Origin Bancorp, Inc.OBK
Origin Bancorp, Inc. Fair Value Disclosure
Note 6 — Fair Value of Financial Instruments
Fair value is the exchange price that is expected to be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Certain assets and liabilities are recorded in the Company’s consolidated financial statements at fair value. Some are recorded on a recurring basis and some on a nonrecurring basis.
The Company utilizes fair value measurement to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. In cases where quoted market values in an active market are not available, the Company utilizes valuation techniques that are consistent with the market approach, the income approach and/or the cost approach to estimate the fair values of its financial instruments. Such valuation techniques are consistently applied.
A hierarchy for fair value has been established, which categorizes the valuation techniques into three levels used to measure fair value. The three levels are as follows:
Level 1 - Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities.
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:
•Quoted prices for similar, but not identical, assets or liabilities in active markets;
•Quoted prices for identical or similar assets or liabilities in markets that are not active;
•Inputs other than quoted prices that are observable, such as interest rate and yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates; and
•Other inputs derived from or corroborated by observable market inputs.
Level 3 - Prices or valuation techniques that require inputs that are both significant and unobservable in the market. 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.
Fair Values of Assets and Liabilities Recorded on a Recurring Basis
The following tables summarize financial assets and financial liabilities recorded at fair value on a recurring basis at December 31, 2025 and 2024 segregated by the level of valuation inputs within the fair value hierarchy utilized to measure fair value. There were no changes in the valuation techniques during the periods presented.
| December 31, 2025 | |||||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| State and municipal securities | $ | — | $ | 261,042 | $ | 33,842 | $ | 294,884 | |||||||||||||||
| Corporate bonds | — | 54,704 | 1,000 | 55,704 | |||||||||||||||||||
| U.S. government agency securities | — | 3,140 | — | 3,140 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 15,286 | — | 15,286 | |||||||||||||||||||
| Residential mortgage-backed securities | — | 454,485 | — | 454,485 | |||||||||||||||||||
| Commercial collateralized mortgage obligations | — | 82,793 | — | 82,793 | |||||||||||||||||||
| Residential collateralized mortgage obligations | — | 210,884 | — | 210,884 | |||||||||||||||||||
| Securities available for sale | — | 1,082,334 | 34,842 | 1,117,176 | |||||||||||||||||||
| Securities carried at fair value through income | — | — | 6,215 | 6,215 | |||||||||||||||||||
| Rabbi Trust assets | 839 | — | — | 839 | |||||||||||||||||||
| — | 13,152 | — | 13,152 | ||||||||||||||||||||
| Total recurring fair value measurements - assets | $ | 839 | $ | 1,095,486 | $ | 41,057 | $ | 1,137,382 | |||||||||||||||
| — | (13,491) | — | (13,491) | ||||||||||||||||||||
| Total recurring fair value measurements - liabilities | $ | — | $ | (13,491) | $ | — | $ | (13,491) | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| (Dollars in thousands) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| State and municipal securities | $ | — | $ | 221,222 | $ | 34,754 | $ | 255,976 | |||||||||||||||
| Corporate bonds | — | 77,236 | 1,000 | 78,236 | |||||||||||||||||||
| U.S. government agency securities | — | 13,805 | — | 13,805 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 44,284 | — | 44,284 | |||||||||||||||||||
| Residential mortgage-backed securities | — | 540,834 | — | 540,834 | |||||||||||||||||||
| Commercial collateralized mortgage obligations | — | 28,566 | — | 28,566 | |||||||||||||||||||
| Residential collateralized mortgage obligations | — | 140,827 | — | 140,827 | |||||||||||||||||||
| Securities available for sale | — | 1,066,774 | 35,754 | 1,102,528 | |||||||||||||||||||
| Securities carried at fair value through income | — | — | 6,512 | 6,512 | |||||||||||||||||||
| Loans held for sale | — | 10,494 | — | 10,494 | |||||||||||||||||||
| Rabbi Trust assets | 509 | — | — | 509 | |||||||||||||||||||
| — | 15,595 | — | 15,595 | ||||||||||||||||||||
| Total recurring fair value measurements - assets | $ | 509 | $ | 1,092,863 | $ | 42,266 | $ | 1,135,638 | |||||||||||||||
| — | (14,959) | — | (14,959) | ||||||||||||||||||||
| Total recurring fair value measurements - liabilities | $ | — | $ | (14,959) | $ | — | $ | (14,959) | |||||||||||||||
The changes in Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2025 and 2024, are summarized as follows:
| (Dollars in thousands) | Securities Available for Sale | Securities at Fair Value Through Income | |||||||||
| Balance at January 1, 2025 | $ | 35,754 | $ | 6,512 | |||||||
| Gain recognized in earnings: | |||||||||||
| Other noninterest income | — | 18 | |||||||||
| Loss recognized in AOCI | 774 | — | |||||||||
| Purchases, issuances, sales and settlements: | |||||||||||
| Purchases | 3,526 | — | |||||||||
| Settlements | (5,212) | (315) | |||||||||
Balance at December 31, 2025 | $ | 34,842 | $ | 6,215 | |||||||
| (Dollars in thousands) | MSR Asset | Securities Available for Sale | Securities at Fair Value Through Income | ||||||||||||||
| Balance at January 1, 2024 | $ | 15,637 | $ | 50,447 | $ | 6,808 | |||||||||||
| Gain (loss) recognized in earnings: | |||||||||||||||||
| Mortgage banking revenue | 450 | — | — | ||||||||||||||
| Other noninterest income | — | — | 3 | ||||||||||||||
| Gain recognized in AOCI | — | 272 | — | ||||||||||||||
| Purchases, issuances, sales and settlements: | |||||||||||||||||
| Purchases | — | 5,396 | — | ||||||||||||||
| Sales | (16,087) | — | — | ||||||||||||||
| Settlements | — | (20,361) | (299) | ||||||||||||||
Balance at December 31, 2024 | $ | — | $ | 35,754 | $ | 6,512 | |||||||||||
The Company obtains fair value measurements for securities available for sale and securities at fair value through income from an independent pricing service; therefore, quantitative unobservable inputs are unknown.
The following methodologies were used to measure the fair value of financial assets and liabilities valued on a recurring basis:
Securities Available for Sale
Securities classified as available for sale are reported at fair value utilizing Level 1, Level 2 or Level 3 inputs. For Level 1 securities, the Company obtains the fair value measurements for those identical assets from an independent pricing service. For Level 2 securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, market consensus prepayment speeds, credit information and the security's terms and conditions, among other things. In order to ensure the fair values are consistent with ASC 820, Fair Value Measurements and Disclosures, the Company periodically checks the fair value by comparing them to other pricing sources, such as Bloomberg LP. The third-party pricing service is subject to an annual review of internal controls in accordance with the Statement on Standards for Attestation Engagements No. 16, which was made available to the Company. In certain cases where Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. For Level 3 securities, the Company determines the fair value of the instruments based on features such as callability, embedded put options, and prepayment optionality. Instruments with put option features are valued at book value, non-putable instruments are priced mainly using a present value calculation based on the spread to the yield curve.
Mortgage Servicing Rights (“MSR”)
The Company sold substantially all of its MSR asset and recorded a $410,000 gain on the sale during the year ended December 31, 2024. There were no MSR assets recognized or recorded during the year ended December 31, 2025 or 2024, and the carrying value of the MSR asset is zero at both December 31, 2025 and December 31, 2024.
Derivatives
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 are based on the fair values of the underlying derivative transactions and an assessment of counterparty credit risk. Fair values for interest rate swaps designated as fair value hedges are based upon observable Level 2 inputs such as forward fixed and floating rate projections entered into a discounted cash flow model using factors based upon the market yield curve. Fair values for interest rate options (caps) are based upon observable Level 2 inputs such as forward floating rate and floating rate volatility projections entered into a discounted cash flow model using factors based upon the market yield curve. For further details on interest rate swaps designated as fair value hedges, refer to Note 13 — Derivative Financial Instruments.
Fair Values of Assets Recorded on a Recurring Basis for which the Fair Value Option has been Elected
Certain assets are measured at fair value on a recurring basis due to the Company’s election to adopt fair value accounting treatment for those assets. For interest-earning assets for which the fair value has been elected, the earned current contractual interest payment is recognized in interest income. For securities carried at fair value through income and loans held for sale, this election allows for a more effective offset of the changes in fair values of the assets and the derivative instruments used to economically hedge them without the burden of complying with the requirements for hedge accounting under ASC Topic 815, Derivatives and Hedging. For the Rabbi Trust assets, the Company has elected the fair value option for these investments in order to align their valuation with the related deferred compensation liabilities. At December 31, 2025 and 2024 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, amortized cost or contributions, respectively, for financial instruments for which the fair value option has been elected:
| December 31, 2025 | |||||||||||||||||
| (Dollars in thousands) | Aggregate Fair Value | Amortized Cost/Contributions | Difference | ||||||||||||||
| Securities carried at fair value through income | $ | 6,215 | $ | 6,200 | $ | 15 | |||||||||||
| Rabbi Trust assets | 839 | 801 | 38 | ||||||||||||||
| Total | $ | 7,054 | $ | 7,001 | $ | 53 | |||||||||||
| December 31, 2024 | |||||||||||||||||
| (Dollars in thousands) | Aggregate Fair Value | Principal Balance/Amortized Cost/Contributions | Difference | ||||||||||||||
Loans held for sale(1) | $ | 10,494 | $ | 10,228 | $ | 266 | |||||||||||
| Securities carried at fair value through income | 6,512 | 6,515 | (3) | ||||||||||||||
| Rabbi Trust Assets | 509 | 499 | 10 | ||||||||||||||
| Total | $ | 17,515 | $ | 17,242 | $ | 273 | |||||||||||
____________________________
(1)There were no loans held for sale that were designated as nonaccrual or 90 days or more past due at December 31, 2024. Please see the Loans Held for Sale section below for more details.
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, | ||||||||||||||||
| Changes in fair value included in noninterest income: | 2025 | 2024 | 2023 | ||||||||||||||
Mortgage banking revenue (loans held for sale)(1) | $ | — | $ | (111) | $ | (66) | |||||||||||
| Other income: | |||||||||||||||||
| Securities carried at fair value through income | 18 | 4 | 726 | ||||||||||||||
| Total fair value option impact on noninterest income | $ | 18 | $ | (107) | $ | 660 | |||||||||||
| Changes in fair value included in noninterest expense: | |||||||||||||||||
| Rabbi Trust assets | $ | (28) | $ | 6 | $ | — | |||||||||||
Deferred compensation liabilities related to Rabbi Trust assets(2) | 28 | (6) | — | ||||||||||||||
| Total fair value option impact on noninterest expense | $ | — | $ | — | $ | — | |||||||||||
____________________________
(1)Please see the Loans Held for Sale section below for more details.
(2)Please see the Rabbi Trust section below for more detail on its impact on the Company’s net income.
The following methodologies were used to measure the fair value of financial assets valued on a recurring basis for which the fair value option was elected:
Loans Held for Sale
Prior to January 1, 2025, the Company had elected to use the fair value option when measuring the valuation of the loans held for sale portfolio. During the quarter ended March 31, 2025, we sold all loans that were previously recorded using the fair value option, and all unsold loans funded in 2025 are valued at the lower of amortized cost basis or market determined as of the balance sheet date. Fair values for loans held for sale were established 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 believed the fair value approximated an exit price.
Securities at Fair Value through Income
Securities carried at fair value through income are valued using a discounted cash flow with a credit spread applied to each instrument based on the creditworthiness of each issuer. The credit spread was 227 basis points at both December 31, 2025 and 2024. The Company believes the fair value approximates an exit price.
Rabbi Trust
The Company maintains a Rabbi Trust to fund obligations under the Origin Bank Nonqualified Deferred Compensation Plan. Investments within the Rabbi Trust consist of various mutual funds based on the participants individual investment elections. The Company has elected the fair value option for these investments to align their valuation with the related deferred compensation liabilities. Fair values for the Rabbi Trust investments are valued at the daily closing price as reported by the mutual fund. These assets are included in accrued interest receivable and other assets in the Company’s Consolidated Balance Sheet, while the offsetting deferred compensation liabilities are included in accrued expenses and other liabilities. Compensation (benefit) expense associated with the deferred compensation liabilities is offset by loss (gain) from the related security investments Rabbi Trust. The net effect of investment income or loss and related compensation expense or benefit has no impact on the Company’s net income or cash balances because the fair value adjustments for the assets and the change in the liabilities offset each other. Changes in the fair value of the Rabbi Trust assets and changes in the deferred compensation obligation are recognized in salaries and employee benefits in the accompanying Consolidated Statements of Income.
Fair Value of Assets Recorded on a Nonrecurring Basis
Non-marketable equity securities held in other financial institutions
The Company’s non-marketable equity securities held in other financial institutions are within Level 2 of the fair value hierarchy and do not have readily determinable fair values. Securities with limited marketability, such as stock in the FRBD or the FHLB, are carried at cost, less impairment, if any, and total $27.8 million and $28.2 million at December 31, 2025 and 2024, respectively. The Company’s remaining equity investments in other financial institutions, excluding FRBD and FHLB, totaled $3.3 million and $43.4 million at December 31, 2025 and 2024, respectively, and qualify for the practicability exception under ASC 321 due to having illiquid markets and are carried at cost, less impairment, plus or minus any observable price changes. We believe these amounts approximate the fair value of these securities. To date, no impairment has been recorded on the Company's investments in equity securities that do not have readily determinable fair values. During the years ended December 31, 2025 and 2024, the Company recorded upward fair value adjustments of $7.0 million and $5.2 million, respectively, in Argent Financial Group, Inc. based on observed price changes in orderly transactions during 2024 and an additional investment on July 1, 2025. The additional investment in mid-2025 increased the Company’s ownership above the threshold for equity method accounting, requiring remeasurement at fair value immediately prior to adoption. As a result, the investment is now disclosed in equity method investments on the face of the balance sheet.
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 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. 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 collateral-dependent loans that have specific allocated reserves was approximately $5.2 million and $4.5 million at December 31, 2025 and 2024, respectively.
Non-Financial Assets
Held for sale other real estate owned properties include foreclosed assets and bank-owned real estate, which the Company is no longer utilizing and intends to sell and are the only non-financial assets valued on a nonrecurring basis that are initially recorded by the Company at fair value, less estimated costs to sell. At foreclosure, if the fair value, less estimated costs to sell, of the real estate acquired is less than the Company’s recorded investment in the related loan, a write-down is recognized through a charge to the ALCL. Similarly, real estate-based properties that were formerly operating as bank offices are evaluated at the time the decision is made to sell, and if the fair value, less estimated costs to sell, of the property is less than the Company’s net book value, a write-down is recognized. 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 and bank-owned real estate held for sale was estimated using Level 3 inputs based on observable market data and was $694,000 and $3.6 million at December 31, 2025 and 2024, respectively. At December 31, 2025 and 2024, the Company had $5.4 million and $5.1 million, respectively, principal amounts of residential mortgage loans in the process of foreclosure.
Fair Values of Financial Instruments Not Recorded at Fair Value
The carrying value and estimated fair values of financial instruments not recorded at fair value are as follows:
| (Dollars in thousands) | December 31, 2025 | December 31, 2024 | |||||||||||||||||||||
Financial assets: Level 1 inputs: | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||
| Cash and cash equivalents | $ | 424,217 | $ | 424,217 | $ | 470,249 | $ | 470,249 | |||||||||||||||
| Level 2 inputs: | |||||||||||||||||||||||
Non-marketable equity securities held in other financial institutions | 31,069 | 31,069 | 71,643 | 71,643 | |||||||||||||||||||
| Loans held for sale | 1,032 | 1,032 | N/A | N/A | |||||||||||||||||||
| Accrued interest receivable | 35,152 | 35,152 | 38,901 | 38,901 | |||||||||||||||||||
| Level 3 inputs: | |||||||||||||||||||||||
| Securities held to maturity | 10,559 | 9,607 | 11,095 | 10,456 | |||||||||||||||||||
| LHFI, net | 7,574,135 | 7,459,710 | 7,482,653 | 7,209,866 | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Level 2 inputs: | |||||||||||||||||||||||
| Deposits | 8,307,247 | 8,302,897 | 8,223,120 | 8,217,564 | |||||||||||||||||||
| FHLB advances, repurchase agreements and other borrowings | 19,050 | 18,989 | 12,460 | 12,203 | |||||||||||||||||||
| Subordinated indebtedness | 16,544 | 16,530 | 159,943 | 159,928 | |||||||||||||||||||
| Accrued interest payable | 3,239 | 3,239 | 8,033 | 8,033 | |||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Mar 2, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 28, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.