Although Origin Bancorp (currently trading at $37.94 per share) has gained 7.2% over the last six months, it has trailed the S&P 500’s 16% return during that period. This may have investors wondering how to approach the situation.

Given the relatively weaker price action, is now a good time to buy OBK? Or are investors better off allocating their money elsewhere?

Why Does Origin Bancorp Spark Debate?

Founded in 1912 during the early boom days of Louisiana banking, Origin Bancorp (NYSE: OBK) is a financial holding company that provides personalized banking services to businesses, municipalities, and individuals across Texas, Louisiana, and Mississippi.

Two Positive Attributes:

1. Net Interest Income Skyrockets, Fueling Growth Opportunities

Net interest income commands greater market attention due to its reliability and consistency, whereas one-time fees are often seen as lower-quality revenue that lacks the same dependable characteristics.

Origin Bancorp’s net interest income has grown at a 12.5% annualized rate over the last five years, better than the broader banking industry and faster than its total revenue. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.

2. Outstanding Long-Term EPS Growth

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

Origin Bancorp’s EPS grew at an astounding 17.3% compounded annual growth rate over the last five years, higher than its 8.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

One Reason to be Careful:

Revenue Tumbling Downwards

Long-term growth is the most important, but within financials, a stretched historical view may miss recent interest rate changes and market returns. Origin Bancorp’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 2.8% over the last two years. 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.

Final Judgment

Origin Bancorp’s merits more than compensate for its flaws. With its shares underperforming the market lately, the stock trades at 1× forward P/B (or $37.94 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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