UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  January 26, 2024

South Plains Financial, Inc.
(Exact name of registrant as specified in its charter)

Texas
001-38895
75-2453320
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

5219 City Bank Parkway
Lubbock, Texas
 
79407
(Address of principal executive offices)
 
(Zip Code)

(806) 792-7101
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $1.00 per share
SPFI
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02
Results of Operations and Financial Condition.

On January 26, 2024, South Plains Financial, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter and year ended December 31, 2023.  A copy of the Company’s press release covering such announcement and certain other matters is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.01
Regulation FD Disclosure.

On January 26, 2024, officers of the Company will have a conference call with respect to the Company’s financial results for the fourth quarter and year ended December 31, 2023. An earnings release slide presentation highlighting the Company’s financial results for the fourth quarter and year ended December 31, 2023 is furnished as Exhibit 99.2 to this Current Report on Form 8-K. This earnings release slide presentation will also be available on the Company’s website, www.spfi.bank, under the “News & Events” section.

In accordance with General Instruction B.2 of Form 8-K, the information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section.  The information in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2 furnished herewith, shall not be incorporated by reference into any filing or other document pursuant to the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Item 9.01
Financial Statements and Exhibits.


(d)
Exhibits.




Press release, dated January 26, 2024, announcing fourth quarter and year-end 2023 financial results of South Plains Financial, Inc.




Earnings release slide presentation, dated January 26, 2024.




104
Cover Page Interactive Data File (formatted as Inline XBRL).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
SOUTH PLAINS FINANCIAL, INC.
 
Date:  January 26, 2024
By:
/s/ Steven B. Crockett
 
Steven B. Crockett
   
Chief Financial Officer and Treasurer




Exhibit 99.1


South Plains Financial, Inc. Reports Fourth Quarter and Year-End 2023 Financial Results

LUBBOCK, Texas, January 26, 2024 (GLOBE NEWSWIRE) – South Plains Financial, Inc. (NASDAQ:SPFI) (“South Plains” or the “Company”), the parent company of City Bank (“City Bank” or the “Bank”), today reported its financial results for the quarter and year ended December 31, 2023.

Fourth Quarter 2023 Highlights


Net income for the fourth quarter of 2023 was $10.3 million, compared to $13.5 million for the third quarter of 2023 and $12.6 million for the fourth quarter of 2022.

Diluted earnings per share for the fourth quarter of 2023 was $0.61, compared to $0.78 for the third quarter of 2023 and $0.71 for the fourth quarter of 2022.

Average cost of deposits for the fourth quarter of 2023 increased to 224 basis points, compared to 207 basis points for the third quarter of 2023 and 97 basis points for the fourth quarter of 2022.

Net interest margin, calculated on a tax-equivalent basis, was 3.52% for the fourth quarter of 2023, compared to 3.52% for the third quarter of 2023.

Loans held for investment grew $20.6 million, or 2.8% annualized, during the fourth quarter of 2023 as compared to September 30, 2023.

Nonperforming assets to total assets were 0.14% at December 31, 2023, compared to 0.12% at September 30, 2023 and 0.20% at December 31, 2022.

Return on average assets for the fourth quarter of 2023 was 0.99% annualized, compared to 1.27% annualized for the third quarter of 2023 and 1.27% annualized for the fourth quarter of 2022.

Tangible book value (non-GAAP) per share was $23.47 as of December 31, 2023, compared to $21.07 as of September 30, 2023.

The consolidated total risk-based capital ratio, Common Equity Tier 1 risk-based capital ratio, and Tier 1 leverage ratio at December 31, 2023 were 16.74%, 12.41%, and 11.33%, respectively.  These ratios significantly exceeded the minimum regulatory levels necessary to be deemed “well-capitalized”.

Full Year 2023 Highlights


Total assets were $4.20 billion at December 31, 2023, compared to $3.94 billion at December 31, 2022.

Full year net income of $62.7 million in 2023, compared to $58.2 million in 2022.

Diluted earnings per share of $3.62 in 2023, compared to $3.23 in 2022.

Loans held for investment grew $266.1 million, or 9.7%, during 2023.

Tangible book value (non-GAAP) per share of $23.47 at December 31, 2023, compared to $19.57 at December 31, 2022.

Return on average assets of 1.54% for the full year 2023, compared to 1.47% for 2022.

The Bank’s wholly-owned subsidiary, Windmark Insurance Agency, Inc. (“Windmark”), was sold in the second quarter of 2023 for $36.1 million, resulting in a gain, net of related charges and taxes, of $22.9 million.

Curtis Griffith, South Plains’ Chairman and Chief Executive Officer, commented, “While our industry faced significant challenges through the year, we delivered strong results which demonstrates not only the strength of our franchise but also our ability to take advantage of opportunities that lie ahead to drive growth and shareholder value.  First and foremost, our community-based deposit franchise grew modestly through the year, despite the significant dislocation that occurred following the failures of Silicon Valley Bank and Signature Bank in the first quarter.  Loan demand also remained healthy across our markets while the Fed steadily raised their benchmark interest rate to what is expected to be a peak for the cycle this past December.  For the full year, we delivered 9.7% loan growth which highlights both the strength of the Texas economy and our efforts to expand our lending platform with a focus on our metro markets.  The credit quality of our loan portfolio also remained strong as we ended 2023 with our classified loans remaining at the lowest level since the start of the pandemic.”

Mr. Griffith concluded, “We also completed the sale of Windmark for a pre-tax gain of $33.8 million.  The gain that we recorded positioned us to strategically sell $56 million of investment securities at a loss in a tax efficient manner and reinvest those proceeds into higher yielding loans.  Given our strong capital and liquidity position, our Board of Directors authorized a $15 million stock repurchase program in May, which has been exhausted.  We repurchased 218 thousand shares during the fourth quarter and a total of 686 thousand shares during 2023.   Through the year, our Board has believed that our shares have traded below intrinsic value and we have been aggressive in repurchasing our stock.”


Results of Operations, Quarter Ended December 31, 2023

Net Interest Income

Net interest income was $35.2 million for the fourth quarter of 2023, compared to $35.7 million for the third quarter of 2023 and $36.3 million for the fourth quarter of 2022. Net interest margin, calculated on a tax-equivalent basis, was 3.52% for the fourth quarter of 2023, compared to 3.52% for the third quarter of 2023 and 3.88% for the fourth quarter of 2022. The average yield on loans was 6.29% for the fourth quarter of 2023, compared to 6.10% for the third quarter of 2023 and 5.59% for the fourth quarter of 2022. The average cost of deposits was 224 basis points for the fourth quarter of 2023, which is 17 basis points higher than the third quarter of 2023 and 127 basis points higher than the fourth quarter of 2022.

Interest income was $57.2 million for the fourth quarter of 2023, compared to $56.5 million for the third quarter of 2023 and $46.2 million for the fourth quarter of 2022. Interest income increased $708 thousand in the fourth quarter of 2023 from the third quarter of 2023, which was comprised of an increase of $1.7 million in loan interest income offset by a decrease of $945 thousand in interest income on other interest-earning assets. The growth in loan interest income was primarily due to an increase of $13.5 million in average loans outstanding and a rise of 19 basis points in the yield on loans. The decline in interest income on other interest-earning assets was predominately a result of decreased liquidity maintained at the Federal Reserve Bank of Dallas.  Interest income increased $11.0 million in the fourth quarter of 2023 compared to the fourth quarter of 2022. This increase was primarily due to an increase of average loans of $273.6 million and higher market interest rates during the period, resulting in growth of $9.2 million in loan interest income.

Interest expense was $22.1 million for the fourth quarter of 2023, compared to $20.8 million for the third quarter of 2023 and $9.9 million for the fourth quarter of 2022. Interest expense increased $1.2 million compared to the third quarter of 2023 and $12.2 million compared to the fourth quarter of 2022, primarily as a result of significantly higher short-term interest rates on interest-bearing liabilities, with the increase being mainly comprised of interest expense on deposits. Additionally, interest-bearing deposits grew during the fourth quarter of 2023 versus the compared periods, which also contributed to the higher interest expense.

Noninterest Income and Noninterest Expense

Noninterest income was $9.1 million for the fourth quarter of 2023, compared to $12.3 million for the third quarter of 2023 and $12.7 million for the fourth quarter of 2022. The decrease from the third quarter of 2023 was primarily due to a decrease of $2.9 million in mortgage banking revenues, mainly from a reduction in the fair value of the mortgage servicing rights assets as interest rates that affect the value began falling late in the fourth quarter.  Additionally, originations of mortgage loans held for sale declined $11.8 million due to typical seasonality. The decrease in noninterest income for the fourth quarter of 2023 as compared to the fourth quarter of 2022 was primarily due to a reduction of $2.8 million in income from insurance activities due to the sale of Windmark and a decrease of $1.1 million in mortgage banking revenues as originations of mortgage loans held for sale declined $35.0 million due to higher mortgage interest rates during the period, which has slowed mortgage activity.

Noninterest expense was $30.6 million for the fourth quarter of 2023, compared to $31.5 million for the third quarter of 2023 and $32.7 million for the fourth quarter of 2022. The $892 thousand decrease from the third quarter of 2023 was largely the result of a reduction of $732 thousand in personnel costs, which predominately came from lower mortgage personnel costs as mortgage loan originations slowed as well as lower health care insurance costs. The decrease in noninterest expense for the fourth quarter of 2023 as compared to the fourth quarter of 2022 was primarily driven by a reduction of $783 thousand in Windmark-related expenses due to its sale and a reduction of approximately $1.2 million in mortgage noninterest expenses due to the decline in mortgage loan originations.

Loan Portfolio and Composition

Loans held for investment were $3.01 billion as of December 31, 2023, compared to $2.99 billion as of September 30, 2023 and $2.75 billion as of December 31, 2022. The $20.6 million, or 2.8% annualized, increase during the fourth quarter of 2023 as compared to the third quarter of 2023 occurred primarily in commercial real estate loans, partially offset by a reduction in consumer auto loans. As of December 31, 2023, loans held for investment increased $266.1 million, or 9.7% year over year, from December 31, 2022, primarily attributable to strong organic loan growth, occurring mainly in commercial real estate loans.

Deposits and Borrowings

Deposits totaled $3.63 billion as of December 31, 2023, compared to $3.62 billion as of September 30, 2023 and $3.41 billion as of December 31, 2022. Deposits increased by $5.5 million, or 0.6% annualized, in the fourth quarter of 2023 from September 30, 2023. As of December 31, 2023, deposits increased $219.7 million, or 6.5% year over year, from December 31, 2022. Noninterest-bearing deposits were $974 million as of December 31, 2023, compared to $1.05 billion as of September 30, 2023 and $1.15 billion as of December 31, 2022. Noninterest-bearing deposits represented 26.9% of total deposits as of December 31, 2023. The quarterly change in total deposits was mostly flat, reflecting a decline in noninterest-bearing deposits of $72.1 million and an increase in interest-bearing deposits of $77.6 million. The year-over-year increase in total deposits is primarily a result of growth of $152 million in brokered deposits in the second and third quarters of 2023 given the overall focus in the banking industry on improving liquidity, as well as organic deposit growth. In December 2023, $12.4 million in subordinated notes with a weighted-average interest rate of 5.75% were redeemed.


Asset Quality

The Company recorded a provision for credit losses in the fourth quarter of 2023 of $600 thousand, compared to negative $700 thousand in the third quarter of 2023 and $248 thousand in the fourth quarter of 2022. The provision during the fourth quarter of 2023 was largely attributable to organic loan growth and net charge-off activity during the quarter.

The ratio of allowance for credit losses to loans held for investment was 1.41% as of December 31, 2023, compared to 1.41% as of September 30, 2023 and 1.43% as of December 31, 2022.

The ratio of nonperforming assets to total assets as of December 31, 2023 was 0.14%, compared to 0.12% as of September 30, 2023 and 0.20% as of December 31, 2022. Annualized net charge-offs were 0.08% for the fourth quarter of 2023, compared to 0.05% for the third quarter of 2023 and 0.09% for the fourth quarter of 2022.

Capital

Book value per share increased to $24.80 at December 31, 2023, compared to $22.39 at September 30, 2023. The increase was primarily driven by an increase in accumulated other comprehensive income (“AOCI”) of $32.9 million and $8.2 million of net income after dividends paid. The increase in AOCI was attributed to the after-tax increase in fair value of our available for sale securities, net of fair value hedges, as a result of decreases in long-term market interest rates during the period.

Conference Call

South Plains will host a conference call to discuss its fourth quarter and year-end 2023 financial results today, January 26, 2024, at 10:00 a.m., Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-877-407-9716 (international callers please dial 1-201-493-6779) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call and conference materials will be available on the Company’s website at https://www.spfi.bank/news-events/events.

A replay of the conference call will be available within two hours of the conclusion of the call and can be accessed on the investor section of the Company’s website as well as by dialing 1-844-512-2921 (international callers please dial 1-412-317-6671). The pin to access the telephone replay is 13743667. The replay will be available until February 9, 2024.

About South Plains Financial, Inc.

South Plains is the bank holding company for City Bank, a Texas state-chartered bank headquartered in Lubbock, Texas. City Bank is one of the largest independent banks in West Texas and has additional banking operations in the Dallas, El Paso, Greater Houston, the Permian Basin, and College Station, Texas markets, and the Ruidoso, New Mexico market. South Plains provides a wide range of commercial and consumer financial services to small and medium-sized businesses and individuals in its market areas. Its principal business activities include commercial and retail banking, along with investment, trust and mortgage services. Please visit https://www.spfi.bank for more information.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include Tangible Book Value Per Share, Tangible Common Equity to Tangible Assets, and Pre-Tax, Pre-Provision Income. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.

We classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

A reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this press release.


Available Information

The Company routinely posts important information for investors on its web site (under www.spfi.bank and, more specifically, under the News & Events tab at www.spfi.bank/news-events/press-releases). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD (Fair Disclosure) promulgated by the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, investors should monitor the Company’s web site, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Company’s web site is not incorporated by reference into, and is not a part of, this document.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect South Plains’ current views with respect to future events and South Plains’ financial performance. Any statements about South Plains’ expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. South Plains cautions that the forward-looking statements in this press release are based largely on South Plains’ expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond South Plains’ control. Factors that could cause such changes include, but are not limited to, the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; potential recession in the United States and our market areas; the impacts related to or resulting from recent bank failures and any continuation of the recent uncertainty in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response thereto; increased competition for deposits and related changes in deposit customer behavior; changes in market interest rates; the persistence of the current inflationary environment in the United States and our market areas; the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; the effects of declines in housing prices in the United States and our market areas; increases in unemployment rates in the United States and our market areas; declines in commercial real estate prices; uncertainty regarding United States fiscal debt and budget matters; cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks; severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events; regulatory considerations; competition and market expansion opportunities; changes in non-interest expenditures or in the anticipated benefits of such expenditures; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; potential increased regulatory requirements and costs related to the transition and physical impacts of climate change; current or future litigation, regulatory examinations or other legal and/or regulatory actions; and changes in applicable laws and regulations. Additional information regarding these risks and uncertainties to which South Plains’ business and future financial performance are subject is contained in South Plains’ most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of such documents, and other documents South Plains files or furnishes with the SEC from time to time, which are available on the SEC’s website, www.sec.gov. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements due to additional risks and uncertainties of which South Plains is not currently aware or which it does not currently view as, but in the future may become, material to its business or operating results. Due to these and other possible uncertainties and risks, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. Any forward-looking statements presented herein are made only as of the date of this press release, and South Plains does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, new information, the occurrence of unanticipated events, or otherwise, except as required by applicable law. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.

Contact:
Mikella Newsom, Chief Risk Officer and Secretary
 
(866) 771-3347
 
investors@city.bank

Source: South Plains Financial, Inc.


South Plains Financial, Inc.
Consolidated Financial Highlights - (Unaudited)
(Dollars in thousands, except share data)

   
As of and for the quarter ended
 
   
December 31,
2023
   
September 30,
2023
   
June 30,
2023
   
March 31,
2023
   
December 31,
2022
 
Selected Income Statement Data:
                             
Interest income
 
$
57,236
   
$
56,528
   
$
50,821
   
$
47,448
   
$
46,228
 
Interest expense
   
22,074
     
20,839
     
16,240
     
13,133
     
9,906
 
Net interest income
   
35,162
     
35,689
     
34,581
     
34,315
     
36,322
 
Provision for credit losses
   
600
     
(700
)
   
3,700
     
1,010
     
248
 
Noninterest income
   
9,146
     
12,277
     
47,112
     
10,691
     
12,676
 
Noninterest expense
   
30,597
     
31,489
     
40,499
     
32,361
     
32,708
 
Income tax expense
   
2,787
     
3,683
     
7,811
     
2,391
     
3,421
 
Net income
   
10,324
     
13,494
     
29,683
     
9,244
     
12,621
 
Per Share Data (Common Stock):
                                       
Net earnings, basic
   
0.63
     
0.80
     
1.74
     
0.54
     
0.74
 
Net earnings, diluted
   
0.61
     
0.78
     
1.71
     
0.53
     
0.71
 
Cash dividends declared and paid
   
0.13
     
0.13
     
0.13
     
0.13
     
0.12
 
Book value
   
24.80
     
22.39
     
23.13
     
21.57
     
20.97
 
Tangible book value (non-GAAP)
   
23.47
     
21.07
     
21.82
     
20.19
     
19.57
 
Weighted average shares outstanding, basic
   
16,443,908
     
16,842,594
     
17,048,432
     
17,046,713
     
17,007,914
 
Weighted average shares outstanding, dilutive
   
17,008,892
     
17,354,182
     
17,386,515
     
17,560,756
     
17,751,674
 
Shares outstanding at end of period
   
16,417,099
     
16,600,442
     
16,952,072
     
17,062,572
     
17,027,197
 
Selected Period End Balance Sheet Data:
                                       
Cash and cash equivalents
   
330,158
     
352,424
     
295,581
     
328,002
     
234,883
 
Investment securities
   
622,762
     
584,969
     
628,093
     
698,579
     
701,711
 
Total loans held for investment
   
3,014,153
     
2,993,563
     
2,979,063
     
2,788,640
     
2,748,081
 
Allowance for credit losses
   
42,356
     
42,075
     
43,137
     
39,560
     
39,288
 
Total assets
   
4,204,793
     
4,186,440
     
4,150,129
     
4,058,049
     
3,944,063
 
Interest-bearing deposits
   
2,651,952
     
2,574,361
     
2,473,755
     
2,397,115
     
2,255,942
 
Noninterest-bearing deposits
   
974,201
     
1,046,253
     
1,100,767
     
1,110,939
     
1,150,488
 
Total deposits
   
3,626,153
     
3,620,614
     
3,574,522
     
3,508,054
     
3,406,430
 
Borrowings
   
110,168
     
122,493
     
122,447
     
122,400
     
122,354
 
Total stockholders’ equity
   
407,114
     
371,716
     
392,029
     
367,964
     
357,014
 
Summary Performance Ratios:
                                       
Return on average assets (annualized)
   
0.99
%
   
1.27
%
   
2.97
%
   
0.95
%
   
1.27
%
Return on average equity (annualized)
   
10.52
%
   
14.01
%
   
31.33
%
   
10.34
%
   
14.33
%
Net interest margin (1)
   
3.52
%
   
3.52
%
   
3.65
%
   
3.75
%
   
3.88
%
Yield on loans
   
6.29
%
   
6.10
%
   
5.94
%
   
5.78
%
   
5.59
%
Cost of interest-bearing deposits
   
3.14
%
   
2.93
%
   
2.45
%
   
2.03
%
   
1.52
%
Efficiency ratio
   
68.71
%
   
65.34
%
   
49.39
%
   
71.42
%
   
66.35
%
Summary Credit Quality Data:
                                       
Nonperforming loans
   
5,178
     
4,783
     
21,039
     
7,579
     
7,790
 
Nonperforming loans to total loans held for investment
   
0.17
%
   
0.16
%
   
0.71
%
   
0.27
%
   
0.28
%
Other real estate owned
   
912
     
242
     
249
     
202
     
169
 
Nonperforming assets to total assets
   
0.14
%
   
0.12
%
   
0.51
%
   
0.19
%
   
0.20
%
Allowance for credit losses to total loans held for investment
   
1.41
%
   
1.41
%
   
1.45
%
   
1.42
%
   
1.43
%
Net charge-offs to average loans outstanding (annualized)
   
0.08
%
   
0.05
%
   
0.05
%
   
0.09
%
   
0.09
%


   
As of and for the quarter ended
 
   
December 31
2023
   
September 30,
2023
   
June 30,
2023
   
March 31,
2023
   
December 31,
2022
 
Capital Ratios:
                             
Total stockholders’ equity to total assets
   
9.68
%
   
8.88
%
   
9.45
%
   
9.07
%
   
9.05
%
Tangible common equity to tangible assets (non-GAAP)
   
9.21
%
   
8.40
%
   
8.96
%
   
8.54
%
   
8.50
%
Common equity tier 1 to risk-weighted assets
   
12.41
%
   
12.19
%
   
12.11
%
   
11.92
%
   
11.81
%
Tier 1 capital to average assets
   
11.33
%
   
11.13
%
   
11.67
%
   
11.22
%
   
11.03
%
Total capital to risk-weighted assets
   
16.74
%
   
16.82
%
   
16.75
%
   
16.70
%
   
16.58
%

(1)
Net interest margin is calculated as the annual net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.


South Plains Financial, Inc.
Average Balances and Yields - (Unaudited)
(Dollars in thousands)

   
For the Three Months Ended
 
   
December 31, 2023
   
December 31, 2022
 
             
   
Average
Balance
   
Interest
   
Yield/Rate
   
Average
Balance
   
Interest
   
Yield/Rate
 
Assets
                                   
Loans
 
$
3,019,228
   
$
47,903
     
6.29
%
 
$
2,745,595
   
$
38,695
     
5.59
%
Debt securities - taxable
   
560,143
     
5,563
     
3.94
%
   
601,411
     
4,868
     
3.21
%
Debt securities - nontaxable
   
157,341
     
1,032
     
2.60
%
   
214,011
     
1,418
     
2.63
%
Other interest-bearing assets
   
255,454
     
2,963
     
4.60
%
   
184,471
     
1,546
     
3.32
%
                                                 
Total interest-earning assets
   
3,992,166
     
57,461
     
5.71
%
   
3,745,488
     
46,527
     
4.93
%
Noninterest-earning assets
   
156,541
                     
182,088
                 
                                                 
Total assets
 
$
4,148,707
                   
$
3,927,576
                 
                                                 
Liabilities & stockholders’ equity
                                               
NOW, Savings, MMDA’s
 
$
2,201,190
     
16,894
     
3.04
%
 
$
1,844,551
     
7,231
     
1.56
%
Time deposits
   
357,067
     
3,325
     
3.69
%
   
305,098
     
1,027
     
1.34
%
Short-term borrowings
   
3
     
-
     
0.00
%
   
4
     
-
     
0.00
%
Notes payable & other long-term borrowings
   
-
     
-
     
0.00
%
   
-
     
-
     
0.00
%
Subordinated debt
   
73,740
     
981
     
5.28
%
   
75,938
     
1,013
     
5.29
%
Junior subordinated deferrable interest debentures
   
46,393
     
874
     
7.47
%
   
46,393
     
635
     
5.43
%
                                                 
Total interest-bearing liabilities
   
2,678,393
     
22,074
     
3.27
%
   
2,271,984
     
9,906
     
1.73
%
Demand deposits
   
1,021,091
                     
1,234,570
                 
Other liabilities
   
59,808
                     
71,615
                 
Stockholders’ equity
   
389,415
                     
349,407
                 
                                                 
Total liabilities & stockholders’ equity
 
$
4,148,707
                   
$
3,927,576
                 
                                                 
Net interest income
         
$
35,387
                   
$
36,621
         
Net interest margin (2)
                   
3.52
%
                   
3.88
%

(1)
Average loan balances include nonaccrual loans and loans held for sale.
(2)
Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.


South Plains Financial, Inc.
Average Balances and Yields - (Unaudited)
(Dollars in thousands)

   
For the Twelve Months Ended
 
   
December 31, 2023
   
December 31, 2022
 
                                     
   
Average
Balance
   
Interest
   
Yield/Rate
   
Average
Balance
   
Interest
   
Yield/Rate
 
Assets
                                   
Loans
 
$
2,924,473
   
$
176,627
     
6.04
%
 
$
2,612,161
   
$
137,957
     
5.28
%
Debt securities - taxable
   
570,655
     
21,590
     
3.78
%
   
594,405
     
15,010
     
2.53
%
Debt securities - nontaxable
   
185,205
     
4,901
     
2.65
%
   
216,216
     
5,733
     
2.65
%
Other interest-bearing assets
   
223,152
     
9,973
     
4.47
%
   
318,862
     
3,675
     
1.15
%
                                                 
Total interest-earning assets
   
3,903,485
     
213,091
     
5.46
%
   
3,741,644
     
162,375
     
4.34
%
Noninterest-earning assets
   
176,495
                     
222,544
                 
                                                 
Total assets
 
$
4,079,980
                   
$
3,964,188
                 
                                                 
Liabilities & stockholders’ equity
                                               
NOW, Savings, MMDA’s
 
$
2,117,985
     
55,423
     
2.62
%
 
$
1,889,888
     
13,013
     
0.69
%
Time deposits
   
321,205
     
9,564
     
2.98
%
   
327,289
     
3,989
     
1.22
%
Short-term borrowings
   
84
     
5
     
5.95
%
   
4
     
-
     
0.00
%
Notes payable & other long-term borrowings
   
-
     
-
     
0.00
%
   
-
     
-
     
0.00
%
Subordinated debt
   
75,458
     
4,018
     
5.32
%
   
75,874
     
4,050
     
5.34
%
Junior subordinated deferrable interest debentures
   
46,393
     
3,276
     
7.06
%
   
46,393
     
1,640
     
3.54
%
                                                 
Total interest-bearing liabilities
   
2,561,125
     
72,286
     
2.82
%
   
2,339,448
     
22,692
     
0.97
%
Demand deposits
   
1,069,280
                     
1,189,730
                 
Other liabilities
   
71,102
                     
66,182
                 
Stockholders’ equity
   
378,473
                     
368,828
                 
                                                 
Total liabilities & stockholders’ equity
 
$
4,079,980
                   
$
3,964,188
                 
                                                 
Net interest income
         
$
140,805
                   
$
139,683
         
Net interest margin (2)
                   
3.61
%
                   
3.73
%

(1)
Average loan balances include nonaccrual loans and loans held for sale.
(2)
Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.


South Plains Financial, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)

   
As of
 
   
December 31,
2023
   
December 31,
2022
 
             
Assets
           
Cash and due from banks
 
$
62,821
   
$
61,613
 
Interest-bearing deposits in banks
   
267,337
     
173,270
 
Securities available for sale
   
622,762
     
701,711
 
Loans held for sale
   
14,499
     
30,403
 
Loans held for investment
   
3,014,153
     
2,748,081
 
Less:  Allowance for credit losses
   
(42,356
)
   
(39,288
)
Net loans held for investment
   
2,971,797
     
2,708,793
 
Premises and equipment, net
   
55,070
     
56,337
 
Goodwill
   
19,315
     
19,508
 
Intangible assets
   
2,429
     
4,349
 
Mortgage servicing assets
   
26,569
     
27,474
 
Other assets
   
162,194
     
160,605
 
Total assets
 
$
4,204,793
   
$
3,944,063
 
                 
Liabilities and Stockholders’ Equity
               
Noninterest-bearing deposits
 
$
974,201
   
$
1,150,488
 
Interest-bearing deposits
   
2,651,952
     
2,255,942
 
Total deposits
   
3,626,153
     
3,406,430
 
Subordinated debt
   
63,775
     
75,961
 
Junior subordinated deferrable interest debentures
   
46,393
     
46,393
 
Other liabilities
   
61,358
     
58,265
 
Total liabilities
   
3,797,679
     
3,587,049
 
Stockholders’ Equity
               
Common stock
   
16,417
     
17,027
 
Additional paid-in capital
   
97,107
     
112,834
 
Retained earnings
   
345,264
     
292,261
 
Accumulated other comprehensive income (loss)
   
(51,674
)
   
(65,108
)
Total stockholders’ equity
   
407,114
     
357,014
 
Total liabilities and stockholders’ equity
 
$
4,204,793
   
$
3,944,063
 


South Plains Financial, Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands)

   
Three Months Ended
   
Twelve Months Ended
 
   
December 31,
2023
   
December 31,
2022
   
December 31,
2023
   
December 31,
2022
 
                         
Interest income:
                       
Loans, including fees
 
$
47,895
   
$
38,694
   
$
176,598
   
$
137,954
 
Other
   
9,341
     
7,534
     
35,435
     
23,214
 
Total interest income
   
57,236
     
46,228
     
212,033
     
161,168
 
Interest expense:
                               
Deposits
   
20,219
     
8,258
     
64,987
     
17,002
 
Subordinated debt
   
981
     
1,013
     
4,018
     
4,050
 
Junior subordinated deferrable interest debentures
   
874
     
635
     
3,276
     
1,640
 
Other
   
-
     
-
     
5
     
-
 
Total interest expense
   
22,074
     
9,906
     
72,286
     
22,692
 
Net interest income
   
35,162
     
36,322
     
139,747
     
138,476
 
Provision for credit losses
   
600
     
248
     
4,610
     
(2,619
)
Net interest income after provision for credit losses
   
34,562
     
36,074
     
135,137
     
141,095
 
Noninterest income:
                               
Service charges on deposits
   
1,844
     
1,680
     
7,130
     
6,829
 
Income from insurance activities
   
37
     
2,823
     
1,515
     
10,826
 
Mortgage banking activities
   
1,671
     
2,777
     
13,817
     
31,370
 
Bank card services and interchange fees
   
3,167
     
3,090
     
13,323
     
12,946
 
Gain on sale of subsidiary
   
     
     
33,778
     
 
Other
   
2,427
     
2,306
     
9,663
     
14,174
 
Total noninterest income
   
9,146
     
12,676
     
79,226
     
76,145
 
Noninterest expense:
                               
Salaries and employee benefits
   
17,977
     
18,703
     
79,377
     
86,323
 
Net occupancy expense
   
3,856
     
4,085
     
16,102
     
15,987
 
Professional services
   
1,509
     
1,945
     
6,433
     
9,740
 
Marketing and development
   
880
     
1,223
     
3,453
     
3,614
 
Other
   
6,375
     
6,752
     
29,581
     
28,425
 
Total noninterest expense
   
30,597
     
32,708
     
134,946
     
144,089
 
Income before income taxes
   
13,111
     
16,042
     
79,417
     
73,151
 
Income tax expense
   
2,787
     
3,421
     
16,672
     
14,911
 
Net income
 
$
10,324
   
$
12,621
   
$
62,745
   
$
58,240
 


South Plains Financial, Inc.
Loan Composition
(Unaudited)
(Dollars in thousands)

   
As of
 
   
December 31,
2023
   
December 31,
2022
 
             
Loans:
           
Commercial Real Estate
 
$
1,081,056
   
$
919,358
 
Commercial - Specialized
   
372,376
     
327,513
 
Commercial - General
   
517,361
     
484,783
 
Consumer:
               
1-4 Family Residential
   
534,731
     
460,124
 
Auto Loans
   
305,271
     
321,476
 
Other Consumer
   
74,168
     
81,308
 
Construction
   
129,190
     
153,519
 
Total loans held for investment
 
$
3,014,153
   
$
2,748,081
 

South Plains Financial, Inc.
Deposit Composition
(Unaudited)
(Dollars in thousands)

   
As of
 
   
December 31,
2023
   
December 31,
2022
 
             
Deposits:
           
Noninterest-bearing deposits
 
$
974,201
   
$
1,150,488
 
NOW & other transaction accounts
   
562,066
     
350,910
 
MMDA & other savings
   
1,722,170
     
1,618,833
 
Time deposits
   
367,716
     
286,199
 
Total deposits
 
$
3,626,153
   
$
3,406,430
 


South Plains Financial, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands)

   
For the quarter ended
 
   
December 31,
2023
   
September 30,
2023
   
June 30,
2023
   
March 31,
2023
   
December 31,
2022
 
Pre-tax, pre-provision income
                             
Net income
 
$
10,324
   
$
13,494
   
$
29,683
   
$
9,244
   
$
12,621
 
Income tax expense
   
2,787
     
3,683
     
7,811
     
2,391
     
3,421
 
Provision for credit losses
   
600
     
(700
)
   
3,700
     
1,010
     
248
 
                                         
Pre-tax, pre-provision income
 
$
13,711
   
$
16,477
   
$
41,194
   
$
12,645
   
$
16,290
 

Efficiency Ratio
                             
Noninterest expense
 
$
30,597
   
$
31,489
   
$
40,499
   
$
32,361
   
$
32,708
 
                                         
Net interest income
   
35,162
     
35,689
     
34,581
     
34,315
     
36,322
 
Tax equivalent yield adjustment
   
225
     
229
     
303
     
302
     
299
 
Noninterest income
   
9,146
     
12,277
     
47,112
     
10,691
     
12,676
 
Total income
   
44,533
     
48,195
     
81,996
     
45,308
     
49,297
 
                                         
Efficiency ratio
   
68.71
%
   
65.34
%
   
49.39
%
   
71.42
%
   
66.35
%
                                         
Noninterest expense
 
$
30,597
   
$
31,489
   
$
40,499
   
$
32,361
   
$
32,708
 
Less:  Windmark transaction and related expenses
   
     
     
(4,532
)
   
     
 
Less:  net loss on sale of securities
   
     
     
(3,409
)
   
     
 
Adjusted noninterest expense
   
30,597
     
31,489
     
32,558
     
32,361
     
32,708
 
                                         
Total income
   
44,533
     
48,195
     
81,996
     
45,308
     
49,297
 
Less:  gain on sale of Windmark
   
     
(290
)
   
(33,488
)
   
     
 
Adjusted total income
   
44,533
     
47,905
     
48,508
     
45,308
     
49,297
 
                                         
Adjusted efficiency ratio
   
68.71
%
   
65.73
%
   
67.12
%
   
71.42
%
   
66.35
%

   
As of
 
   
December 31,
2023
   
September 30,
2023
   
June 30,
2023
   
March 31,
2023
   
December 31,
2022
 
Tangible common equity
                             
Total common stockholders’ equity
 
$
407,114
   
$
371,716
   
$
$ 392,029
   
$
$ 367,964
   
$
$ 357,014
 
Less:  goodwill and other intangibles
   
(21,744
)
   
(21,936
)
   
(22,149
)
   
(23,496
)
   
(23,857
)
                                         
Tangible common equity
 
$
385,370
   
$
349,780
   
$
$ 369,880
   
$
$ 344,468
   
$
$ 333,157
 
                                         
Tangible assets