117 at December 31, 2022 and 2021, respectively)

11,275 22,767

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Non-marketable equity securities held in other financial institutions 67,378 45,192

Loans held for sale ($ 37,032 and $ 136,026 at fair value at December 31, 2021, and December 31, 2020, respectively)

Loans held for sale ($ 25,389 and $ 37,032 at fair value at December 31, 2022 and 2021, respectively)

49,957 80,387

Loans, net of allowance for credit losses of $ 64,586 and $ 86,670 at December 31, 2021, and December 31, 2020, respectively ($ 17,011 at fair value at December 31, 2020)

Loans, net of allowance for credit losses of $ 87,161 and $ 64,586 at December 31, 2022 and 2021, respectively

7,002,861 5,166,745

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Cash surrender value of bank-owned life insurance 39,040 38,352

Goodwill and other intangible assets, net 51,330 30,480

Goodwill 128,679 34,368

Other intangible assets, net 49,829 16,962

Accrued interest receivable and other assets 209,199 141,758

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Total deposits 7,775,702 6,570,693

Federal Home Loan Bank ("FHLB") advances and other borrowings 309,801 984,608

Federal Home Loan Bank ("FHLB") advances, repurchase obligations and other borrowings 639,230 309,801

Subordinated indebtedness, net 201,765 157,417

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50,000,000 shares authorized;

23,746,502 and 23,506,312 shares issued at December 31, 2021, and December 31, 2020, respectively)

30,746,600 and 23,746,502 shares issued at December 31, 2022 and 2021, respectively)

153,733 118,733

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Retained earnings 435,416 363,635

Accumulated other comprehensive income 5,729 25,649

Accumulated other comprehensive (loss) income ( 159,875 ) 5,729

Total stockholders' equity 949,943 730,211

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(Dollars in thousands, except per share amounts)

Years Ended December 31,

Year Ended December 31,

2022 2021 2020

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Service charges and fees 17,669 15,049 12,998

Mortgage banking revenue 12,927 29,603 12,309

Insurance commission and fee income 22,869 13,098 12,746

Mortgage banking revenue 6,722 12,927 29,603

Other fee income 3,530 2,879 2,253

Gain on sales of securities, net 1,664 1,748 580

Loss on sales and disposals of other assets, net ( 175 ) ( 185 ) ( 1,213 )

Limited partnership investment income (loss) 5,701 78 ( 6 )

Limited partnership investment (loss) income ( 199 ) 5,701 78

Swap fee income 457 814 2,546

Other fee income 2,879 2,253 1,490

Other income 4,737 10,162 5,061

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(Dollars in thousands, except per share amounts)

Years Ended December 31,

Year Ended December 31,

2022 2021 2020

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Data processing 10,456 9,117 8,321

Office and operations 8,120 6,399 5,624

Loan-related expenses 6,097 7,688 6,316

Professional services 3,813 3,644 3,975

Electronic banking 3,958 3,563 3,686

Communications 1,574 1,767 2,098

Advertising and marketing 4,431 3,438 3,710

Professional services 3,644 3,975 3,577

Franchise tax expense 3,582 2,538 2,186

Regulatory assessments 3,547 2,904 3,826

Loan-related expenses 7,688 6,316 4,174

Office and operations 6,399 5,624 6,674

Intangible asset amortization 5,488 844 1,060

Franchise tax expense 2,538 2,186 2,160

Communications 1,246 1,574 1,767

Merger-related expense 6,171 — —

Other expenses 4,336 4,697 3,337

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ORIGIN BANCORP, INC.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss) Income

(Dollars in thousands)

Years Ended December 31,

Year Ended December 31,

2022 2021 2020

Net income $ 87,715 $ 108,546 $ 36,357

Other comprehensive income (loss)

Other comprehensive (loss) income

Securities available for sale and transferred securities:

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Net unrealized gain (loss) arising during the period 1,161 400 ( 739 )

Reclassification adjustment for (loss) gain included in net income ( 204 ) ( 134 ) 37

Reclassification adjustment for gain (loss) included in net income 15 ( 204 ) ( 134 )

Change in the net unrealized gain (loss) on cash flow hedges, before tax 1,146 604 ( 605 )

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Other comprehensive (loss) income, net of tax ( 165,604 ) ( 19,920 ) 19,316

Comprehensive income $ 88,626 $ 55,673 $ 62,695

Comprehensive (loss) income $ ( 77,889 ) $ 88,626 $ 55,673

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

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— — — — 19,316 19,316

Impact of adoption of ASU 2016-02 related to leases

Impact of adoption of ASU 2016-13 - CECL

— — — ( 760 ) — ( 760 )

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— — — 108,546 — 108,546

Other comprehensive income, net of tax

— — — — 19,316 19,316

Impact of adoption of ASU 2016-13 - CECL

— — — ( 760 ) — ( 760 )

Other comprehensive loss, net of tax — — — — ( 19,920 ) ( 19,920 )

Recognition of stock compensation, net

100,410 502 ( 730 ) — — ( 228 )

Stock Issuance - Lincoln Agency Acquisition 125,386 627 4,646 — — 5,273

Stock Issuance - Pulley-White Acquisition 51,962 260 1,925 — — 2,185

Dividends declared - common stock ($ 0.49 per share)

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Balance at December 31, 2021 23,746,502 118,733 242,114 363,635 5,729 730,211

— — — 108,546 — 108,546

Net income — — — 87,715 — 87,715

Other comprehensive loss, net of tax — — — — ( 165,604 ) ( 165,604 )

Recognition of stock compensation, net 205,188 1,025 6,186 — — 7,211

100,410 502 ( 730 ) — — ( 228 )

Stock Issuance - Lincoln Agency Acquisition 125,386 627 4,646 — — 5,273

Stock Issuance - Pulley-White Acquisition 51,962 260 1,925 — — 2,185

Options assumed - BTH Merger — — 13,687 — — 13,687

Stock issuance - BTH Merger 6,794,910 33,975 258,682 — — 292,657

Dividends declared - common stock ($ 0.58 per share)

— — — ( 15,934 ) — ( 15,934 )

Repurchase of common stock

( 37,568 ) ( 188 ) ( 1,068 ) — — ( 1,256 )

Balance at December 31, 2022 30,746,600 $ 153,733 $ 520,669 $ 435,416 $ ( 159,875 ) $ 949,943

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Net amortization on securities 8,734 7,758 4,581

Accretion of net premium/discount on purchased loans ( 2,840 ) — —

Amortization of investments in tax credit funds 1,659 1,825 1,442

Net realized gain on securities sold ( 1,748 ) ( 580 ) ( 20 )

Gain on sale of securities, net ( 1,664 ) ( 1,748 ) ( 580 )

Deferred income tax expense (benefit) 18,309 6,279 ( 11,884 )

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Proceeds from mortgage loans held for sale 264,607 542,638 570,349

Gain on mortgage loans held for sale, including origination of servicing rights ( 17,015 ) ( 19,190 ) ( 6,943 )

Gain on mortgage loans held for sale, including origination of mortgage servicing rights ( 7,175 ) ( 17,015 ) ( 19,190 )

Mortgage servicing rights valuation adjustment ( 1,219 ) 2,593 12,746

Net loss on disposals of premises and equipment 82 72 139

Net (gain) loss on disposals of premises and equipment ( 19 ) 82 72

Increase in the cash surrender value of life insurance ( 688 ) ( 810 ) ( 917 )

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Cash flows from investing activities:

Cash paid for business combinations ( 7,457 ) — —

Cash acquired in (paid for) business combination 69,953 ( 7,457 ) —

Purchases of securities available for sale ( 558,091 ) ( 717,028 ) ( 700,319 )

Maturities, pay downs and calls of securities available for sale 146,941 151,932 154,473

Proceeds from sales of securities available for sale 44,893 64,702 27,766

Maturities and pay downs of securities available for sale 165,328 146,941 151,932

Proceeds from sales and calls of securities available for sale 487,544 44,893 64,702

Purchase of securities held to maturity ( 7,000 ) — ( 10,000 )

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Pay downs of securities carried at fair value 275 3,243 452

Net sales (purchases) of non-marketable equity securities held in other financial institutions 17,583 ( 22,401 ) 3,386

Net (purchases) sales of non-marketable equity securities held in other financial institutions ( 15,818 ) 17,583 ( 22,401 )

Originations of mortgage warehouse loans ( 9,126,356 ) ( 16,121,464 ) ( 13,665,295 )

Proceeds from pay-offs of mortgage warehouse loans 9,468,569 16,578,387 12,855,955

Net decrease (increase) in loans, excluding mortgage warehouse and loans held for sale 55,020 ( 788,719 ) ( 290,278 )

Surrender (purchase) of bank-owned life insurance 11 — ( 4,500 )

Return of capital on limited partnership investments — 818 503

Net (increase) decrease in loans, excluding mortgage warehouse and loans held for sale ( 949,638 ) 55,020 ( 788,719 )

Proceeds from bank-owned life insurance — 11 —

Return of capital and other distributions from limited partnership investments 6,668 — 818

Capital calls on limited partnership investments ( 4,057 ) ( 225 ) ( 525 )

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Proceeds from sales of other real estate owned 997 3,949 4,451

Net cash provided by (used in) investing activities 12,852 ( 2,115,732 ) ( 291,185 )

Net cash (used in) provided by investing activities ( 455,988 ) 12,852 ( 2,115,732 )

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

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2022 2021 2020

Net increase in deposits $ 819,378 $ 1,522,703 445,474

Proceeds from long-term FHLB advances — — 100,000

Net (decrease) increase in deposits $ ( 361,450 ) $ 819,378 1,522,703

Repayments on long-term FHLB advances ( 250,257 ) ( 13,716 ) ( 1,898 )

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Repayments on short-term FHLB advances ( 9,475,000 ) ( 6,376,000 ) ( 1,557,000 )

Issuance of subordinated indebtedness, net — 147,374 —

Issuance of subordinated debentures, net — — 147,374

Net increase in other short-term borrowings 30,000 — —

Net increase (decrease) in securities sold under agreements to repurchase 8,339 1,039 ( 8,309 )

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Common stock repurchased — ( 1,256 ) ( 723 )

Net cash provided by financing activities 144,066 2,200,541 404,472

Net increase in cash and cash equivalents 328,403 85,696 174,840

Cash and cash equivalents at beginning of period 377,214 291,518 116,678

Cash and cash equivalents at end of period $ 705,617 $ 377,214 $ 291,518

Net cash (provided by) used in financing activities ( 36,307 ) 144,066 2,200,541

Net (decrease) increase in cash and cash equivalents ( 346,646 ) 328,404 85,696

Cash and cash equivalents at beginning of year 705,618 377,214 291,518

Cash and cash equivalents at end of year $ 358,972 $ 705,618 $ 377,214

Interest paid $ 50,104 $ 26,265 $ 36,432

Income taxes paid 21,164 24,974 10,023

Income taxes (refund) paid ( 6,261 ) 21,164 24,974

Significant non-cash transactions:

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Real estate acquired in settlement of loans 675 3,889 2,446

(Decrease) increase in GNMA repurchase obligation ( 18,786 ) ( 12,130 ) 27,625

Recognition of operating right-of-use assets 13,428 5,776 1,338

Recognition of operating lease liabilities 13,643 6,310 1,621

Total assets acquired in BTH merger 1,846,598 — —

Total liabilities assumed in BTH merger 1,633,340 — —

Common stock issued in BTH merger as consideration 292,657 — —

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

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 1 - Significant Accounting Policies

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("Company") is a financial holding company headquartered in Ruston, Louisiana.

The Company's wholly-owned bank subsidiary, Origin Bank ("Bank"), provides a broad range of financial services to businesses, municipalities, high net worth individuals and retail clients.

The Company currently operates 44 banking centers located in Dallas/Fort Worth and Houston, Texas, North Louisiana and into Mississippi.

The Company's wholly-owned bank subsidiary, Origin Bank ("Bank"), was founded in 1912 in Choudrant, Louisiana.

Deeply rooted in Origin’s history is a culture committed to providing personalized, relationship banking to businesses, municipalities, and personal clients to enrich the lives of the people in the communities it serves.

Origin provides a broad range of financial services and currently operates 59 banking centers located in Dallas/Fort Worth, East Texas, Houston, North Louisiana and Mississippi.

The Company principally operates in one business segment, community banking.

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The enterprise with a controlling financial interest, known as the primary beneficiary, consolidates the VIE.

The Company's wholly-owned subsidiaries CTB Statutory Trust I and First Louisiana Statutory Trust I are VIEs for which the Company is not the primary beneficiary.

The Company's wholly-owned subsidiaries CTB Statutory Trust I, First Louisiana Statutory Trust I and BT Holdings Trust I are VIEs for which the Company is not the primary beneficiary.

Accordingly, the accounts of these trusts are not included in the Company's consolidated financial statements.

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ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Cash and Cash Equivalents .

For purposes of the statement of cash flows, the Company considers all cash on hand, demand deposits with other banks, federal funds sold and short-term interest-bearing cash items with an original maturity less than 90 days to be cash equivalents.

For purposes of the consolidated statements of cash flows, the Company considers all cash on hand, demand deposits with other banks, federal funds sold and short-term interest-bearing cash items with an original maturity less than 90 days to be cash equivalents.

The Company maintains deposits with other financial institutions in amounts that exceed federal deposit insurance coverage.

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If quoted market prices are not available, fair values are based on other methods including, but not limited to the discounting of cash flows.

Unrealized gains and losses on AFS securities are excluded from earnings and reported net of tax in accumulated other comprehensive income until realized.

Unrealized gains and losses on AFS securities are excluded from earnings and reported net of tax in accumulated other comprehensive (loss) income until realized.

Please see the paragraphs under Allowance for Credit Losses referenced below in this footnote for information on the allowance for credit losses pertaining to AFS securities.

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A security is placed on nonaccrual status if (i) principal or interest has been in default for a period of 90 days or more or (ii) full payment of principal and interest is not expected.

The Company has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest in other assets in the consolidated balance sheets.

Interest accrued but not received for a security placed on nonaccrual status is reversed against interest income.

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The Company's remaining equity investments in other financial institutions, excluding FRB and FHLB, totaling $ 15.8 million and $ 15.7 million at December 31, 2022 and 2021, respectively, qualify for the practicability exception under Accounting Standards Update ("ASU") 2016-01 due to having illiquid markets and are carried at cost, less impairment, plus or minus any observable price changes.

The carrying value of these securities was evaluated and was determined not to be impaired for the years ended December 31, 2021, 2020 and 2019.

The carrying value of these securities was evaluated and was determined not to be impaired during the years ended December 31, 2022 and 2021 .

Loans Held for Sale .

Loans held for sale include mortgage loans and are carried at fair value, with unrealized gains and losses recorded in the consolidated statements of income.

Please see Mortgage Servicing Rights and Transfers of Financial Assets below for information on the GNMA repurchase asset which represents the difference between the total loans held for sale on the face of the balance sheet and the loans held for sale at fair value also shown on the face of the balance sheet.

Please see Mortgage Servicing Rights and Transfers of Financial Assets below for information on the GNMA repurchase asset which represents the difference between the total loans held for sale on the face of the consolidated balance sheet and the loans held for sale at fair value also shown on the face of the consolidated balance sheet.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Forward commitments to sell mortgage loans are acquired to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale.

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Fees received from borrowers to guarantee the funding of mortgage loans held for sale are recognized as income or expense when the loans are sold or when it becomes evident that the commitment will not be used.

Acquisition Accounting and Acquired Loans.

The Company accounts for its mergers/acquisitions under Financial Accounting Standards Board ("FASB") Accounting Standards Codification (ASC) Topic 805, Business Combinations, which requires the use of the acquisition method of accounting.

All identifiable assets acquired, including loans, are recorded at fair value.

In accordance with ASC 326, the Company records a discount or premium and also an allowance for credit losses on acquired loans.

All purchased loans are recorded at fair value in accordance with the fair value methodology prescribed in FASB ASC Topic 820, Fair Value Measurements.

The fair value estimates associated with the loans include estimates related to expected prepayments and the amount and timing of undiscounted expected principal, interest and other cash flows.

Purchased loans that have experienced more than insignificant credit deterioration since origination are purchased credit deteriorated (“PCD”) loans.

The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following:

(1) non-accrual status;

(2) troubled debt restructured designation;

(3) risk ratings of special mention, substandard or doubtful;

(4) watchlist credits;

and (5) delinquency status, including loans that are current on merger/ acquisition date, but had been previously delinquent two times 60 days.

An allowance for credit losses is determined using the same methodology as other individually evaluated loans.

The Non-PCD model utilizes data from the Bank in order to determine the probability of default and loss given default to be used in the calculation.

The initial allowance for credit losses, determined on a collective basis, is allocated to individual loans.

The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis.

The difference between the initial amortized cost basis and the par value of the loan is a non-credit discount or premium, which is amortized or accreted into interest income over the life of the loan.

Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses.

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for credit losses, and any deferred fees or costs on originated loans.

2 unchanged sentences

Late fees are recognized as income when earned, assuming collectability is reasonably assured.

The Company has elected the fair value option on a small portion of its LHFI at December 31, 2020, with changes in fair value recorded in noninterest income.

For these loans, the earned current contractual interest payment is recognized in interest income.

Loan origination costs and fees are recognized in earnings as incurred and not deferred.

Because these loans are recognized at fair value, the Company's allowance for credit losses policy does not apply to these loans.

Fair value is determined using discounted cash flows and credit quality indicators.

In addition to loans issued in the normal course of business, the Company considers overdrafts on customer deposit accounts to be loans and classifies these overdrafts as loans in its consolidated balance sheets.

1 unchanged sentence

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.

Loans are considered past due or delinquent when the contractual principal or interest due in accordance with the terms of the loan agreement or any portion thereof remains unpaid after the due date of the scheduled payment.

When accrual of interest is discontinued, all unpaid accrued interest is reversed.

4 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Allowance for Credit Losses .

2 unchanged sentences

The Company evaluates loans held for investment ("LHFI") on a pool basis with pools of loans characterized by loan type, collateral, industry, internal credit risk rating and Fair Isaac Corporation ("FICO") score.

The Company applied a probability of default, loss given default loss methodology to the loan pools at January 1 and December 31, 2021.

Historical loss rates for each pool are calculated based on charge-off and recovery data beginning with the second quarter of 2012.

These loss rates are adjusted for differences between current period conditions, including the ongoing effects of COVID-19 on the U.S.

economy, and the conditions existing during the historical loss period.

These loss rates are adjusted for differences between current period conditions, including the economic forecast 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.

31 unchanged sentences

Furniture, fixtures, and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated useful lives of the assets, which range from three to seven years .

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The Company determines if an arrangement is a lease at inception.

Operating lease assets are included in accrued interest receivable and other assets, operating lease liabilities are included in accrued expenses and other liabilities in the Company's consolidated balance sheets.

The Company has made an accounting policy election not to recognize short-term lease assets and liabilities (less than a 12-month term) or immaterial equipment and server space leases in its balance sheets;

instead, the Company recognizes the lease expense for these leases on a straight-line basis over the life of the lease.

The Company has no material finance leases.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Right of use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

18 unchanged sentences

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.

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 consolidated balance sheets as mortgage loans held for sale, regardless of whether the institution intends to exercise the buy-back option.

These loans were recorded as mortgage loans held for sale, at the lower of cost or fair value with a corresponding liability in FHLB advances and other borrowings on the Company's consolidated balance sheets.

During the quarter ended December 31, 2022, the Company entered into a contract to sell substantially all of its GNMA mortgage servicing rights portfolio, recognized an impairment of $ 2.0 million, and met all final sale conditions in early 2023.

The sale was completed in February 2023.

The Company sold approximately $ 1.8 million in GNMA mortgage servicing rights, representing $ 453.3 million in unpaid principal balances, with no significant additional gain or loss realized, and derecognized the related GNMA repurchase asset and offsetting liability of $ 24.6 million.

Derivative Instruments and Hedging Activities .

4 unchanged sentences

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

During the term of a cash flow hedge contract, the effective portion of changes in fair value in the derivative instrument are recorded in accumulated other comprehensive income.

During the term of a cash flow hedge contract, the effective portion of changes in fair value in the derivative instrument are recorded in accumulated other comprehensive (loss) income.

Changes in the fair value of derivatives to which hedge accounting does not apply are recognized immediately in earnings.

1 unchanged sentence

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Goodwill and Other Intangible Assets .

Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business, is not amortized but tested for impairment on an annual basis, which is typically October 1 for the Company, or more often if events or circumstances indicate that there may be impairment.

Because of the volatile market conditions during which the Company's market value fell below book value, the Company performed a qualitative assessment of whether it was more likely than not that the fair value was less than carrying value during each quarter of 2020 including a goodwill impairment assessment performed by a third-party valuation specialist during the second quarter of 2020.

Based on these assessments, it was determined that the Company's fair value exceeded carrying value and no goodwill impairment was recorded during 2020.

Other intangible assets, such as relationship based intangibles and core deposit intangibles, are amortized on a basis consistent with the receipt of economic benefit to us.

Goodwill, which represents the excess of cost over the fair value of the net assets of an acquired business, is not amortized but evaluated for potential impairment on an annual basis, which is typically October 1 for the Company, or more often if events or circumstances indicate that there may be impairment.

Other intangible assets, such as core deposit intangibles and relationship based intangibles, are amortized on a basis consistent with the receipt of economic benefit to the Company.

Such assets are evaluated at least annually as to the recoverability of their carrying value for potential impairment.

8 unchanged sentences

Any subsequent write-downs to reflect current fair value, or gains and losses on the sale of the properties are charged to noninterest income.

At December 31, 2021 and 2020, the balance of OREO was $ 1.5 million and $ 1.6 million, respectively, and included as a component of accrued interest receivable and other assets in the accompanying consolidated balance sheets.

At December 31, 2022 and 2021, the balance of OREO was $ 806,000 and $ 1.5 million, respectively, and included as a component of accrued interest receivable and other assets in the accompanying consolidated balance sheets.

Overnight Repurchase Agreements with Depositors .

8 unchanged sentences

Performance obligations for our customer contracts are generally satisfied at a single point in time, typically when the transaction is complete, or over time.

Descriptions of the Company's revenue generating activities that are within the scope of Topic 606 are described below.

Descriptions of the Company's revenue generating activities that are within the scope of the revenue recognition standard are described below.

Service charges and fees on deposit accounts

5 unchanged sentences

In most instances, the Company considers the performance obligation to be complete at the time the service was rendered.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Credit card interchange income

2 unchanged sentences

The amounts are included as a component of other income in the consolidated statements of income.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Gain or loss on sale of other assets and OREO

15 unchanged sentences

For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

The Company did not have any amount accrued with respect to uncertainty in income taxes at December 31, 2021 and 2020.

The Company did not have any amount accrued with respect to uncertain income tax positions at December 31, 2022 and 2021.

The Company recognizes interest and/or penalties related to income tax matters as a component of noninterest expense.

2 unchanged sentences

Stock-Based Compensation .

The cost of employee services received in exchange for stock options or restricted stock grants are measured using the fair value of the award on the grant date and is recognized over the service period.

The cost of employee services received in exchange for stock options, restricted stock and performance stock grants and/or units are measured using the fair value of the award on the grant date and is recognized over the service period.

Other Investments .

9 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Investments in Tax Credit Entities .

15 unchanged sentences

Diluted earnings per share includes the dilutive effect of additional potential common shares issuable under stock options and restricted stock awards.

Diluted income per common share considers common stock issuable under the assumed release of unvested restricted stock awards, convertible preferred stock being converted to common stock, and the assumed exercise of stock options granted.

Diluted income per common share considers common stock issuable under the assumed release of unvested restricted stock awards, restricted stock units, performance stock units, shares potentially issuable under the employee stock purchase plan, and the assumed exercise of stock options granted.

The dilutive effect of share-based payment awards that are not deemed to be participating securities is calculated using the treasury stock method, which assumes that the proceeds from exercise are used to purchase common stock at the average market price for the period.

The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock method (which assumes that the participating securities are exercised/released) or the two-class method (which assumes that the participating securities are not exercised/released and earnings are reallocated between common and participating security stockholders).

Potentially dilutive common stock equivalents are excluded from the computation of diluted earnings per common share in periods in which the effect would be anti-dilutive.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Effect of Recently Adopted Accounting Standards

2019-10, Financial Instruments —Credit Losses (Topic 326), the impact of this ASU alleviates step 2 of the goodwill impairment test.

Implementation of this ASU became effective for the Company on January 1, 2020, and did not materially impact the consolidated financial statements or disclosures.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments;

2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses;

ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments;

ASU 2019-05, Financial Instruments - Credit Losses (Topic 326):

Targeted Transition Relief;

ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses;

collectively, the "ASUs".

These ASUs introduce and amend Accounting Standards Codification ("ASC") Topic 326, Financial Instruments - Credit Losses and amend guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities.

For assets held at amortized cost basis, Topic 326 eliminates the current incurred loss approach and, instead, requires an entity to reflect its current estimate of all expected credit losses.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected.

This guidance also changes the accounting for purchased loans and securities with credit deterioration.

Topic 326 also applies to off-balance sheet exposures such as unfunded loan commitments, letters of credit and other financial guarantees.

Expected credit losses related to off-balance sheet exposures will be presented as a liability rather than as an allowance.

Please see the paragraphs under Allowance for Credit Losses referenced above in this footnote for additional information on the determination of the allowance for credit losses as required by these ASUs.

The Company made the following policy elections related to the adoption of the guidance in Topic 326:

• Accrued interest will be written off against interest income when financial assets are placed into nonaccrual status.

Therefore, accrued interest will be excluded from the amortized cost basis for purposes of calculating the allowance for credit losses.

Accrued interest receivable is presented with other assets in a separate line item in the consolidated balance sheet.

• The fair value of collateral practical expedient has been elected on certain loans, in determining the allowance for credit losses, for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty.

• For credit loss estimates calculated using a discounted cash flow approach, the entire change in present value is reported in credit loss expense rather than being attributed to interest income.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The adoption of ASC Topic 326 was recorded on its original effective date as a cumulative effect adjustment to retained earnings at January 1, 2020, and is shown below.

(Dollars in thousands) December 31, 2019 Balance Transition Adjustment January 1, 2020

Loans secured by real estate:

Commercial real estate $ 10,013 $ ( 5,052 ) $ 4,961

Construction/land/land development 3,711 1,141 4,852

Residential real estate 6,332 ( 2,526 ) 3,806

Total real estate 20,056 ( 6,437 ) 13,619

Commercial and industrial 16,960 7,296 24,256

Mortgage warehouse lines of credit 262 29 291

Consumer 242 360 602

Total allowance for loan credit losses $ 37,520 $ 1,248 $ 38,768

Reserve for off-balance sheet exposures $ 1,810 $ ( 381 ) $ 1,429

Held-to-Maturity Securities:

Municipal securities $ — $ 96 $ 96

2018-13, Fair Value Measurement - (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement modifies the disclosure requirements on fair value measurements in Topic 820.

The amendments in this update remove disclosures that no longer are considered cost beneficial, modify/clarify the specific requirements of certain disclosures, and add disclosure requirements identified as relevant.

ASU 2018-13 became effective on January 1, 2020, and did not have a significant impact on our financial statements.

2019-12, Income Taxes (Topic 740):

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The ASU is effective upon issuance, however, the SEC release on which the ASU is based is effective for registrants with the first fiscal year ending after December 15, 2021, while Guide 3 will be rescinded effective January 1, 2023.

Implementation of this ASU is not expected to materially impact the Company's financial statement disclosures.

Implementation of this ASU did not materially impact the Company's financial statement disclosures.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Effect of Newly Issued But Not Yet Effective Accounting Standards

1 unchanged sentence

The amendments in this update affect accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Implementation of this ASU is not expected to materially impact the Company's financial statements or disclosures.

2022-01, Derivatives and Hedging (Topic 815) — Fair Value Hedging - Portfolio Layer Method.

The amendments in this Update clarify the accounting for and promote consistency in the reporting of hedge basis adjustments applicable to both a single hedged layer and multiple hedged layers.

Additionally, this Update allows entities to elect to apply the portfolio layer method of hedge accounting in accordance with Topic 815.

The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Implementation of this ASU is not expected to materially impact the Company's financial statements or disclosures.

2022-02, Financial Instruments - Credit Losses (Topic 326) — Troubled Debt Restructurings and Vintage Disclosures.

The amendments in this Update eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.

Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance in paragraphs 310-20-35-9 through 35-11 to determine whether a modification results in a new loan or a continuation of an existing loan.

For public business entities, the amendments in this Update require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost.

The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Implementation of this ASU is not expected to materially impact the Company's financial statements or disclosures.

2022-06, Reference Rate Reform (Topic 848) - Deferral of the Sunset Date of Topic 848 — The amendments in this Update provide temporary relief during the transition period in complying with Update No.

2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

The Board included a sunset provision within Topic 848 based on expectations of when the London Interbank Offered Rate (LIBOR) would cease being published.

At the time that Update 2020-04 was issued, the UK Financial Conduct Authority (FCA) had established its intent that it would no longer be necessary to persuade, or compel, banks to submit to LIBOR after December 31, 2021.

As a result, the sunset provision was set for December 31, 2022 - 12 months after the expected cessation date of all currencies and tenors of LIBOR.

In March 2021, the FCA announced that the intended cessation date of the overnight 1-, 3-, 6-, and 12-month tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848.

Because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

The ASU is effective immediately.

Implementation of this ASU is not expected to materially impact the Company's financial statements or disclosures.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 2 - Earnings Per Share

1 unchanged sentence

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.

Diluted earnings per share includes the dilutive effect of additional potential common shares issuable under the Company's stock and incentive compensation plans.

Information regarding the Company's basic and diluted earnings per common share is presented in the following table:

7 unchanged sentences

Diluted earnings per common share 3.28 4.60 1.55

Note 3 - Business Combinations

BT Holdings, Inc.

On August 1, 2022, the Company completed its merger with BT Holdings, Inc.

(“BTH”), a Texas corporation and the registered bank holding company of BTH Bank, acquiring 100 % of the voting equity interests of BTH.

The Company issued 6,794,910 shares of its common stock, and all outstanding BTH common stock options were converted into options to purchase an aggregate of 611,676 shares of Origin common stock.

Based on the closing price of the Company's common stock on July 29, 2022, of $ 43.07 per share, the aggregate consideration to be paid to holders of BTH common stock in connection with the merger is valued at approximately $ 307.8 million.

Goodwill of $ 94.5 million was recorded as a result of the transaction.

The merger added new markets for expansion and brings complementary businesses together to drive synergies and growth, which are the factors that gave rise to the goodwill recorded.

The goodwill will not be deductible for tax purposes.

Including the effects of the known purchase accounting adjustments, as of the merger date, Origin had approximately $ 9.84 billion in assets, $ 6.77 billion in loans and $ 7.99 billion in deposits on a consolidated basis.

Origin Bank and BTH Bank, N.A.

operated as separate banking subsidiaries of the Company until the merger of the banks, which Origin completed on October 7, 2022, concurrently with the data processing conversion.

BTH formerly operated its banking business from 13 locations in East Texas, Dallas and Fort Worth, Texas, each of which now operates as a banking location of Origin Bank.

The purchase price allocation and certain fair value measurements remain preliminary due to the timing of the merger.

The Company will continue to review the estimated fair values of loans, deposits and intangible assets, and to evaluate the assumed tax positions and contingencies.

The Company has determined that the merger of the net assets of BTH constitutes a business combination as defined by the ASC Topic 805.

Accordingly, the assets acquired and liabilities assumed are presented at their fair values as required.

Fair values were determined based on the requirements of ASC Topic 820.

In many cases, the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

The following schedule is a preliminary breakdown of the assets acquired and liabilities assumed as of the merger date:

BT Holdings, Inc.

(Dollars in thousands) As Recorded by Origin

Assets Acquired:

Cash and cash equivalents $ 69,953

Investment securities 456,808

Loans acquired 1,239,532

Allowance for credit losses on loans ( 5,527 )

Loans receivable, net 1,234,005

Premises and equipment 17,825

Non-marketable equity securities held in other financial institutions 5,873

Core deposit intangible 38,356

Other assets 23,778

Total assets acquired $ 1,846,598

Liabilities Assumed:

Noninterest-bearing deposits $ 398,089

Interest-bearing deposits 865,864

Time deposits 302,506

Total deposits 1,566,459

Securities sold under agreements to repurchase 10,133

Subordinated indebtedness, net 44,074

Accrued expenses and other liabilities 12,674

Total liabilities assumed 1,633,340

Net assets acquired 213,258

Purchase price 307,784

Goodwill $ 94,526

The Company’s operating results include the operating results of the acquired assets and assumed liabilities of BTH subsequent to the merger date.

Acquisition Accounting.

The following is a description of the methods used to determine the fair values of significant assets and liabilities acquired as part of a merger or acquisition.

The Company elected to use the pushdown accounting method to record the merger.

Loans acquired – Fair values for PCD loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates except when a fair value of collateral approach was applied.

The discount rates used for PCD loans were based on current market rates and include adjustments for liquidity concerns.

The discount rate does not include a factor for credit losses, as that has been included in the estimated cash flows.

Non-PCD loans were grouped together according to similar characteristics and were treated in the aggregate when applying valuation techniques.

See Note 5 - Loans in these notes to the consolidated financial statements for more information related to loans acquired.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Loan Acquisition Accounting – The Company accounts for its acquisitions/mergers under ASC Topic 805, Business Combinations, which requires the use of the acquisition method of accounting.

All identifiable assets acquired, including loans, are recorded at fair value.

The fair value for acquired loans at the time of acquisition or merger is based on a variety of factors, including discounted expected cash flows, adjusted for estimated prepayments and credit losses.

In accordance with ASC 326, the fair value adjustment is recorded as premium or discount to the unpaid principal balance of each acquired loan.

Loans that have been identified as having experienced a more-than-insignificant deterioration in credit quality since origination are PCD loans.

The net premium or discount on PCD loans is adjusted by the Company’s allowance for credit losses recorded at the time of merger/acquisition.

The remaining net premium or discount is accreted or amortized into interest income over the remaining life of the loan using the effective interest rate method.

The net premium or discount on loans that are not classified as PCD (“non-PCD”), that includes credit and non-credit components, is accreted or amortized into interest income over the remaining life of the loan using a constant yield method.

The Company then records the necessary allowance for credit losses on the non-PCD loans through provision for credit losses expense.

During the quarter ended December 31, 2022, the Company continued to analyze the valuations and accounting associated with the acquired assets and assumed liabilities and received updated information resulting in the revised amounts displayed below.

The Company updated the estimated amounts of these items within the consolidated balance sheets with a corresponding adjustment to goodwill.

The changes are gross of taxes and reflected in the following table:

(Dollars in thousands)

Acquired Asset or Liability

Consolidated Balance Sheet Line Item Provisional Estimate Revised Estimate Increase (Decrease)

Loan acquired Loans, net of allowance for credit losses $ 1,239,625 $ 1,239,532 $ ( 93 )

Deferred tax asset Other Assets 17,427 23,778 6,351

Provision for off-balance sheet contingencies Accrued expenses and other liabilities 14,530 12,674 ( 1,856 )

Goodwill Goodwill 102,640 94,526 ( 8,114 )

Purchased loans that reflect a more-than-insignificant deterioration of credit from origination are considered PCD.

For PCD loans, the initial estimate of expected credit losses is recognized in the allowance for credit loss on the date of the merger using the same methodology as other loans held for investment as discussed in Note 5 - Loans in these notes to the consolidated financial statements.

The following table provides a summary of loans purchased with credit deterioration at the merger transaction date with BTH:

August 1, 2022

(Dollars in thousands) Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total

Unpaid principal balance $ 10,731 $ 1,315 $ 2,880 $ 37,117 $ — $ 169 $ 52,212

PCD allowance for credit loss at merger 1 — — 5,525 — 1 5,527

Non-credit related (premium)/discount ( 277 ) ( 92 ) 3 ( 77 ) — 1 ( 442 )

Fair value of PCD loans $ 11,007 $ 1,407 $ 2,877 $ 31,669 $ — $ 167 $ 47,127

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Revenue and earnings of BTH since the acquisition date have not been disclosed as the acquired company was merged into the Company and separate financial information is not readily available.

The following table presents unaudited pro-forma information as if the merger with BTH had occurred on January 1, 2021.

This pro-forma information gives effect to certain adjustments, including purchase accounting fair value adjustments, amortization of core deposit intangible and related income tax effects and is based on our historical results for the periods presented.

Transaction-related costs related to the merger are not reflected in the pro-forma amounts.

The pro-forma information does not necessarily reflect the results of operations that would have occurred had the Company acquired BTH at the beginning of fiscal year 2021.

Cost savings are also not reflected in the unaudited pro-forma amounts.

(Dollars in thousands except share and per share data) Actual for the

Year Ended December 31, 2022 Pro-Forma for the Year Ended December 31,

Net interest income $ 275,278 $ 323,772 $ 276,817

Noninterest income 57,274 65,900 66,157

Net income 87,715 104,969 122,710

Pro-forma earnings per share:

Basic — 3.14 4.06

Diluted — 3.11 4.02

Weighted average shares outstanding:

26,627,476 33,455,866 30,259,894

Basic $ 3.29 $ — $ —

Diluted 3.28 — —

Lincoln Agency and Pulley-White Acquisition

On December 31, 2021, the Company acquired the remaining 62 % equity interest in the Lincoln Agency for $ 5.3 million in cash and $ 5.3 million in Company common stock.

The Company previously acquired a 38 % minority interest in Lincoln Agency that was accounted for as an equity method investment, which had an immaterial carrying value at the acquisition date.

The acquisition of the remaining equity interest was considered a step acquisition, whereby the Company re-measured the previously held equity method investment to its fair value of $ 5.2 million, resulting in the recognition of a gain of $ 5.2 million, which is recorded as a component of noninterest income in the accompanying consolidated statements of income.

The acquisition date fair value of the previously held equity method investment was calculated using multiple factors, including the total consideration for the acquired ownership interest of Lincoln Agency and an analysis of control premiums paid for similar transactions.

The purchase agreement for Lincoln Agency includes potential earnout payments of up to $ 250,000 based on net product line revenue for fiscal year 2023 and up to an additional $ 750,000 based on compound annual revenue growth for fiscal year 2024.

The Company included the $ 795,000 fair value of this contingent liability as a component of other liabilities on the accompanying consolidated balance sheets at December 31, 2021.

At December 31, 2022, the contingent liability was valued at $ 825,000 in accordance with ASC Topic 805.

Additionally, the Company acquired certain assets, including 100 % of the book of business, and assumed certain liabilities of Pulley-White on December 31, 2021, for $ 2.2 million in cash and $ 2.2 million in Company common stock.

The purchase agreement for Pulley-White includes potential earnout payments of up to an additional $ 250,000 provided the revenue attributable to the legacy operations of Pulley-White for the two years ended December 31, 2023, achieves certain compounded annual growth rate metrics and payments of up to $ 500,000 provided the revenue attributable to the legacy operations of Pulley-White for the three years ended December 31, 2024, achieves certain compounded annual growth rate metrics.

The Company included the $ 574,000 fair value of this contingent liability as a component of other liabilities on the accompanying consolidated balance sheets at December 31, 2021.

At December 31, 2022, the contingent liability was valued at $ 631,000 in accordance with ASC Topic 805.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

A summary of the fair value of assets acquired and liabilities assumed from the insurance acquisitions was as follows:

(Dollars in thousands) Estimated Fair Value

Assets Acquired:

Definite-lived intangibles $ 14,067

Operating lease right of use assets 1,488

Prepaid expense and other assets 18

Total assets acquired 15,573

Liabilities Assumed:

Operating lease liability 1,488

Net assets acquired 14,085

Total consideration 21,497

Goodwill $ 7,412

The fair value of assets acquired and liabilities assumed were preliminary and based on valuation estimates and assumptions at December 31, 2021.

The Company continued to analyze the valuations and accounting associated with the acquired assets and assumed liabilities and received updated information during the first quarter of 2022, resulting in a $ 215,000 downward adjustment to the goodwill associated with the acquisitions of Lincoln Agency and Pulley-White.

With these acquisitions, the Company continues to expand the scope of product offerings to its banking customers.

$ 4.6 million of goodwill associated with these acquisitions is deductible for income tax purposes.

A summary of total consideration was as follows:

(Dollars in thousands) December 31, 2021

Cash paid $ 7,457

Common stock issued ( 177,348 shares)

Contingent consideration 1,369

Fair value of previously held interest in Lincoln Agency 5,213

Total consideration $ 21,497

The Company has determined the insurance acquisitions constitute a business combination as defined by ASC Topic 805, which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired and the liabilities assumed.

The Company has recorded the assets purchased and liabilities assumed at their estimated fair value in accordance with ASC Topic 805.

The fair value of assets acquired and liabilities assumed in the insurance acquisitions are final.

Pro forma results of aggregate operations for the insurance acquisitions are not presented because these acquisitions are not material to the Company's consolidated results of operations.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Note 4 - Securities

25 unchanged sentences

Residential mortgage-backed securities 559,655 3,751 ( 5,605 ) 557,801 — 557,801

Commercial collateralized mortgage obligations 20,000 2 ( 330 ) 19,672 — 19,672

Residential collateralized mortgage obligations 196,691 460 ( 3,411 ) 193,740 — 193,740

7 unchanged sentences

________________________

(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.

(1) Securities carried at fair value through income have no unrealized gains or losses at the consolidated balance sheet dates as all changes in value have been recognized in the consolidated statements of income.

See Note 6 - Fair Value of Financial Instruments for more information.

On August 1, 2022, the Company completed the merger with BT Holdings, Inc.

and acquired $ 456.8 million of available for sale securities from BTH, $ 447.5 million of which were sold during the third quarter of 2022, and classified the remaining as available-for-sale at the merger date.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Securities with unrealized losses at December 31, 2022, and 2021, 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.

13 unchanged sentences

48,749 ( 3,928 ) 97,621 ( 19,838 ) 146,370 ( 23,766 )

Asset-backed securities 62,047 ( 1,528 ) 9,853 ( 490 ) 71,900 ( 2,018 )

Total $ 794,894 $ ( 59,754 ) $ 801,830 $ ( 144,737 ) $ 1,596,724 $ ( 204,491 )

6 unchanged sentences

government and agency securities 97,010 ( 1,234 ) 440 ( 2 ) 97,450 ( 1,236 )

Commercial mortgage-backed securities 57,703 ( 1,167 ) 6,540 ( 281 ) 64,243 ( 1,448 )

Residential mortgage-backed securities 409,382 ( 5,577 ) 1,693 ( 28 ) 411,075 ( 5,605 )

Commercial collateralized mortgage obligations

14,568 ( 330 ) — — 14,568 ( 330 )

Residential collateralized mortgage obligations

3 unchanged sentences

State and municipal securities $ — $ — $ — $ — $ — $ —

Management evaluates available for sale debt securities in unrealized loss positions to determine whether the impairment is due to credit-related factors or non credit-related factors.

Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2022, the Company had 716 individual securities that were in an unrealized loss position.

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 the cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

Management does not have the intent to sell any of the securities in an unrealized loss position and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Accordingly, at December 31, 2021, management believes that the unrealized losses detailed in the previous table are due to non credit-related factors, including changes in interest rates and other market conditions, and therefore no losses have been recognized in the Company’s consolidated statements of income.

Accordingly, at December 31, 2022, 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.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The following table presents the activity in the allowance for credit losses for held-to-maturity debt securities.

1 unchanged sentence

Allowance for credit losses:

2022 2021 2020

Balance at January 1, $ 167 $ 66 $ —

Impact of adopting ASC 326 — — 96

Credit loss allowance (recovery) 101 ( 30 )

Provision expense for credit loss for held to maturity securities 732 101 ( 30 )

Balance at December 31,

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Accrued interest of $ 6.1 million and $ 5.4 million was not included in the calculation of the allowance at December 31, 2021 or 2020, respectively.

$ 899 $ 167 $ 66

Accrued interest of $ 8.2 million and $ 6.1 million was not included in the calculation of the allowance or the amortized cost basis of the debt securities at December 31, 2022 or 2021, respectively.

There were no past due held-to-maturity securities or held-to-maturity securities in nonaccrual status at December 31, 2022 or 2021.

20 unchanged sentences

Total $ 12,174 $ 11,970 $ 1,844,975 $ 1,641,484

The following table presents carrying amounts of securities pledged as collateral for deposits and repurchase agreements for the period ends presented.

The following table presents carrying amounts of securities pledged as collateral for deposits and repurchase agreements at the periods presented.

(Dollars in thousands) December 31, 2022 December 31, 2021

2 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 5 - Loans

8 unchanged sentences

Commercial and industrial 2,051,161 1,454,235

1,454,235 1,817,862

Mortgage warehouse lines of credit 284,867 627,078

Consumer 26,153 16,684

Total loans accounted for at amortized cost 5,231,331 5,707,762

Loans accounted for at fair value — 17,011

Total LHFI (1)

7,090,022 5,231,331

Allowance for loan losses 64,586 86,670

Allowance for loan credit losses 87,161 64,586

LHFI, net $ 7,002,861 $ 5,166,745

____________________________

(1) Includes $ 105.8 million and $ 546.5 million of PPP loans at December 31, 2021 and December 31, 2020, respectively.

(2) Includes net deferred loan fees of $ 9.6 million and $ 13.7 million at December 31, 2021, and December 31, 2020, respectively.

There were no loans held for investment ("LHFI") for which the fair value option was elected at December 31, 2021, and $ 17.0 million of commercial real estate loans for which the fair value option was elected at December 31, 2020.

The Company mitigates the interest rate component of fair value risk on loans at fair value by entering into derivative interest rate contracts.

See Note 5 - Fair Value of Financial Instruments for more information on loans for which the fair value option has been elected.

The Company was a participating lender in the Paycheck Protection Program ("PPP") in 2020 and 2021.

There were approximately $ 105.8 million and $ 546.5 million in PPP loans outstanding included in the Company’s commercial and industrial loan portfolio at December 31, 2021 and 2020, respectively, which included $ 3.0 million and $ 9.6 million in net deferred loan fees at December 31, 2021 and 2020, respectively.

PPP loans have a maximum maturity of five years and earn interest at 1%.

PPP loans are fully guaranteed by the U.S.

government and can be forgiven by the Small Business Administration ("SBA") if the borrower uses the proceeds to pay specified expenses.

The Company believes that the vast majority of its PPP loans will ultimately be forgiven by the SBA in accordance with the terms of the program, and as of December 31, 2021, forgiveness has been granted on $ 648.4 million of PPP loans.

(1) Includes purchase accounting adjustment and net deferred loan fees of $ 14.2 million at December 31, 2022, and net deferred loan fees of $ 9.6 million at December 31, 2021.

There were no merger date loan fair value adjustments at December 31, 2021.

On August 1, 2022, the Company completed the merger with BTH.

As of the merger date, BTH had approximately $ 1.24 billion in loans and the Company recorded a Day 1 fair value purchase accounting net discount of $ 5.1 million.

As of December 31, 2022, the remaining purchase accounting net loan discount was $ 2.2 million.

Credit quality indicators.

As part of the Company's commitment to manage the credit quality of its loan portfolio, management annually and periodically updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions in the cities and states in which the Company operates.

As part of the Company's commitment to managing the credit quality of its loan portfolio, management annually and periodically updates and evaluates certain credit quality indicators, which include but are not limited to (i) weighted-average risk rating of the loan portfolio, (ii) net charge-offs, (iii) level of non-performing loans, (iv) level of classified loans (defined as substandard, doubtful and loss), and (v) the general economic conditions in the cities and states in which the Company operates.

The Company maintains an internal risk rating system where ratings are assigned to individual loans based on assessed risk.

1 unchanged sentence

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

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.

Minimal risk (1) Well-collateralized by cash equivalent instruments held by the Banks.

Moderate risk (2) Borrowers with excellent asset quality and liquidity.

25 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

• for commercial and industrial loans, the debt service coverage ratio (income from the business in excess of operating expenses compared to loan repayment requirements), the operating results of the commercial, industrial or professional enterprise, the borrower's business, professional and financial ability and expertise, the specific risks and volatility of income and operating results typical for businesses in that category and the value, nature and marketability of collateral.

Purchased loans that have experienced more than insignificant credit deterioration since origination are PCD loans.

An allowance for credit losses is determined using the same methodology as other individually evaluated loans.

The Company held approximately $ 48.1 million of unpaid principal balance PCD loans at December 31, 2022, as a result of the merger with BTH on August 1, 2022, and none at December 31, 2021.

Please see Note 1 - Significant Accounting Policies in these Notes to Consolidated Financial Statements for a description of our accounting policies related to purchased financial assets with credit deterioration.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

The following table reflects recorded investments in loans by credit quality indicator and origination year at December 31, 2022, excluding loans held for sale and loans accounted for at fair value.

Loans acquired are shown in the table by origination year, not merger date.

The Company had an immaterial amount of revolving loans converted to term loans at December 31, 2022.

Amortized Cost Basis by Origination Year

2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total

(Dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

Commercial real estate:

23 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Amortized Cost Basis by Origination Year

2021 2020 2019 2018 2017 Prior Revolving Loans Amortized Cost Basis Total

(Dollars in thousands)

(Dollars in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Total

Commercial and industrial:

8 unchanged sentences

Pass $ — $ — $ — $ — $ — $ — $ 282,298 $ 282,298

Special mention — — — — — — 2,042 2,042

Classified — — — — — — 527 527

Total mortgage warehouse lines of credit $ — $ — $ — $ — $ — $ — $ 284,867 $ 284,867

Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —

19 unchanged sentences

Current period net charge-offs (recoveries) $ — $ — $ — $ 72 $ 21 $ 12 $ — $ 105

(1) Excludes $ 17.0 million of commercial real estate loans at fair value at December 31, 2020, which are not included in the loss estimation methodology due to the fair value option election.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Amortized Cost Basis by Origination Year

36 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

The following tables present the Company's loan portfolio aging analysis at the dates indicated:

17 unchanged sentences

Commercial real estate $ 22 $ — $ 197 $ 219 $ 1,693,293 $ 1,693,512 $ —

$ 1,072 $ — $ 3,172 $ 4,244 $ 1,383,695 $ 1,387,939 $ —

Construction/land/land development

7 unchanged sentences

Total LHFI $ 2,434 $ 1,653 $ 21,528 $ 25,615 $ 5,205,716 $ 5,231,331 $ —

____________________________

(1) Includes $ 17.0 million of commercial real estate loans at fair value.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

GAAP requires that a discount or premium, and also an allowance for credit losses be recorded on acquired loans.

The Company completed the merger with BTH on August 1, 2022.

As a result, the Company recorded $ 5.1 million in net loan discounts and a $ 5.5 million increase in the allowance for credit losses related to PCD loans.

In addition, the Company recorded a Day 1 $ 14.9 million provision for loan credit losses on non-PCD loans required by the Current Expected Credit Losses ("CECL") guidance.

The following tables detail activity in the allowance for loan credit losses by portfolio segment.

Accrued interest of $ 15.9 million and $ 20.3 million was not included in the book value for the purposes of calculating the allowance at December 31, 2021, and December 31, 2020, respectively.

Accrued interest of $ 27.1 million and $ 15.9 million was not included in the book value for the purposes of calculating the allowance at December 31, 2022 and 2021, respectively.

Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

Year Ended December 31, 2022

(Dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (1)

Ending Balance Average Balance Net Charge-offs to Loan Average Balance

Loans secured by real estate:

Commercial real estate $ 15,430 $ 170 $ 65 $ ( 1,900 ) $ 13,425 $ 1,501,890 0.01 %

Construction/land/land development

8,191 — — ( 4,180 ) 4,011 528,618 —

Residential real estate

9,418 78 117 ( 3,341 ) 6,116 916,039 —

Commercial and industrial

Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total

(Dollars in thousands)

Beginning Balance $ 13,425 $ 4,011 $ 6,116 $ 40,146 $ 340 $ 548 $ 64,586

Allowance for loan credit losses - BTH merger 1 — — 5,525 — 1 5,527

Charge-offs 166 — 91 8,459 — 43 8,759

Recoveries 40 211 102 3,825 — 16 4,194

Provision (1)(2)

6,472 3,554 2,103 9,111 39 334 21,613

Mortgage warehouse lines of credit

Ending Balance $ 19,772 $ 7,776 $ 8,230 $ 50,148 $ 379 $ 856 $ 87,161

Average Balance $ 1,951,246 $ 708,758 $ 1,143,190 $ 1,675,719 $ 420,639 $ 20,913 $ 5,920,465

Net Charge-offs to Loan Average Balance 0.01 % ( 0.03 ) % — % 0.28 % — % 0.13 % 0.08 %

_________________________

Consumer 918 63 49 ( 356 ) 548 16,764 0.08

Total $ 86,670 $ 12,234 $ 948 $ ( 10,798 ) $ 64,586 $ 5,343,976 0.21

(1) The $ 10.8 million provision for credit losses net benefit on the consolidated statements of income includes a $ 10.8 million provision for loan losses net benefit, a $ 68,000 provision for off-balance sheet commitments net benefit and a $ 101,000 provision for held to maturity securities credit losses for the year ended December 31, 2021.

(1) The $ 24.7 million provision for credit losses on the consolidated statement of income includes a $ 21.6 million provision for loan losses, a $ 2.3 million provision for off-balance sheet commitments and a $ 732,000 provision for held to maturity securities credit losses for the year ended December 31, 2022.

(2) Excluded from the allowance is $ 10.8 million in PCD loans that were acquired in the merger with BTH that were added to the allowance and immediately written off.

Year Ended December 31, 2021

(Dollars in thousands) Beginning Balance Impact of Adopting ASC 326 Charge-offs Recoveries Provision (1)

Ending Balance Average Balance Net Charge-offs to Loan Average Balance

Loans secured by real estate:

Commercial real estate $ 10,013 $ ( 5,052 ) $ 4,924 $ 19 $ 15,374 $ 15,430 $ 1,322,477 0.37 %

Construction/land/land development

3,711 1,141 — 1 3,338 8,191 554,038 —

Residential real estate

6,332 ( 2,526 ) 692 202 6,102 9,418 769,838 0.06

Commercial and industrial

Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total

(Dollars in thousands)

Beginning Balance $ 15,430 $ 8,191 $ 9,418 $ 51,857 $ 856 $ 918 $ 86,670

Charge-offs 170 — 78 11,923 — 63 12,234

Recoveries 65 — 117 717 — 49 948

Provision (1)

( 1,900 ) ( 4,180 ) ( 3,341 ) ( 505 ) ( 516 ) ( 356 ) ( 10,798 )

Mortgage warehouse lines of credit

Ending Balance $ 13,425 $ 4,011 $ 6,116 $ 40,146 $ 340 $ 548 $ 64,586

Average Balance $ 1,501,890 $ 528,618 $ 916,039 $ 1,627,077 $ 753,588 $ 16,764 $ 5,343,976

Net Charge-offs to Loan Average Balance 0.01 % — % — % 0.69 % — % 0.08 % 0.21 %

_________________________

Consumer 242 360 76 24 368 918 18,707 0.28

Total $ 37,520 $ 1,248 $ 12,394 $ 1,268 $ 59,028 $ 86,670 $ 4,950,545 0.22

(1) The $ 59.9 million provision for credit losses on the consolidated statements of income includes a $ 59.0 million net loan loss provision, a $ 902,000 provision for off-balance sheet commitments and a $ 30,000 provision benefit for held to maturity securities credit losses for the year ended December 31, 2020.

(1) The $ 10.8 million provision for credit losses net benefit on the consolidated statement of income includes a $ 10.8 million provision for loan losses net benefit, a $ 68,000 benefit for off-balance sheet commitments and a $ 101,000 provision for held to maturity securities credit losses for the year ended December 31, 2021.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Year Ended December 31, 2020

(Dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (1)

Ending Balance Average Balance Net Charge-offs to Loan Average Balance

Loans secured by real estate:

Commercial real estate $ 8,999 $ 1,420 $ 341 $ 2,093 $ 10,013 $ 1,247,941 0.09 %

Construction/land/land development

3,331 38 40 378 3,711 505,795 —

Residential real estate

5,705 265 185 707 6,332 661,581 0.01

Commercial and industrial

Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total

(Dollars in thousands)

Beginning Balance $ 10,013 $ 3,711 $ 6,332 $ 16,960 $ 262 $ 242 $ 37,520

Impact of Adopting ASC 326 ( 5,052 ) 1,141 ( 2,526 ) 7,296 29 360 $ 1,248

Charge-offs 4,924 — 692 6,702 — 76 12,394

Recoveries 19 1 202 1,022 — 24 1,268

Provision (1)

15,374 3,338 6,102 33,281 565 368 59,028

Mortgage warehouse lines of credit

Ending Balance $ 15,430 $ 8,191 $ 9,418 $ 51,857 $ 856 $ 918 $ 86,670

Average Balance $ 1,322,477 $ 554,038 $ 769,838 $ 1,710,648 $ 574,837 $ 18,707 $ 4,950,545

Net Charge-offs to Loan Average Balance 0.37 % — % 0.06 % 0.33 % — % 0.28 % 0.22 %

_________________________

Consumer 236 148 48 106 242 20,809 0.48

Total $ 34,203 $ 10,131 $ 4,241 $ 9,207 $ 37,520 $ 3,972,861 0.15

(1) The $ 9.6 million provision for credit losses on the consolidated statements of income includes a $ 9.2 million net loan loss provision, a $ 361,000 provision for off-balance sheet commitments for the year ended December 31, 2019.

The decrease in provision expense compared to the year ended December 31, 2020, was primarily due to improvement in forecasted economic conditions during the year ended December 31, 2021, as compared to continuing uncertainty related to ongoing economic impact and duration of the COVID-19 pandemic during the year ended December 31, 2020.

(1) The $ 59.9 million provision for credit losses on the consolidated statement of income includes a $ 59.0 million net loan loss provision, a 902,000 provision for off-balance sheet commitments and a 30,000 provision benefit for held to maturity securities credit losses for the year ended December 31, 2020.

The increase in provision expense during the year ended December 31, 2022, is primarily due to the merger with BTH, completed on August 1, 2022, which required a Day 1 CECL loan provision of $ 14.9 million for loan credit losses on non-PCD loans along with a $ 5.5 million allowance for loan credit losses on PCD loans.

The allowance for loan credit losses increased $ 22.6 million compared to December 31, 2021, mainly due to a $ 23.9 million allowance for BTH loans at December 31, 2022.

Qualitative factor changes across the Company's risk pools, which includes the impact of the BTH acquired loans, drove a $ 22.4 million increase for the year ended December 31, 2022.

The decrease in provision expense during the year ended December 31, 2021, compared to the year ended December 31, 2020, was primarily due to improvement in forecasted economic conditions during the year ended December 31, 2021, as compared to continuing uncertainty related to ongoing economic impact and duration of the COVID-19 pandemic during the year ended December 31, 2020.

The Company's credit quality profile in relation to the allowance for loan credit losses drove a decline of $ 25.1 million in the collectively evaluated portion of the reserve during the year ended December 31, 2021, of which a $ 19.6 million decrease was related to qualitative factor changes across the Company's risk pools for the year ended December 31, 2021.

These declines were partially offset by an increase in certain specific loan reserves at December 31, 2021.

The provision for loan credit losses for the year ended December 31, 2020, was driven by the continuing uncertainty related to the ongoing economic impact and duration of the COVID-19 pandemic.

Based upon the requirements of CECL, economic forecasts are essential for estimating the life of loan losses.

The increased risk, as reflected in current and forecast adjustments, resulted in approximately $ 39.8 million in provision expense in total collective reserves, of which $ 27.5 million was related to qualitative factor changes, across the Company’s risk pools for the year ended December 31, 2020.

An additional $ 8.1 million in provision expense was due to the current and forecast effects of individually evaluated loans.

There were four significant loan charge-offs during year ended December 31, 2020, totaling $ 6.6 million, reflecting two loan relationships.

The following tables show the recorded investment in loans by loss estimation methodology, excluding loans for which the fair value option was elected at December 31, 2020.

There were no LHFI for which the fair value option was elected at December 31, 2021.

The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related Allowance for Loan Credit Losses ("ALCL") allocated to these loans.

December 31, 2022

Collectively Evaluated Individually Evaluated

(Dollars in thousands) Probability of Default Fair Value of Collateral Discounted Cash Flow Total

Loans secured by real estate:

Commercial real estate $ 1,691,269 $ 166 $ 2,077 $ 1,693,512

Construction/land/land development 529,789 — 294 530,083

Residential real estate

898,456 8,150 3,133 909,739

Commercial and industrial

1,441,204 8,547 4,484 1,454,235

Mortgage warehouse lines of credit 627,078 — — 627,078

Consumer 16,682 2 — 16,684

(Dollars in thousands) Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total

Real Estate $ 273 $ 97 $ 6,731 $ — $ — $ — $ 7,101

Accounts Receivable — — — 831 — — 831

Equipment — — — 285 — — 285

Total $ 273 $ 97 $ 6,731 $ 1,116 $ — $ — $ 8,217

ACL Allocation $ — $ — $ — $ 738 $ — $ — $ 738

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

December 31, 2020

Collectively Evaluated Individually Evaluated

(Dollars in thousands) Probability of Default Fair Value of Collateral Discounted Cash Flow Total

Loans secured by real estate:

Commercial real estate (1)

$ 1,365,284 $ 3,173 $ 2,471 $ 1,370,928

Construction/land/land development 528,894 2,621 345 531,860

Residential real estate

879,015 2,009 4,096 885,120

Commercial and industrial

1,804,049 3,152 10,661 1,817,862

Mortgage warehouse lines of credit 1,084,001 — — 1,084,001

Consumer 17,991 — — 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.

The following tables show the allowance for loan credit losses by loss estimation methodology at December 31, 2021, and December 31, 2020.

December 31, 2021

Collectively Evaluated Individually Evaluated

(Dollars in thousands) Probability of Default Fair Value of Collateral Discounted Cash Flow Total

Loans secured by real estate:

Commercial real estate $ 13,416 $ — $ 9 $ 13,425

Construction/land/land development 3,997 — 14 4,011

Residential real estate

5,017 19 1,080 6,116

Commercial and industrial

29,995 6,680 3,471 40,146

Mortgage warehouse lines of credit 340 — — 340

Consumer 546 2 — 548

Total $ 53,311 $ 6,701 $ 4,574 $ 64,586

Notes to Consolidated Financial Statements

December 31, 2021

Collectively Evaluated Individually Evaluated

(Dollars in thousands) Probability of Default Fair Value of Collateral Discounted Cash Flow Total

Loans secured by real estate:

Commercial real estate $ 14,896 $ 525 $ 9 $ 15,430

Construction/land/land development 8,062 128 1 8,191

Residential real estate

8,983 — 435 9,418

Commercial and industrial

44,714 1,707 5,436 51,857

Mortgage warehouse lines of credit 856 — — 856

Consumer 918 — — 918

(Dollars in thousands) Commercial Real Estate Construction/ Land/ Land Development Residential Real Estate Commercial and Industrial Mortgage Warehouse Lines of Credit Consumer Total

Real Estate $ 166 $ — $ 8,150 $ — $ — $ — $ 8,316

Accounts Receivable — — — 7,783 — — 7,783

Equipment — — — 601 — — 601

Total $ 166 $ — $ 8,150 $ 8,384 $ — $ — $ 16,700

Note that the Company is not using the collateral maintenance agreement practical expedient.

The fair value of equipment collateral that secures commercial and industrial loans is estimated by third-party valuation experts.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Collateral-dependent loans consist primarily of commercial real estate and commercial and industrial loans.

ACL Allocation $ — $ — $ 19 $ 6,563 $ — $ — $ 6,582

Collateral-dependent loans consist primarily of residential 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.

In the case of commercial and industrial loans secured by equipment, the fair value of the collateral is estimated by third-party valuation experts.

Loan balances are charged down to the underlying collateral value when they are deemed uncollectible.

Note that the Company did not elect to use the collateral maintenance agreement practical expedient available under CECL.

Nonaccrual LHFI were as follows:

11 unchanged sentences

527 58 1,383 12,306

Mortgage warehouse lines of credit — — — —

Consumer — — 49 100

3 unchanged sentences

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

At December 31, 2021, the Company had no funding commitments for which the terms have been modified in TDRs.

For the years ended December 31, 2021, 2020 and 2019, gross interest income that would have been recorded had the nonaccruing loans been current in accordance with their original terms was $ 1.9 million, $ 1.5 million and $ 1.5 million, respectively.

At December 31, 2022 and 2021, the Company had no funding commitments for which the terms were modified in TDRs.

For the year ended December 31, 2022, 2021 and 2020 gross interest income, that would have been recorded had the nonaccruing loans been current in accordance with their original terms, was $ 1.3 million, $ 1.9 million and $ 1.5 million, respectively.

No interest income was recorded on these loans while they were considered nonaccrual during the years ended December 31, 2022, 2021 and 2020.

The Company elects the fair value option for recording residential mortgage loans held for sale, as well as for certain commercial real estate loans at December 31, 2020, in accordance with U.S.

The Company had $ 1.8 million of nonaccrual mortgage loans held for sale that were recorded using the fair value option election at December 31, 2021, compared to $ 681,000 at December 31, 2020.

There were no LHFI that were recorded using the fair value option election at December 31, 2021.

Loans classified as TDRs, excluding the impact of forbearances granted due to COVID-19, were as follows:

The Company elects the fair value option for recording residential mortgage loans held for sale in accordance with U.S.

The Company had $ 3.9 million of nonaccrual mortgage loans held for sale that were recorded using the fair value option election at December 31, 2022, compared to $ 1.8 million at December 31, 2021.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Loans classified as TDRs were as follows:

(Dollars in thousands) December 31, 2022 December 31, 2021

5 unchanged sentences

(Dollars in thousands) Number of Loans Restructured Pre-Modification Recorded Balance Term Concessions Interest Rate Concessions Combination of Term and Rate Concessions Total Modifications

Loans secured by real estate:

Commercial real estate (1)

1 $ 214 $ — $ — $ 211 $ 211

Construction/land/land development 2 850 695 — 97 792

Residential real estate 3 3,822 122 3,570 — 3,692

Total real estate 6 4,886 817 3,570 308 4,695

Commercial and industrial 1 20 20 — — 20

Total 7 $ 4,906 $ 837 $ 3,570 $ 308 $ 4,715

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

________________________

(1) Acquired in connection with the BTH merger.

Year Ended December 31, 2021

(Dollars in thousands) Number of Loans Restructured Pre-Modification Recorded Balance Term Concessions Interest Rate Concessions Combination of Term and Rate Concessions Total Modifications

Loans secured by real estate:

Commercial real estate 2 $ 1,696 $ 1,694 $ — $ — $ 1,694

Residential real estate 1 $ 31 $ 26 $ — $ — $ 26

Total real estate 7 2,908 1,694 177 877 2,748

Commercial and industrial 1 100 100 — — 100

Consumer 1 2 — — 2 2

Total 2 $ 131 $ 126 $ — $ — $ 126

2 unchanged sentences

Loans secured by real estate:

Construction/land/land development 1 $ 361 $ — $ — $ 343 $ 343

Commercial real estate 2 $ 1,696 $ 1,694 $ — $ — $ 1,694

Residential real estate 5 1,212 — 177 877 1,054

3 unchanged sentences

Total 13 $ 3,127 $ 1,887 $ 177 $ 879 $ 2,943

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

There were no loans that defaulted during the year ended December 31, 2022, after having been modified as a TDR within the previous 12 months.

During the year ended December 31, 2021, one loan with an outstanding principal balance of $ 9,000 defaulted after having been modified as a TDR within the previous 12 months.

During the year ended December 31, 2020, no loans defaulted after having been modified as a TDR within the previous 12 months.

During the year ended December 31, 2019, two loans with an outstanding principal balance of $ 117,000 defaulted after having been modified as a TDR within the previous 12 months.

A payment default is defined as a loan that was 90 or more days past due.

The modifications made during the year ended December 31, 2021, did not significantly impact the Company's determination of the allowance for loan credit losses.

The Company monitors the performance of the modified loans to their restructured terms on an ongoing basis.

In the event of a subsequent default, the allowance for loan credit losses continues to be reassessed on the basis of an individual evaluation of each loan.

In the event of subsequent default, the allowance for loan credit losses continues to be reassessed on the basis of an individual evaluation of each loan.

The modifications made during the periods presented did not significantly impact the Company's determination of the allowance for credit losses.

Note 6 - Fair Value of Financial Instruments

9 unchanged sentences

Level 1 - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Level 2 - Fair value is based on significant other observable inputs that are generally determined based on a single price for each financial instrument provided to the Company by an unrelated third-party pricing service and is based on one or more of the following:

5 unchanged sentences

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.

These estimates can be inherently uncertain.

There were no transfers between fair value reporting levels for any period presented.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Fair Values of Assets and Liabilities Recorded on a Recurring Basis

20 unchanged sentences

Total recurring fair value measurements - liabilities $ — $ ( 25,275 ) $ — $ ( 25,275 )

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

December 31, 2021

2 unchanged sentences

Corporate bonds — 82,734 — 82,734

treasury securities 92,245 — — 92,245

government agency securities — 5,413 — 5,413

1 unchanged sentence

Residential mortgage-backed securities — 557,801 — 557,801

Commercial collateralized mortgage obligations — 19,672 — 19,672

Residential collateralized mortgage obligations — 193,740 — 193,740

3 unchanged sentences

Loans held for sale — 37,032 — 37,032

Loans at fair value — — 17,011 17,011

Mortgage servicing rights — — 16,220 16,220

4 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2021 and 2020, are summarized as follows:

(Dollars in thousands) Loans at Fair Value MSRs Securities Available for Sale Securities at Fair Value Through Income

Notes to Consolidated Financial Statements

The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2022 and 2021, are summarized as follows:

(Dollars in thousands) MSRs Securities Available for Sale Securities at Fair Value Through Income

Balance at January 1, 2022 $ 16,220 $ 41,461 $ 7,497

1 unchanged sentence

Mortgage banking revenue (1)

— ( 2,593 ) — —

Other noninterest income — — ( 854 )

3 unchanged sentences

Purchases — 22,384 —

Sales — — — —

Acquired in BTH merger 1,099 — —

Settlements — ( 3,655 ) ( 275 )

Balance at December 31, 2022

$ 20,824 $ 55,769 $ 6,368

(Dollars in thousands) Loans at Fair Value MSRs Securities Available for Sale Securities at Fair Value Through Income

Balance at January 1, 2021 $ 17,011 $ 13,660 $ 44,065 $ 11,554

3 unchanged sentences

Other noninterest income ( 251 ) — — ( 814 )

Gain recognized in AOCI — — 1,575 —

Loss recognized in AOCI — — ( 1,263 ) —

Purchases, issuances, sales and settlements:

1 unchanged sentence

Purchases — — 1,000 —

Sales — — ( 140 ) —

Settlements ( 16,760 ) — ( 2,341 ) ( 3,243 )

1 unchanged sentence

$ — $ 16,220 $ 41,461 $ 7,497

___________________________

(1) Total mortgage banking revenue includes changes in fair value due to market changes and run-off.

13 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Mortgage Servicing Rights ("MSRs")

The carrying amounts of the MSRs equal fair value and are valued using a discounted cash flow valuation technique.

The carrying amounts of the MSRs equal fair value, which are determined using a discounted cash flow valuation model.

The significant assumptions used to value MSRs were as follows:

13 unchanged sentences

Therefore, estimating these assumptions within ranges that market participants would use in determining the fair value of MSRs requires significant management judgment.

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.

During the second half of 2022, the Company recognized an impairment of $ 2.0 million and entered into an agreement to sell its GNMA MSR portfolio, which met all final sale conditions in early 2023.

The Company sold approximately $ 1.8 million in GNMA MSR, with no significant additional gain or loss realized, and derecognized the related GNMA repurchase asset and offsetting liability of $ 24.6 million.

Fair values for interest rate swap agreements and interest rate lock commitments are based upon the amounts that would be required to settle the contracts.

Fair values for risk participations, forward mortgage backed security purchases or loan sale commitments and future contracts to purchase United States treasury notes are based on the fair values of the underlying mortgage loans or securities and the probability of such commitments being exercised.

Significant management judgment and estimation is required in determining these fair value measurements.

3 unchanged sentences

For assets for which the fair value has been elected, the earned current contractual interest payment is recognized in interest income, loan origination costs and fees on fair value option loans are recognized in earnings as incurred and not deferred.

At December 31, 2021, and December 31, 2020, there were no gains or losses recorded attributable to changes in instrument-specific credit risk.

At December 31, 2022 and 2021, 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:

December 31, 2022

(Dollars in thousands) Aggregate Fair Value Aggregate Unpaid Principal Balance Difference

(Dollars in thousands) Aggregate Fair Value Principal Balance/Amortized Cost Difference

Loans held for sale (1)

7 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

December 31, 2021

(Dollars in thousands) Aggregate Fair Value Aggregate Unpaid Principal Balance Difference

(Dollars in thousands) Aggregate Fair Value Principal Balance/Amortized Cost Difference

Loans held for sale (1)

$ 37,032 $ 36,072 $ 960

Commercial real estate LHFI (2)

17,011 16,760 251

Securities carried at fair value through income 7,497 7,375 122

1 unchanged sentence

____________________________

(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.

(1) $ 1.8 million of loans held for sale were designated as nonaccrual or 90 days or more past due at December 31, 2021.

Of this balance, $ 1.2 million was guaranteed by U.S.

Government agencies.

(2) There were no commercial real estate loans for which the fair value had been elected that were designated as nonaccrual or 90 days or more past due at December 31, 2020.

Changes in the fair value of assets for which the Company elected the fair value option are classified in the consolidated statement of income line items reflected in the following table:

Changes in the fair value of assets for which the Company elected the fair value option are classified in the consolidated statements of income line items reflected in the following table:

(Dollars in thousands) Years Ended December 31,

19 unchanged sentences

The Company believes the fair value approximates an exit price.

There are no LHFI for which the fair value option had been elected at December 31, 2021.

For LHFI for which the fair value option has been elected at December 31, 2020, fair values are calculated using a discounted cash flow model with inputs including observable interest rate curves and unobservable credit adjustment spreads based on credit risk inherent in the loan.

Credit spreads ranged from 290 to 413 basis points at December 31, 2020.

The Company believes the fair value approximates an exit price.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Fair Value of Assets Recorded on a Nonrecurring Basis

Equity Securities without Readily Determinable Fair Values

Equity securities without readily determinable fair values totaled $ 45.2 million and $ 62.6 million, at December 31, 2021, and December 31, 2020, respectively, and are shown on the face of the consolidated balance sheets.

Equity securities without readily determinable fair values totaled $ 67.4 million and $ 45.2 million at December 31, 2022 and 2021, 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.

1 unchanged sentence

Government National Mortgage Association Repurchase Asset

The Company recorded $ 43.4 million and $ 55.5 million, respectively, at December 31, 2021, and December 31, 2020, for Government National Mortgage Association ("GNMA") repurchase assets included in loans held for sale on the consolidated balance sheets.

The Company recorded $ 24.6 million and $ 43.4 million, respectively, at December 31, 2022 and 2021, for Government National Mortgage Association ("GNMA") repurchase assets included in loans held for sale on the consolidated balance sheets.

The assets are valued at the lower of cost or market and, where market is lower than cost, valued using anticipated sale prices for loans allocated to a sale commitment, and those unallocated to a commitment are valued based on the interest rate and term for similar loans allocated.

The Company believes the fair value approximates an exit price.

Please see Note 9 - Mortgage Banking for more information on the GNMA repurchase asset.

Collateral Dependent Loans with Credit Losses

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

During the second half of 2022, the Company recognized an impairment of $ 2.0 million and entered into an agreement to sell its GNMA MSR portfolio, which met all final sale conditions in early 2023.

Individually Evaluated 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.

Allowable methods for determining the amount of credit loss include estimating the fair value using the fair value of the collateral for collateral-dependent loans and a discounted cash flow methodology for other evaluated loans that are not collateral dependent.

If the loan is identified as collateral-dependent, the fair value method of measuring the amount of credit loss is utilized.

This method requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

Loans that have experienced a credit loss that are collateral-dependent are classified within Level 3 of the fair value hierarchy when the credit loss is determined using the fair value method.

The fair value of loans that have experienced a credit loss with specific allocated losses was approximately $ 4.8 million and $ 12.3 million at December 31, 2021, and December 31, 2020, respectively.

Evaluating the fair value of the collateral for collateral-dependent loans requires obtaining a current independent appraisal of the collateral and applying a discount factor to the value.

If the loan is not collateral-dependent, the discounted cash flow method is utilized, which involves assumptions and judgments as to credit risk, prepayment risk, liquidity risk, default rates, loss severity, payment speeds, collateral values and discount rate.

Loans that have experienced a credit loss with specific allocated losses are 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 $ 20.7 million and $ 4.8 million at December 31, 2022 and 2021, respectively.

Non-Financial Assets

2 unchanged sentences

Additionally, valuations are periodically performed by management, and any subsequent reduction in value is recognized by a charge to income.

The carrying value and fair value of foreclosed assets held for sale is estimated using Level 3 inputs based on observable market data and was $ 1.5 million and $ 1.6 million at December 31, 2021 and 2020, respectively.

At December 31, 2021, the Company had $ 5.9 million in principal amount of residential mortgage loans in the process of foreclosure.

The carrying value and fair value of foreclosed assets held for sale was estimated using Level 3 inputs based on observable market data and was $ 806,000 and $ 1.5 million at December 31, 2022 and 2021, respectively.

At December 31, 2022 and 2021, the Company had $ 10,000 and $ 5.9 million, respectively, in principal amount of residential mortgage loans in the process of foreclosure.

Fair Values of Financial Instruments Not Recorded at Fair Value

2 unchanged sentences

An overall valuation adjustment is made for specific credit risks as well as general portfolio credit risk.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The estimated fair value approximates carrying value for demand deposits.

6 unchanged sentences

The estimated fair value approximates carrying value for variable-rate junior subordinated debentures that reprice quarterly.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The carrying value and estimated fair values of financial instruments not recorded at fair value are as follows:

9 unchanged sentences

67,378 67,378 45,192 45,192

GNMA repurchase asset 24,569 24,569 43,355 43,355

Accrued interest and loan fees receivable 38,136 38,136 23,402 23,402

2 unchanged sentences

LHFI, net 7,002,861 6,835,770 5,166,745 5,133,257

5,166,745 5,133,257 5,621,092 5,802,744

Financial liabilities:

4 unchanged sentences

Accrued interest payable 3,917 3,917 2,696 2,696

____________________________

(1) Does not include loans for which the fair value option had been elected at December 31, 2020, as these loans are carried at fair value on a recurring basis.

There are no loans for which the fair value option had been elected at December 31, 2021.

Note 7 - Premises and Equipment

9 unchanged sentences

Depreciation expense for premises and equipment totaled $ 6.8 million, $ 6.0 million and $ 5.8 million for the years ended December 31, 2022, 2021 and 2020, respectively.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Note 8 - Leases

The Company leases certain real estate, as well as certain equipment, under non-cancelable operating leases that expire at various dates through 2052.

The balance sheet details and components of the Company's lease expense were as follows:

The consolidated balance sheets detail and components of the Company's lease expense were as follows:

(Dollars in thousands) December 31, 2022 December 31, 2021

4 unchanged sentences

Weighted average discount rate - operating leases 3.71 % 2.89 %

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

(Dollars in thousands) December 31, 2022 December 31, 2021 December 31, 2020

5 unchanged sentences

Maturities of operating lease liabilities at December 31, 2022, were as follows:

December 31, 2021

Year 1 $ 5,035

Year 6 and thereafter 11,820

(Dollars in thousands) December 31, 2022

Thereafter 19,317

Total lease payments 42,092

5 unchanged sentences

Note 9 - Goodwill and Other Intangible Assets

During 2022, the Company recorded goodwill totaling $ 94.5 million and other intangible assets totaling $ 38.4 million in connection with the merger with BTH.

During 2021, the Company recorded goodwill totaling $ 7.4 million and other intangible assets totaling $ 14.1 million in connection with the acquisitions of the Lincoln Agency and Pulley-White.

There were no changes to the carrying amount of the Company's goodwill during the year ended December 31, 2020.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

The components of the Company's goodwill and other intangible assets are as follows:

1 unchanged sentence

December 31, 2022

Gross Accumulated Amortization Net

Goodwill $ 34,368 $ — $ 34,368

Gross Carrying Amount at Period End Beginning Balance Mergers/Acquisitions Accumulated Amortization Net Carrying Amount at Period End

Goodwill $ 34,153 $ 94,526 N/A $ 128,679

Other intangible assets:

5 unchanged sentences

December 31, 2021

Goodwill $ 26,741 $ — $ 26,741

$ 26,741 $ 7,412 N/A $ 34,153

Other intangible assets:

4 unchanged sentences

Total $ 8,750 $ 14,067 $ ( 5,855 ) $ 16,962

___________________________

(1) A downward adjustment of $ 215,000 to the preliminary goodwill estimate was recorded in conjunction with the accounting of the acquisitions of the Lincoln Agency and Pulley-White subsequent to December 31, 2021, and is reflected in the goodwill amount in the above schedule.

Core deposit intangibles acquired during the year ended December 31, 2022, represent the value of the relationships that BTH had with their deposit customers and are amortized over 10 years using an accelerated amortization methodology.

Amortization expense on other intangible assets totaled $ 5.5 million, $ 844,000 and $ 1.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, and was included as a component of other noninterest expense in the consolidated statements of income.

5 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 10 - Mortgage Banking

The following table presents the Company's revenue from mortgage banking operations:

(Dollars in thousands) Years Ended December 31,

(Dollars in thousands) Year Ended December 31,

Mortgage banking revenue

1 unchanged sentence

Origination $ 774 $ 1,379 $ 1,880

Gain on sale of loans held for sale 11,862 13,481 4,348

Gain (loss) on sale of loans held for sale 4,889 11,862 13,481

Originations of MSRs 2,286 5,153 5,709

4 unchanged sentences

MSR hedge impact ( 6,737 ) ( 1,967 ) 7,812

Mortgage banking revenue $ 12,927 $ 29,603 $ 12,309

Management uses mortgage-backed securities to mitigate the impact of changes in fair value of MSRs.

Mortgage banking revenue (loss) $ 6,722 $ 12,927 $ 29,603

Management uses TBA mortgage-backed securities and U.S.

Treasury futures to mitigate the impact of changes in fair value of MSRs.

See Note 13 - Derivative Financial Instruments for further information.

1 unchanged sentence

Activity in MSRs was as follows:

Years Ended December 31,

Year Ended December 31,

(Dollars in thousands) 2022 2021 2020

Fair Value at Beginning of Period $ 13,660 $ 20,697 $ 25,114

Originations of MSRs 5,153 5,709 2,595

MSR valuation adjustments, net ( 2,593 ) ( 12,746 ) ( 7,012 )

Fair Value at End of Period $ 16,220 $ 13,660 $ 20,697

Balance at beginning of period $ 16,220 $ 13,660 $ 20,697

Servicing acquired in BTH merger 1,099 — —

Addition of servicing rights 2,286 5,153 5,709

Valuation adjustment, net of amortization 1,219 ( 2,593 ) ( 12,746 )

Balance at end of period $ 20,824 $ 16,220 $ 13,660

During the second half of 2022, the Company recognized an impairment of $ 2.0 million and entered into an agreement to sell its GNMA MSR portfolio, which met all final sale conditions in early 2023.

The Company receives annual servicing fee income approximating 0.28 % of the outstanding balance of the underlying loans.

1 unchanged sentence

The Company is potentially subject to losses in its loan servicing portfolio due to loan foreclosures.

The Company has obligations to either repurchase the outstanding principal balance of a loan or make the purchaser whole for the economic benefits of a loan if it is determined that the loan sold violated representations or warranties made by the Company and/or the borrower at the time of the sale, which the Company refers to as mortgage loan servicing put back expenses.

Such representations and warranties typically include those made regarding loans that had missing or insufficient file documentation and/or loans obtained through fraud by borrowers or other third parties.

Put back claims may be made until the loan is paid in full.

When a put back claim is received, the Company evaluates the claim and takes appropriate actions based on the nature of the claim.

The Company is required by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to provide a response to put back claims within 60 days of the date of receipt.

At December 31, 2021 and 2020, the reserve for mortgage loan servicing put back expenses totaled $ 379,000 and $ 311,000 , respectively.

There is inherent uncertainty in reasonably estimating the requirement for reserves against future mortgage loan servicing put back expenses.

Future put back expenses depend on many subjective factors, including the review procedures of the purchasers and the potential refinance activity on loans sold with servicing released and the subsequent consequences under the representations and warranties.

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 of the date of receipt.

At December 31, 2022 and 2021, the reserve for mortgage loan servicing putback expenses totaled $ 217,000 and $ 379,000 , 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.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

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.

1 unchanged sentence

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 consolidated balance sheets as mortgage loans held for sale, regardless of whether the institution intends to exercise the buy-back option.

These loans totaled $ 24.6 million and $ 43.4 million at December 31, 2022 and 2021, 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.

As mentioned above, the Company sold approximately $ 1.8 million in GNMA MSR and derecognized the related GNMA repurchase asset and offsetting liability of $ 24.6 million during the first quarter of 2023.

Note 11 - Deposits

2 unchanged sentences

Noninterest-bearing demand $ 2,482,475 $ 2,163,507

Interest bearing demand 1,412,089 1,478,818

Money market 2,442,559 2,204,109

Interest bearing demand 1,737,158 1,412,089

Time deposits 787,287 543,128

8 unchanged sentences

Total $ 787,287

At December 31, 2021 and 2020, overdrawn deposits of $ 1.9 million and $ 462,000 , respectively, were reclassified as unsecured loans.

At December 31, 2022 and 2021, overdrawn deposits of $ 1.3 million and $ 1.9 million, respectively, were reclassified as unsecured loans.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 12 - Borrowings

1 unchanged sentence

(Dollars in thousands) 2022 2021

Overnight repurchase agreements with depositors $ 9,447 $ 8,408

Short-term FHLB advances $ 550,000 $ —

Long-term FHLB advances 6,740 256,999

GNMA repurchase liability

24,569 43,355

Long-term FHLB advances 256,999 270,715

Overnight repurchase agreements with depositors 27,921 9,447

Correspondent short-term borrowings 30,000 —

Total FHLB advances and other borrowings $ 639,230 $ 309,801

3 unchanged sentences

At December 31, 2022:

Long-term FHLB advance, callable quarterly, fixed rate $ 250,000 1.65 % 8/23/2033

At December 31, 2020:

Short-term FHLB advance, fixed rate $ 450,000 4.55 % 1/3/2023

650,000 0.10 1/4/2021

Short-term FHLB advance, fixed rate 100,000 4.62 1/13/2023

At December 31, 2021:

Long-term FHLB advance, callable quarterly, fixed rate 250,000 1.65 8/23/2033

Short-Term Borrowings

The Company had unsecured lines of credit for the purchase of federal funds in the amount of $ 140.0 million and $ 190.0 million at December 31, 2021 and 2020, respectively.

The Company also had a $ 75.0 million secured repurchase line of credit at December 31, 2021 and 2020.

There were no amounts outstanding on these lines at either date.

It is customary for the financial institutions granting the unsecured lines of credit to require a minimum amount of cash be held on deposit at that institution.

Amounts required to be held on deposit are typically $ 250,000 or less, and the Company has complied with all compensating balance requirements to allow utilization of these lines of credit.

Securities sold under agreements to repurchase consist of the Company's obligations to other parties and mature on a daily basis.

These obligations to other parties carried a daily average interest rate of 0.08 % and 0.22 % for the years ended December 31, 2021 and 2020, respectively.

Security for all indebtedness and outstanding commitments to the FHLB consists of a blanket floating lien on all of the Company's first mortgage loans, commercial real estate and other real estate loans, as well as the Company's investment in capital stock of the FHLB and deposit accounts at the FHLB.

The net amounts available under the blanket floating lien at December 31, 2022 and 2021, were $ 1.29 billion and $ 982.2 million, respectively.

Long-Term Borrowings

7 unchanged sentences

Total $ 6,740

__________________________

(1) Includes a FHLB advances totaling $ 250.0 million callable quarterly with a final maturity in 2033, carrying a rate of 1.65 %.

Short-Term Borrowings

In conjunction with the BTH merger, the Company assumed certain repurchase agreements with former BTH depositors that included the sale and repurchase of BTH investment securities of at least equal to the daily balance of the BTH depositor's account, subject to maximum limitations, with various maturity dates.

These BTH repurchase agreements were restructured and integrated into the Company's repurchase agreements which include the sale and repurchase of investment securities and mature on a daily basis.

The total overnight repurchase agreements with depositors carried a daily average interest rate of 0.24 % for the year ended December 31, 2022, and 0.08 % for the year ended December 31, 2021, rated into the Company's repurchase agreements which include the sale and repurchase of investment securities and mature on a daily basis.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The net amounts available under the blanket floating lien at December 31, 2021 and 2020, were $ 982.2 million and $ 456.9 million, respectively.

Additionally, at December 31, 2021 and December 31, 2020, the Company had the availability to borrow $ 856.8 million and $ 793.2 million, respectively, from the discount window at the Federal Reserve Bank of Dallas, with $ 1.09 billion and $ 999.7 million in commercial and industrial loans pledged as collateral, respectively.

Notes to Consolidated Financial Statements

The Company had unsecured lines of credit for the purchase of federal funds in the amount of $ 140.0 million at both December 31, 2022 and 2021.

The Company also had a $ 75.0 million secured repurchase line of credit at December 31, 2022 and 2021.

There were no amounts outstanding on these lines at either date.

It is customary for the financial institutions granting the unsecured lines of credit to require a minimum amount of cash be held on deposit at that institution.

Amounts required to be held on deposit are typically $ 250,000 or less, and the Company has complied with all compensating balance requirements to allow utilization of these lines of credit.

Additionally, at December 31, 2022 and 2021, the Company had the availability to borrow $ 1.23 billion and $ 856.8 million, respectively, from the discount window at the Federal Reserve Bank of Dallas, with $ 1.76 billion and $ 1.09 billion in commercial and industrial loans pledged as collateral, respectively.

There were no borrowings against this line at December 31, 2022 or 2021.

5 unchanged sentences

The Lender has no obligation to agree to extend any incremental revolving loan or to increase the loan amount.

The principal amounts borrowed under the Loan Agreement bears interest at a variable rate equal to the applicable Term SOFR for the then-current SOFR Interest Period plus 3.35 % (as such terms are defined in the Loan Agreement).

Pursuant to the Amendment, the line of credit available to the Company expires on October 28, 2022, or such date of the acceleration of the obligation pursuant to the Loan Agreement, as amended, at which time all amounts borrowed, together with applicable interest, fees and other amounts owed by the Company shall be due and payable.

The principal amounts borrowed under the Loan Agreement bear interest at a variable rate equal to the applicable Term SOFR for the then-current SOFR Interest Period plus 3.35 % (as such terms are defined in the Loan Agreement).

Pursuant to the Amendment, the line of credit available to the Company expired on October 28, 2022, or such date of the acceleration of the obligation pursuant to the Loan Agreement, as amended, at which time all amounts borrowed, together with applicable interest, fees and other amounts owed by the Company shall be due and payable.

The Company may extend the maturity date to a date that is three hundred and sixty-four ( 364 ) days after the then-effective maturity date, no more than two times upon (i) delivery of a written request therefor to Lender at least thirty (30) days, but no more than (60) days, prior to the maturity date then in effect;

and (ii) receipt by the Lender of a certificate of the Company dated the date of such request.

There were no outstanding revolving credit loans under the Loan Agreement at December 31, 2021 or 2020.

The Company exercised the request for extension and the maturity date was extended to October 27, 2023.

The Company had $ 30.0 million and zero outstanding on this revolving credit loan under the Loan Agreement at December 31, 2022 and 2021, respectively.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Subordinated Indebtedness

As detailed in the table below and included in subordinated indebtedness, net in the table above, on August 1, 2022, the Company assumed $ 37.6 million of subordinated promissory notes ("BTH Notes") from BTH.

Debt Security Issue Year Interest Rate Outstanding Amount

(Dollars in thousands)

Floating rate subordinated promissory notes due June 2025 2015 Prime + 175 bps

Floating rate subordinated promissory notes due December 2023 2016 Prime + 125 bps

Floating rate subordinated promissory notes due December 2026 2016 Prime + 175 bps

Floating rate subordinated promissory notes due December 2024 2017 Prime + 125 bps

Floating rate subordinated promissory notes due December 2027 2017 Prime + 175 bps

Floating rate subordinated promissory notes due December 2025 2018 Prime + 50 bps

Floating rate subordinated promissory notes due December 2028 2018 Prime + 75 bps

Fixed to floating rate subordinated promissory notes due June 2031 2021 Through 6/30/26:

After 6/30/26:

Prime + 75 bps

Fair value adjustment at December 31, 2022

Total assumed subordinated notes at December 31, 2022

Legacy subordinated indebtedness described below 147,894

Total subordinated indebtedness, excluding junior subordinated debt $ 185,497

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The BTH Notes are intended to qualify for Tier 2 capital treatment and are substantively identical in terms and conditions, including priority, except for the maturity dates and interest rates payable on the notes.

Interest is payable on the BTH Notes quarterly, and the principal amount of each BTH Note is payable at maturity.

After the five-year anniversary of issuance, the Company can redeem the BTH Notes in part or in full at the Company’s discretion and, if applicable, subject to receipt of any required regulatory approvals.

In addition, the BTH Notes can be redeemed at any time without penalty, upon not less than ten days ’ notice, in the event that (i) the BTH Notes no longer qualify as Tier 2 capital as a result of any amendment or change in interpretation or application of laws or regulation that becomes effective after the date of issuance of the BTH Notes, or (ii) a tax event, or (iii) investment company act event, as defined in the BTH Notes.

The BTH Notes are unsecured and rank senior to the Company’s common stock, any preferred stock that may be issued, and the BTH TruPS (defined below).

In February 2020, Origin Bank completed an offering of $ 70.0 million in aggregate principal amount of 4.25 % fixed-to-floating rate subordinated notes due 2030 (the “ 4.25 % Notes”) to certain investors in a transaction exempt from registration under Section 3(a)(2) of the Securities Act of 1933, as amended.

7 unchanged sentences

The Company may redeem the 4.50 % Notes at any time upon certain specified events or in whole or in part on or after November 1, 2025.

The 4.50 % Notes qualify as Tier 2 capital for regulatory capital purposes for the Company and $ 51.0 million was transferred to Origin Bank during the fourth quarter of 2020, which qualifies as Tier 1 capital for regulatory capital purposes for the Bank.

The 4.50 % Notes provided net proceeds to the Company of approximately $ 78.6 million.

The Company has two wholly-owned, unconsolidated subsidiary grantor trusts that were established for the purpose of issuing trust preferred securities.

The 4.50 % Notes qualify as Tier 2 capital for regulatory capital purposes for the Company and a portion was transferred to Origin Bank, which qualifies as Tier 1 capital for regulatory capital purposes for the Bank.

The balance of the subordinated indebtedness varies from the amounts carried on the consolidated balance sheets due to the remaining purchase discount of $ 3.2 million and $ 3.4 million, at December 31, 2022 and 2021, respectively, which was established at the time of issuance and is being amortized over the remaining life of the securities using the interest method.

On August 1, 2022, the Company assumed BTH's obligations with respect to $ 7.2 million in aggregate principal amount of junior subordinated debentures issued to a statutory trust of BTH ("BTH TruPS").

The BTH TruPS and the Company's two other wholly-owned, unconsolidated subsidiary grantor trusts were established for the purpose of issuing trust preferred securities.

The trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in each trust agreement.

2 unchanged sentences

The Company's obligations under the debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the trusts.

The trust preferred securities are mandatorily redeemable upon maturity of the debentures and can be currently redeemed by the Company in whole or in part, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.

Due to the extended maturity date of the trust preferred securities, they are included in Tier 1 capital for regulatory purposes, subject to certain limitations.

The trust preferred securities are mandatorily redeemable upon maturity of the debentures and can be currently redeemed by the Company in whole or in part at a redemption price equal to 100 % of the outstanding principal amount of the debentures, plus any accrued but unpaid interest to the redemption date.

The trust preferred securities qualify as Tier 1 capital of the Company for regulatory purposes, subject to certain limitations.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The following table is a summary of the terms of the current junior subordinated debentures at December 31, 2022:

6 unchanged sentences

09/2006 12/2036 4,124 Variable (2)

BT Holdings Trust I 05/2007 09/2037 7,217 Variable (3)

Par amount $ 18,043

Unamortized original issue discount ( 1,055 )

Unamortized purchase accounting discount ( 720 )

Total junior subordinated debt at December 31, 2022 $ 16,268

____________________________

1 unchanged sentence

(2) The trust preferred securities reprice quarterly based on the three-month LIBOR plus 1.80 %, with the last reprice date on December 13, 2022.

The balance of the subordinated indebtedness varies from the amounts carried on the consolidated balance sheets due to the remaining purchase discount of $ 3.4 million and $ 3.6 million, at December 31, 2021, and December 31, 2020, respectively, which was established at the time of issuance and is being amortized over the remaining life of the securities using the interest method.

(3) The trust preferred securities reprice quarterly based on the three-month LIBOR plus 1.64 % with the last reprice date on December 2, 2022.

Note 13 - Derivative Financial Instruments

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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.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Cash Flow Hedges of Interest Rate Risk

The Company is a party to an interest rate swap agreement under which the Company receives interest at a variable rate and pays at a fixed rate.

The derivative instrument represented by this swap agreement is designated as a cash flow hedge of the Company's forecasted variable cash flows under a variable-rate term borrowing agreement.

During the term of the swap agreement, the effective portion of changes in the fair value of the derivative instrument are recorded in accumulated other comprehensive income and subsequently reclassified into earnings in the periods that the hedged forecasted variable-rate interest payments affected earnings.

There was no ineffective portion of the change in fair value of the derivative recognized directly in earnings.

The entire swap fair value will be reclassified into earnings before the expiration date of the swap agreement.

The Company is a party to interest rate swap agreements under which the Company receives interest at a variable rate and pays at a fixed rate.

The derivative instruments represented by these swap agreements are designated as cash flow hedges of the Company's forecasted variable cash flows under a variable-rate term borrowing agreements.

During the terms of the swap agreements, the effective portion of changes in the fair value of the derivative instruments are recorded in accumulated other comprehensive (loss) 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 derivatives recognized directly in earnings.

The entire swap fair value will be reclassified into earnings before the expiration dates of the swap agreements.

Derivatives Not Designated as Hedges

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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.

In most 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.

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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.

The Company also economically hedges the value of MSRs by entering into a series of commitments to purchase mortgage-backed securities in the future and U.S.

Treasury future contracts.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Fair Values of Derivative Instruments on the Balance Sheet

The following tables disclose the fair value of derivative instruments in the Company's balance sheets at December 31, 2021, and December 31, 2020:

Notes to Consolidated Financial Statements

Fair Values of Derivative Instruments on the Consolidated Balance Sheets

The following tables disclose the fair value of derivative instruments in the Company's consolidated balance sheets at December 31, 2022 and 2021, as well as the effect of these derivative instruments on the Company's consolidated statements of income for the year ended December 31, 2022 and 2021.

Derivative instruments and their related gains and losses are reported in other operating activities, net in the statements of cash flows.

Notional Amounts (1)

2 unchanged sentences

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Interest rate swaps included in other liabilities $ 21,000 $ 21,000 $ ( 103 ) $ ( 706 )

Interest rate swaps included in other assets $ 10,500 $ 21,000 $ 1,043 $ ( 103 )

Derivatives not designated as hedging instruments:

2 unchanged sentences

345,742 327,510 ( 25,175 ) ( 10,762 )

Risk participation derivatives included in accrued expenses and other liabilities on the consolidated balance sheets 63,374 63,374 ( 2 ) ( 18 )

Forward commitments to purchase mortgage-backed securities included in other liabilities 80,000 107,000 ( 627 ) ( 317 )

Forward commitments to sell residential mortgage loans included in other assets (liabilities) 52,000 107,200 1 ( 658 )

Risk participation agreements included in accrued expenses and other liabilities on the consolidated balance sheets 59,738 63,374 — ( 2 )

Forward commitments to purchase TBA mortgage-backed securities included in other liabilities 7,000 80,000 ( 100 ) ( 627 )

Forward commitments to purchase treasury notes in other assets 31,500 — — —

Forward commitments to sell residential mortgage loans included in other assets 8,500 52,000 7 1

Interest rate-lock commitments on residential mortgage loans included in other assets

4 unchanged sentences

These amounts are typically not exchanged, significantly exceed amounts subject to credit or market risk and are not reflected in the consolidated balance sheets.

The weighted-average rates paid and received for interest rate swaps at the dates indicated were as follows:

The weighted-average rates paid and received for interest rate swaps at December 31, 2022, were as follows:

Weighted-Average Interest Rate

15 unchanged sentences

See Note 10 - 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.

Some interest rate swaps included in other assets were subject to a master netting arrangement with the counterparty in all periods 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.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

At December 31, 2022 and 2021, the Company had cash collateral on deposit with swap counterparties totaling $ 7.6 million and $ 16.5 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.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Note 14 - Stock and Incentive Compensation Plans

On April 28, 2021, an employee stock purchase plan ("ESPP") was approved by the Company's stockholders and qualified as an ESPP under IRS guidelines.

The ESPP provides for the purchase of up to an aggregate one million shares of the Company's common stock by employees pursuant to the terms of the ESPP.

Under the ESPP, employees of the Company who elect to participate have the right to purchase a limited number of shares of the Company's common stock at a 15 % discount from the lower of the market value of the common stock at the beginning or the end of each one year offering period, beginning on June 1st.

The ESPP benefit is treated as compensation to the employee and the compensation expense will be recognized over the service period based on the fair value of the rights on the grant date, adjusted for forfeitures and certain modifications.

There were no shares of common stock issued pursuant to the ESPP during the year ended December 31, 2021.

The Company has granted, and currently has outstanding, stock and incentive compensation awards subject to the provisions of the Company's 2012 Stock Incentive Plan (the "2012 Plan").

Additionally, awards have been issued prior to the establishment of the 2012 Plan, some of which were still outstanding at December 31, 2021.

The 2012 Plan is designed to provide flexibility to the Company regarding its ability to motivate, attract and retain the services of key officers, employees and directors.

The 2012 Plan allows the Company to make grants of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards ("RSA"), restricted stock units ("RSU"), dividend equivalent rights, performance unit awards or any combination thereof.

At December 31, 2022, the maximum number of shares of the Company's common stock available for issuance under the 2012 Plan was 194,020 shares.

Additionally, in April 2021, an employee stock purchase plan ("ESPP") was approved by the Company's stockholders and qualified as an ESPP under IRS guidelines.

The ESPP provides for the purchase of up to an aggregate one million shares of the Company's common stock by employees, and the total number of shares available for issuance at December 31, 2022, was 973,911 .

Under the ESPP, employees of the Company, who elect to participate, have the right to purchase a limited number of shares of the Company's common stock at a 15 % discount from the lower of the market value of the common stock at the beginning or the end of each one year offering period, beginning on June 1st.

The ESPP benefit is treated as compensation to the employee, and the compensation expense will be recognized over the service period based on the fair value of the rights on the grant date, adjusted for forfeitures and certain modifications.

Under the ESPP, employees purchased 26,089 shares during the year ended December 31, 2022, and no shares of common stock were issued pursuant to the ESPP during the year ended December 31, 2021.

In February 2022, the Compensation Committee ("Committee") approved and the Company granted PSUs to select officers and employees under the 2012 Plan.

Each PSU represents a right for the participant to receive shares of Company common stock or cash equal to the fair market value of such stock, as determined by the Committee.

The number of PSUs to which the participant may be entitled will vary from 0 % to 150 % of the target number of PSUs, based on the Company’s achievement of specified performance criteria during the performance period compared to performance benchmarks adopted by the Committee and, further, the participant's continuous service with the Company through the third anniversary of the date of the grant.

The performance period is the three-year period commencing on January 1, 2022, and ending on December 31, 2024 ("Performance Period").

On December 7, 2022, the Committee and the independent members of the Board also approved a special, one-time stock award to Drake Mills, the Company’s President and Chief Executive Officer (the “One-Time Award”), having an approximate value of $ 10,000,000 , was comprised of 129,736 restricted stock units (“CEO RSUs”) and 129,735 market-based performance stock units (“CEO PSUs”), and was effective as of December 13, 2022, (the “Grant Date”).

In exchange for the One-Time Award, Mr.

Mills agreed to a 2-year non-competition covenant, in addition to the standard non-solicitation of customers and employees covenant included in the Company’s form of award agreement.

Pursuant to the One-Time Award, the CEO RSUs shall vest in five approximately equal installments on each of the third, fourth, fifth, sixth and seventh anniversaries of the Grant Date, subject to Mr.

Mills’ continued employment with the Company on each respective vesting date, or upon the earlier occurrence of Mr.

Mills’ death, disability, termination of employment without cause or resignation for good reason.

The CEO PSUs shall be eligible to vest based on achievement of five pre-established stock price hurdles (each, a “Stock Price Hurdle”) during a seven-year performance period (the “CEO Performance Period”).

Achievement of each Stock Price Hurdle requires substantial and sustained growth in the Company’s stock price, with each Stock Price Hurdle representing a twenty percent ( 20 %) price appreciation over the 20-day average closing price of the Company’s common stock as of the Grant Date (such that 100 % appreciation is required for 100 % of the CEO PSUs to vest).

Each Stock Price Hurdle must be maintained for twenty consecutive days during the CEO Performance Period.

Each of the five tranches of CEO PSUs will vest on the later of the date that the applicable Stock Price Hurdle is achieved (“Achieved PSUs”) or the third, fourth, fifth, sixth and seventh anniversaries of the Grant Date, respectively, subject to Mr.

Mills’ continued employment with the Company on each respective vesting date, or upon the earlier occurrence of Mr.

Mills’ death or disability.

Mills’ employment is terminated without cause or he resigns for good reason, then any Achieved PSUs will become fully vested and unearned CEO PSUs will remain outstanding and eligible to vest based on achievement of the Stock Price Hurdle during the CEO Performance Period.

The One-Time Award was granted pursuant to, and subject to the terms and conditions of, the Origin Bancorp, Inc.

2012 Stock Incentive Plan and the Company’s form of RSU agreement and PSU agreement, respectively.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Compensation expense for the CEO PSUs will be recognized over the vesting period of the awards based on the fair value of the award at the grant date determined by using a Monte Carlo simulation model with the following inputs:

Simulation Inputs Year Ended December 31, 2022

Grant date December 13, 2022

Performance period seven years

Stock price $ 36.87

Expected volatility (1)

Risk-free rate (2)

____________________________

(1) The expected volatility was determined based on the historical volatilities of the Company and the specified peer group.

(2) The risk-free interest rate for the performance period was derived from the seven-year continuous U.S.

Treasury Yield constant maturity curve on the valuation date.

Share-based compensation cost charged to income for the years ended December 31, 2022, 2021, and 2020 is presented below.

There was no stock option expense for any of the periods shown.

Years Ended December 31,

Year Ended December 31,

(Dollars in thousands) 2022 2021 2020

RSA & RSU $ 2,845 $ 2,100 $ 2,320

ESPP 316 195 —

Total stock compensation expense $ 3,449 $ 2,295 $ 2,320

Related tax benefits recognized in net income $ 724 $ 482 $ 487

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 .

Restricted Stock and Performance Stock Grants

The Company's RSAs and RSUs 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 seven years .

Time-vested awards are valued utilizing the fair value of the Company's stock at the grant date.

These awards are recognized on the straight-line method over the requisite service period, with forfeitures recognized as they occur.

The following table summarizes the Company's time-vested award activity:

The Company's PSU awards, excluding the CEO PSUs, are three-year cliff-vested awards, with each unit divided into two categories ("ROAA Unit Group" and "ROAE Unit Group"), composed of an equivalent number of initial PSUs granted.

The PSUs do not reflect potential increases or decreases resulting from the interim performance results until the final performance results are determined at the end of the three-year period.

The ROAA Unit Group is based upon the Company's Performance Period Return on Average Assets performance, and the ROAE Unit Group is based upon the Company's Performance Period Return on Average Equity performance.

The PSUs are initially valued utilizing the fair value of the Company's stock at the grant date, assuming 100 % of the target number of units are achieved.

Subsequent valuation of the PSUs is determined using the ratio of the actual Company's Performance Period ROAA or ROAE to the Company's targeted Performance Period ROAA or ROAE, applied to the PSUs awarded times the Company's period end stock price.

Forfeitures are recognized as they occur.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The following table summarizes the Company's award activity:

Year Ended December 31,

6 unchanged sentences

Nonvested RSA shares, December 31,

27,391 35.37 48,048 35.27 103,359 31.51

Nonvested RSU, January 1, 73,977 $ 40.64 — $ — — $ —

Granted RSU 222,282 39.43 73,977 40.64 — —

Vested RSU ( 24,028 ) 40.56 — — — —

Forfeited RSU ( 1,841 ) 43.48 — — — —

Nonvested RSU, December 31,

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

At December 31, 2021, there was $ 1.1 million and $ 2.7 million of total unrecognized compensation cost related to nonvested RSA shares and RSU shares under the 2012 Plan, respectively.

Those costs are expected to be recognized over a weighted-average period of 1.2 years and 2.7 years for RSA shares and RSU shares, respectively.

270,390 39.63 73,977 40.64 — —

Nonvested PSU, January 1, — $ — — $ — — $ —

Granted PSU 157,367 29.06 — — — —

Adjustment due to performance — — — — — —

Nonvested PSU, December 31,

157,367 29.06 — — — —

At December 31, 2022, there was $ 518,000 , $ 9.6 million and $ 4.0 million of total unrecognized compensation cost related to nonvested RSA shares, RSU shares and PSU shares under the 2012 Plan, respectively.

Those costs are expected to be recognized over a weighted-average period of 0.6 , 4.6 and 2.8 years for RSA, RSU and PSU shares, respectively.

Stock Option Grants

The Company issued common stock options to select officers and employees primarily through individual agreements.

As a result, both incentive and nonqualified stock options have been issued and may be issued in the future.

The Company has previously issued common stock options to select officers and employees primarily through individual agreements.

The exercise price of each option varies by agreement and is based on the fair value of the stock at the date of the grant.

No outstanding stock option has a term that exceeds twenty years , and all of the outstanding options are fully vested.

The Company recognizes compensation cost for stock option grants over the required service period based upon the grant date fair value, which is established using a Black-Scholes valuation model.

The Company recognized 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.

In conjunction with the BTH merger, the Company assumed the BTH 2012 Equity Incentive Plan and converted all outstanding options to purchase BTH common stock into options to purchase an aggregate of 611,676 shares of the Company's common stock.

Under the terms of applicable change in control provisions within the BTH 2012 Equity Incentive Plan and BTH Notice Of Stock Option Award, all BTH stock options fully vested immediately prior to the closing of the merger that occurred on August 1, 2022.

BTH converted options have no expiration dates past August 16, 2031, and no further grants will be made under the BTH 2012 Equity Incentive Plan.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The table below summarizes the status of the Company's stock options and changes during the years ended December 31, 2022, 2021, and 2020.

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(in years) Aggregate Intrinsic Value

Year Ended December 31, 2022

Outstanding at January 1, 2022 39,200 $ 10.73 2.28 $ 1,262

BTH options converted to OBNK options 611,676 28.62 — 8,838

Exercised ( 144,785 ) 20.80 — 2,992

Outstanding at December 31, 2019 254,000 10.55 5.81 6,932

Expired ( 1,654 ) 34.44 — —

Outstanding and exercisable at December 31, 2022

504,437 29.46 5.13 3,736

Year Ended December 31, 2021

Outstanding at January 1, 2021 224,000 10.86 4.92 3,789

Exercised ( 184,800 ) 10.88 — 6,447

Outstanding at December 31, 2020 224,000 10.86 4.92 3,789

Outstanding and exercisable at December 31, 2021

39,200 10.73 2.28 1,262

Year Ended December 31, 2020

Outstanding at January 1, 2020 254,000 10.55 5.81 6,932

Exercised ( 30,000 ) 8.25 — 866

Outstanding at December 31, 2021 39,200 10.73 2.28 1,262

Exercisable at December 31, 2021 39,200 10.73 2.28 1,262

Note 14 - Employee Retirement Plan - 401(k)

Outstanding and exercisable at December 31, 2020

224,000 10.86 4.92 3,789

Note 15 - Employee Benefit Plans

Defined Contribution Retirement Plan

12 unchanged sentences

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Other Benefit Plans

The Company has established non-qualified defined benefit plans for some of its key executives for which deferred compensation liabilities are recorded as a component of accrued expenses and other liabilities in the accompanying consolidated balance sheets.

The Company has entered into individual Supplemental Executive Retirement Plans (“SERP”) or Executive Supplemental Income Agreements (“ESIA”) with several of its executive officers.

Eligibility to participate in a SERP or ESIA is limited to senior officers and determined by the Board.

The SERPs and ESIA are unfunded and designed to be a nonqualified deferred compensation retirement plan in compliance with Section 409A of the Internal Revenue Code.

Deferred compensation has been recorded for these plans as a component of accrued expenses and other liabilities in the accompanying consolidated balance sheets.

The deferred compensation liability was $ 10.9 million and $ 10.4 million at December 31, 2022 and 2021, respectively.

Typically, payments to participants reduce the accrual and any actuarial adjustments are netted with the expense.

The expense recorded for the deferred compensation plan totaled $ 1.1 million, $ 1.1 million, and $ 1.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

On December 7, 2022, the Company's Board of Directors approved the Origin Bank Nonqualified Deferred Compensation Plan (the “DCP”), pursuant to which certain employees, including the Company’s named executive officers, may elect to participate.

Pursuant to the DCP, which became effective January 1, 2023, participants may make deferral elections with respect to their base salary, bonus or stock units.

The Company may make discretionary contributions to the DCP, which contributions will be subject to a vesting schedule.

Unless otherwise specified by the Company, such Company contributions will have a 5-year ratable vesting schedule, subject to acceleration of vesting in the case of a change in control or the participant’s death, disability or retirement.

Participants may make individual investment elections that will determine the rate of return on their cash deferral amounts under the DCP.

Cash deferrals are only deemed to be invested in the investment options selected.

The DCP does not provide any above-market returns or preferential earnings to participants, and, with the exception of Company contributions, the deferrals and their earnings are always 100 % vested.

Participants may elect at the time they make their deferral elections to receive in-service and/or separation from service distributions, either as a lump sum payment or in substantially equal annual installments over a period of 5 years or 10 years, respectively.

There was no deferred compensation liability or expense recorded pursuant to the DCP plan during the periods covered by this report.

Note 16 - Income Taxes

The provision for income taxes is as follows:

(Dollars in thousands) Years Ended December 31,

(Dollars in thousands) Year Ended December 31,

Federal income taxes:

6 unchanged sentences

Income tax expense $ 19,727 $ 23,885 $ 7,996

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is below:

Years Ended December 31,

Year Ended December 31,

2022 2021 2020

10 unchanged sentences

Total income tax expense $ 19,727 18.36 % $ 23,885 18.04 % $ 7,996 18.04 %

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Significant components of deferred tax assets and liabilities are as follows:

4 unchanged sentences

Net operating loss carryforwards 27,341 1,170

Other 278 1,064

Credit carryforwards 3,678 —

Investments in limited partnerships 13 —

Other real estate owned 9 —

Lease obligations 36 —

Premium/discount on acquisitions 624 —

Deferred rent obligations 594 —

Gross deferred tax assets 60,519 20,808

8 unchanged sentences

Net deferred tax asset $ 42,430 $ 12,598

At December 31, 2021, the Company has $ 3.4 million in Federal gross net operating loss carryforwards acquired in previous business combinations expiring between 2022 and 2028, and $ 15.0 million in state net operating losses expiring between 2022 and 2041.

At December 31, 2022, the Company had $ 126.5 million of Federal gross net operating net loss carryforwards and $ 22.8 million in gross state net operating losses carryforwards.

Of these net loss carryforwards, $ 3.1 million in Federal gross net operating loss carryforwards acquired in previous business combinations are expiring between 2023 and 2028, and 65.4 % of the $ 22.8 million in state net operating losses can be carried forward indefinitely with the remaining carryforwards expiring between 2028 and 2042.

Due to limitations on the amounts of these losses that can be recognized annually, the Company has determined that it is more likely than not that some of these net operating loss carryforwards will expire unused, and has established a $ 899,000 valuation allowance related to these carryforwards.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

The Company files a consolidated income tax return in the U.S.

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With few exceptions, the Company is no longer subject to income tax examinations by tax authorities in these taxing jurisdictions for the years before 2019.

Note 16 - Accumulated Other Comprehensive Income

Accumulated other comprehensive income ("AOCI") includes the after-tax change in unrealized gains and losses on AFS securities and cash flow hedging activities.

(Dollars in thousands) Unrealized Gain (Loss) on AFS Securities Unrealized (Loss) Gain on Cash Flow Hedges Accumulated Other Comprehensive Income

Note 17 - Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive income (loss) income ("AOCI") includes the after-tax change in unrealized gains and losses on AFS securities and cash flow hedging activities.

(Dollars in thousands) Unrealized (Loss) Gain on AFS Securities Unrealized Gain (Loss) on Cash Flow Hedges Accumulated Other Comprehensive (Loss) Income

Balance at January 1, 2020 $ 6,412 $ ( 79 ) $ 6,333

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Balance at December 31, 2022 $ ( 160,700 ) $ 825 $ ( 159,875 )

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Note 18 - 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.

The Company (on a consolidated basis) and the Bank is 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.

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The capital conservation buffer is designed to absorb losses during periods of economic stress and requires increased capital levels for the purpose of capital distributions and other payments.

Failure to meet the full amount of the buffer will result in restrictions on the Company's ability to make capital distributions, which includes dividend payments, and stock repurchases and to pay discretionary bonuses to executive officers.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, common equity Tier 1 capital, Tier 1 capital, Tier 1 capital, and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average total consolidated assets (as defined).

Management believes, at December 31, 2021 and 2020, that the Company and the Bank met all capital adequacy requirements to which they are subject, including the capital buffer requirement.

At December 31, 2021 and 2020, the Bank's capital ratios exceeded those levels necessary to be categorized as "well capitalized" under the regulatory framework for prompt corrective action.

To be categorized as "well capitalized," the Bank must maintain minimum total risk-based, common equity Tier 1 capital, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.

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 Origin to maintain minimum amounts and ratios (set forth in the table below) of total, common equity Tier 1 capital, Tier 1 capital, Tier 1 capital, and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average total consolidated assets (as defined).

Management believes, at December 31, 2022 and 2021, that the Company and Origin met all capital adequacy requirements to which they are subject, including the capital buffer requirement.

At December 31, 2022 and 2021, Origin'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," Origin must maintain minimum total risk-based, common equity Tier 1 capital, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below.

A final rule adopted by the federal banking agencies in February 2019 provides banking organizations with the option to phase in, over a three-year period, the adverse day-one regulatory capital effects of the adoption of CECL.

In addition, on March 27, 2020, the federal banking agencies issued an interim final rule that gives banking organizations that were required to implement CECL before the end of 2020 the option to delay for two years CECL’s adverse effects on regulatory capital.

Origin elected to adopt CECL in the first quarter of 2020 and exercised the option to delay the estimated impact of the adoption of CECL on the Company's regulatory capital for two years (from January 2020 through December 31, 2021), which resulted in a 14 basis point benefit to the common equity Tier 1 capital to risk-weighted assets capital ratio at December 31, 2021.

The two-year delay is followed by a three-year transition period of CECL's initial impact on our regulatory capital (from January 1, 2022 through December 31, 2024).

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 $ 5.1 million and $ 7.6 million at December 31, 2022 and 2021, respectively.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The actual capital amounts and ratios of the Company and Bank at December 31, 2021, and December 31, 2020, are presented in the following table:

Notes to Consolidated Financial Statements

The actual capital amounts and ratios of the Company and Origin at December 31, 2022 and 2021, are presented in the following table:

(Dollars in thousands)

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Stock Repurchases

During the first quarter of 2021, the Company repurchased a total of 37,568 shares of its common stock pursuant to its stock buyback program at an average price per share of $ 33.42 , for an aggregate purchase price of $ 1.3 million.

There have been no common stock repurchases since the first quarter of the 2021 year.

Prior to December 31, 2020, the Company had cumulatively repurchased an aggregate of 330,868 shares of common stock for a total purchase price of $ 10.8 million under the stock buyback program.

As of December 31, 2021, the Company's board of directors has approved approximately $ 28.0 million remaining to be purchased under the program.

In July 2019, the Company's board of directors authorized a stock repurchase program pursuant to which the Company was authorized purchase up to $ 40 million of its outstanding common stock.

The stock repurchase program was approved for a period of three years and expired in June 2022, having repurchased a total of $ 28.0 million of outstanding common stock.

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 year ended December 31, 2022.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 19 - 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.

In the ordinary course of business, the Company enters into financial instruments, such as commitments to extend credit and letters of credit, to meet the financing needs of its customers.

Such instruments are not reflected in the accompanying consolidated financial statements until they are funded, although they expose the Company to varying degrees of credit risk and interest rate risk in much the same way as funded loans.

Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the acquisition and development or construction of real property or equipment, and credit card and personal credit lines.

Commitments to extend credit include revolving commercial credit lines, non-revolving loan commitments issued mainly to finance the merger 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.

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(1) Includes $ 594.6 million and $ 513.0 million of unconditionally cancellable commitments at December 31, 2022 and 2021, respectively.

At December 31, 2022, the Company held 28 unfunded letters of credit from the FHLB totaling $ 277.4 million, with expiration dates ranging from January 14, 2023, to September 22, 2027.

At December 31, 2021, the Company held 43 unfunded letters of credit from the FHLB totaling $ 599.3 million, with expiration dates ranging from January 20, 2022, to March 22, 2023.

At December 31, 2020, the Company held 35 unfunded letters of credit from the FHLB totaling $ 527.4 million with expiration dates ranging from January 20, 2021, to November 4, 2022.

The Company has a total contingent liability of $ 3.1 million as of December 31, 2022, for retention bonuses and guaranteed minimum incentives.

The contingent liability consists of retention bonuses totaling $ 1.0 million for former BTH employees, with $ 523,000 , or 50 %, due at December 31, 2023, and the remaining $ 523,000 , or 50 %, due at December 31, 2024.

Additionally, the Company will pay $ 2.0 million, in total, in guaranteed minimum incentives to certain employees, with approximately 42 % due on or about December 31, 2023, and 29 % each due on or about December 31, 2024 and 2025, respectively.

In all cases, continued employment through the payout date is required in order to receive the compensation.

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

In conjunction with the December 31, 2021, acquisitions of the Lincoln Agency, LLC and Pulley-White Insurance Agency, Inc., the Company has a total fair value contingent liability of $ 1.5 million and $ 1.4 million as of December 31, 2022 and 2021, respectively.

The amount is payable if Davison Insurance Agency, LLC, the acquirer and surviving wholly-owned subsidiary of the Company, meets certain revenue growth objectives over three years .

The fair value and probability of payout of this liability is reassessed annually at the fiscal year end of the Company.

Management establishes an asset-specific allowance for certain lending-related commitments and computes a formula-based allowance for performing consumer and commercial lending-related commitments.

These are computed using a methodology similar to that used for the commercial loan portfolio, modified for expected maturities and probabilities of drawdown.

The reserve for lending-related commitments was $ 2.3 million at both December 31, 2021, and December 31, 2020, respectively, and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

The reserve for lending-related commitments was $ 4.6 million and $ 2.3 million at December 31, 2022 and 2021, respectively, and is included in accrued expenses and other liabilities in the accompanying consolidated balance sheets.

Loss Contingencies

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Deposits from related parties held by the Company at December 31, 2022 and 2021, amounted to $ 40.0 million and $ 30.0 million, respectively.

Note 20 - Business Combinations

On December 31, 2021, the Company acquired the remaining 62 % equity interest in the Lincoln Agency for $ 5.3 million in cash and $ 5.3 million in Company common stock.

The Company previously acquired a 38 % minority interest in Lincoln Agency that was accounted for as an equity method investment, which had an immaterial carrying value at the acquisition date.

The Company included the $ 795,000 fair value of this contingent liability as a component of other liabilities on the accompanying consolidated balance sheet.

Additionally, the Company acquired 100 % of the book of business, and certain assets, and assumed certain liabilities of Pulley-White on December 31, 2021, for $ 2.2 million in cash and $ 2.2 million in Company common stock.

The purchase agreement for Pulley-White also includes potential earnout payments of up to an additional $ 250,000 provided the revenue attributable to the legacy operations of Pulley-White for the two years ended December 31, 2023, achieve certain compounded annual growth rate metrics and payments of up to $ 500,000 provided the revenue attributable to the legacy operations of Pulley-White for the three years ended December 31, 2024, achieve certain compounded annual growth rate metrics.

The Company included the $ 574,000 fair value of this contingent liability as a component of other liabilities on the accompanying consolidated balance sheet.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

A preliminary summary of the fair value of assets acquired and liabilities assumed from the acquisitions is as follows:

(Dollars in thousands) Estimated Fair Value

Assets Acquired:

Definite-lived intangibles $ 14,067

Operating lease right of use assets 1,488

Prepaid expense and other assets 47

Total assets acquired 15,602

Liabilities Assumed:

Operating lease liability 1,488

Accounts payable and accrued expenses 244

Total liabilities assumed 1,732

Net assets acquired 13,870

Total consideration 21,497

Goodwill $ 7,627

With these acquisitions, the Company continues to expand the scope of product offerings to its banking customers.

$ 4.6 million of goodwill associated with these acquisitions is deductible for income tax purposes.

A summary of total consideration is as follows:

(Dollars in thousands) December 31, 2021

Cash paid $ 7,457

Common stock issued ( 177,348 shares)

Contingent consideration 1,369

Fair value of previously held interest in Lincoln Agency 5,213

Total consideration $ 21,497

The Company has determined the above noted acquisitions constitute a business combination as defined by ASC Topic 805, which establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired and the liabilities assumed.

The Company has recorded the assets purchased and liabilities assumed at their estimated fair value in accordance with ASC Topic 805.

The fair value of assets acquired and liabilities assumed are preliminary and based on valuation estimates and assumptions.

The accounting for business combinations require estimates and judgments regarding expectations of future cash flows of the acquired business, and the allocations of those cash flows to identifiable tangible and intangible assets.

The estimates and assumptions underlying the preliminary valuations are subject to collection of information necessary to complete the valuations (specifically related to projected financial information) within the measurement periods, which are up to one year from the acquisition date.

Although the Company does not currently expect material changes to the initial value of net assets acquired, the Company continues to evaluate assumptions related to the valuation of the assets acquired and liabilities assumed.

Any adjustments to our estimates of purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date.

Pro forma results of operations for these acquisitions in the aggregate are not presented because these acquisitions are not material to the Company's consolidated results of operations.

ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Acquisition costs, which primarily consists of professional services, are expensed as incurred as a component of noninterest expense.

The Company incurred total acquisition costs of approximately $ 214,000 during the year ended December 31, 2021.

Notes to Consolidated Financial Statements

Note 21 - Condensed Parent Company Only Financial Statements

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Liabilities and Stockholders' Equity

Short-term borrowings $ 30,000 $ —

Subordinated indebtedness, net 132,661 88,405

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Retained earnings 435,416 363,635

Accumulated other comprehensive income 5,729 25,649

Accumulated other comprehensive (loss) income ( 159,875 ) 5,729

Total stockholders' equity 949,943 730,211

Total liabilities and stockholders' equity $ 1,115,157 $ 820,087

(Dollars in thousands) Years Ended December 31,

(Dollars in thousands) Year Ended December 31,

Condensed Statements of Income 2022 2021 2020

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ORIGIN BANCORP, INC.

Condensed Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements

(Dollars in thousands) Years Ended December 31,

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Equity in undistributed net income of subsidiaries ( 77,195 ) ( 92,589 ) ( 21,275 )

Amortization of subordinated indebtedness discount 147 58 28

Amortization of subordinated indebtedness discount including purchase accounting adjustment 181 147 58

Other, net 4,805 ( 5,898 ) 3,633

Net cash provided by operating activities 10,213 18,772 15,783

Net cash (used in) provided by operating activities 13,252 10,213 18,772

Cash flows from investing activities:

Lincoln Agency and Pulley-White acquisitions — ( 7,457 ) —

BTH acquisition 44,265 — —

Capital contributed to subsidiaries — — ( 51,000 )

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Capital calls on limited partnership investments ( 3,722 ) ( 513 ) —

Net cash used in investing activities ( 11,582 ) ( 51,000 ) —

Net cash provided by (used in) investing activities 40,543 ( 11,582 ) ( 51,000 )

Cash flows from financing activities:

Proceeds from short-term borrowings 30,000 — —

Dividends paid ( 15,887 ) ( 11,525 ) ( 8,854 )

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Cash and cash equivalents at end of year $ 99,810 $ 28,904 $ 42,908

ORIGIN BANCORP, INC.

Notes to Consolidated Financial Statements

Note 22 - Subsequent Events

During the second half of 2022, the Company entered into an agreement to sell substantially all of its GNMA mortgage servicing rights portfolio, recognized an impairment of $ 2.0 million, and met all final sale conditions in early 2023.

The sale was completed in February 2023.

For further information on the sale, please see Note 10 - Mortgage Banking in these notes to the consolidated financial statements.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data