What Happened?
Shares of regional banking company Origin Bancorp (NYSE: OBK) fell 6.1% in the afternoon session after it disclosed that a customer, Tricolor Holdings, filed for Chapter 7 bankruptcy, prompting the bank to place approximately $30.1 million in loans on non-accrual status.
According to a company SEC filing, the bank is now evaluating the need for additional provisions for credit losses related to these loans. The filing also noted the immediate resignation of board member Daniel T. Chu, who serves as the CEO of Tricolor. While the bank stated there were no disagreements with Mr. Chu, the connection highlights the direct impact of Tricolor's financial distress. This development heightens concerns for investors, as Origin Bank now must pursue remedies to protect its interests and manage potential losses from the defaulted loans.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Origin Bancorp? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Origin Bancorp’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 20 days ago when the stock gained 4.4% on the news that the major indices rebounded, as Fed Chair Jerome Powell delivered dovish remarks at the much-awaited Jackson Hole symposium. Powell suggested that with inflation risks moderating and unemployment remaining low, the Federal Reserve might consider a shift in its monetary policy stance, including potential interest rate cuts. This outlook eased market concerns about prolonged high interest rates and their impact on economic growth. The prospect of lower borrowing costs bolstered investor confidence, particularly in sectors that have lagged, leading to a broad rally across the market.
Origin Bancorp is up 5.1% since the beginning of the year, but at $34.99 per share, it is still trading 14.5% below its 52-week high of $40.93 from February 2025. Investors who bought $1,000 worth of Origin Bancorp’s shares 5 years ago would now be looking at an investment worth $1,565.
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