Origin Bancorp (OBK): Buy, Sell, or Hold Post Q1 Earnings?

Origin Bancorp trades at $35.76 and has moved in lockstep with the market. Its shares have returned 8.3% over the last six months while the S&P 500 has gained 4.5%.

Is now the time to buy Origin Bancorp, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.

Why Is Origin Bancorp Not Exciting?

We don't have much confidence in Origin Bancorp. Here are two reasons why we avoid OBK and a stock we'd rather own.

1. Lackluster Revenue Growth

We at StockStory place the most emphasis on long-term growth, but within financials, a stretched historical view may miss recent interest rate changes, market returns, and industry trends. Origin Bancorp’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 1.3% over the last two years was well below its five-year trend.

Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

2. Net Interest Margin Dropping

Revenue is a fine reference point for banks, but net interest income and margin are better indicators of business quality for banks because they’re balance sheet-driven businesses that leverage their assets to generate profits.

Over the past two years, Origin Bancorp’s net interest margin averaged 3.2%. Its margin also contracted by 18.7 basis points (100 basis points = 1 percentage point) over that period.

This decline was a headwind for its net interest income. While prevailing rates are a major determinant of net interest margin changes over time, the decline could mean Origin Bancorp either faced competition for loans and deposits or experienced a negative mix shift in its balance sheet composition.

Final Judgment

Origin Bancorp’s business quality ultimately falls short of our standards. That said, the stock currently trades at 0.9× forward P/B (or $35.76 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now. We’d suggest looking at one of our top digital advertising picks.

Stocks We Would Buy Instead of Origin Bancorp

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