UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549



FORM 10-Q



(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-38895



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

 Texas
 
75-2453320
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
5219 City Bank Parkway
Lubbock, Texas
 
79407
(Address of principal executive offices)
 
(Zip Code)

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

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, $1.00 par value per share
SPFI
The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company

     
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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes    No 

As of August 5, 2024, the registrant had 16,386,627 shares of common stock, par value $1.00 per share, outstanding.



TABLE OF CONTENTS

   
Page
PART I.
3
Item 1.
3
 
3
 
4
 
6
 
7
 
8
Item 2.
32
Item 3.
54
Item 4.
54
PART II.
56
Item 1.
56
Item 1A.
56
Item 2.
56
Item 3.
56
Item 4.
56
Item 5.
56
Item 6.
57
58

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

 
June 30,
2024
   
December 31,
2023
 
   
(Unaudited)
       
ASSETS
           
Cash and due from banks
 
$
46,024
   
$
62,821
 
Interest-bearing deposits in banks
   
251,982
     
267,337
 
Cash and cash equivalents
   
298,006
     
330,158
 
Securities available for sale
   
591,031
     
622,762
 
Loans held for sale ($12,252 and $6,615 at fair value at June 30, 2024 and December 31, 2023, respectively)
   
16,585
     
14,499
 
Loans held for investment
   
3,094,273
     
3,014,153
 
Allowance for credit losses on loans
   
(43,173
)
   
(42,356
)
Loans held for investment, net
    3,051,100       2,971,797  
Accrued interest receivable
   
19,481
     
20,881
 
Premises and equipment, net
   
53,952
     
55,070
 
Bank-owned life insurance
   
75,254
     
74,504
 
Goodwill
   
19,315
     
19,315
 
Intangible assets, net
   
2,064
     
2,429
 
Mortgage servicing rights
   
26,426
     
26,569
 
Deferred tax asset, net
   
22,319
     
19,413
 
Other assets
   
45,403
     
47,396
 
Total assets
 
$
4,220,936
   
$
4,204,793
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Deposits:
               
Noninterest-bearing
 
$
951,565
   
$
974,201
 
Interest-bearing
   
2,672,948
     
2,651,952
 
Total deposits
   
3,624,513
     
3,626,153
 
Accrued expenses and other liabilities
   
68,177
     
61,358
 
Subordinated debt
   
63,868
     
63,775
 
Junior subordinated deferrable interest debentures
   
46,393
     
46,393
 
Total liabilities
   
3,802,951
     
3,797,679
 
                 
Stockholders’ equity:
               
Common stock, $1.00 par value per share, 30,000,000 shares authorized; 16,424,021 and 16,417,099 issued and outstanding at June 30, 2024 and December 31, 2023, respectively
   
16,424
     
16,417
 
Additional paid-in capital
   
97,766
     
97,107
 
Retained earnings
   
362,855
     
345,264
 
Accumulated other comprehensive loss
   
(59,060
)
   
(51,674
)
Total stockholders’ equity
   
417,985
     
407,114
 
Total liabilities and stockholders’ equity
 
$
4,220,936
   
$
4,204,793
 

The accompanying notes are an integral part of these consolidated financial statements.

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousands, except per share data)

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2024
   
2023
   
2024
   
2023
 
Interest income:
                       
Loans, including fees
 
$
50,571
   
$
42,864
   
$
99,503
   
$
82,461
 
Securities:
                               
Taxable
   
5,285
     
5,365
     
10,796
     
10,605
 
Non-taxable
   
807
     
1,108
     
1,616
     
2,224
 
Federal funds sold and interest-bearing deposits in banks
   
2,545
     
1,484
     
6,020
     
2,979
 
Total interest income
   
59,208
     
50,821
     
117,935
     
98,269
 
Interest expense:
                               
Deposits
   
21,629
     
14,433
     
43,292
     
25,803
 
Notes payable & other borrowings
          5             5  
Subordinated debt
   
835
     
1,013
     
1,670
     
2,025
 
Junior subordinated deferrable interest debentures
   
856
     
789
     
1,717
     
1,540
 
Total interest expense
   
23,320
     
16,240
     
46,679
     
29,373
 
Net interest income
   
35,888
     
34,581
     
71,256
     
68,896
 
Provision for credit losses    
1,775
     
3,700
     
2,605
     
4,710
 
Net interest income, after provision for credit losses
   
34,113
     
30,881
     
68,651
     
64,186
 
Noninterest income:
                               
Service charges on deposit accounts
   
1,949
     
1,745
     
3,762
     
3,446
 
Income from insurance activities
   
30
     
37
     
64
     
1,448
 
Net gain on sales of loans
   
2,788
     
3,528
     
5,442
     
6,446
 
Bank card services and interchange fees
   
4,052
     
4,043
     
7,113
     
6,999
 
Other mortgage banking income
   
609
     
1,731
      1,900       1,098  
Investment commissions
   
450
     
420
     
884
     
809
 
Fiduciary fees
   
720
     
597
     
1,474
     
1,197
 
Gain on sale of subsidiary
          33,488             33,488  
Other
   
2,111
     
1,523
     
3,479
     
2,872
 
Total noninterest income
   
12,709
     
47,112
     
24,118
     
57,803
 
Noninterest expense:
                               
Salaries and employee benefits
   
19,199
     
23,437
     
38,187
     
42,691
 
Occupancy and equipment, net
   
4,029
     
4,303
     
7,949
     
8,135
 
Professional services
   
1,738
     
1,716
     
3,221
     
3,364
 
Marketing and development
   
860
     
784
     
1,614
     
1,720
 
IT and data services
   
1,086
     
888
     
2,076
     
1,752
 
Bank card expenses
   
1,516
     
1,316
     
2,913
     
2,668
 
Appraisal expenses
   
229
     
301
     
456
     
579
 
Realized loss on sale of securities
          3,409             3,409  
Other
   
3,915
     
4,345
     
8,086
     
8,542
 
Total noninterest expense
   
32,572
     
40,499
     
64,502
     
72,860
 
Income before income taxes
   
14,250
     
37,494
     
28,267
     
49,129
 
Income tax expense
   
3,116
     
7,811
     
6,259
     
10,202
 
Net income
 
$
11,134
   
$
29,683
   
$
22,008
   
$
38,927
 

The accompanying notes are an integral part of these consolidated financial statements.

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED)
(Unaudited)
(Dollars in thousands, except per share data)

 
Three Months Ended
June 30,
   
Six Months Ended
June 30,
 
   
2024
   
2023
   
2024
   
2023
 
Earnings per share:
                       
Basic
 
$
0.68
   
$
1.74
   
$
1.34
   
$
2.28
 
Diluted
 
$
0.66
   
$
1.71
   
$
1.30
   
$
2.23
 
                                 
Net income
 
$
11,134
   
$
29,683
   
$
22,008
   
$
38,927
 
Other comprehensive income (loss):                                
Unrealized gains (losses) on securities available for sale    
561
     
(7,109
)
   
(10,269
)
   
1,514
 
Less: Change in fair value on hedged state and municipal securities
   
(463
)
   
1,866
     
920
     
(771
)
Reclassification adjustment for loss on sale of securities
          3,409             3,409  
Tax effect
   
(21
)
   
385
     
1,963
     
(872
)
Other comprehensive income (loss)
   
77
     
(1,449
)
   
(7,386
)
   
3,280
 
Comprehensive income
 
$
11,211
   
$
28,234
   
$
14,622
   
$
42,207
 

The accompanying notes are an integral part of these consolidated financial statements.

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(Dollars in thousands, except per share data)

 
Common Stock
   
Additional
Paid-in
   
Retained
   
Accumulated
Other
Comprehensive
       
   
Shares
   
Amount
   
Capital
   
Earnings
   
Income (Loss)
   
Total
 
Six Months Ended June 30, 2023
                                   
Balance at beginning of period
   
17,027,197
   
$
17,027
   
$
112,834
   
$
292,261
   
$
(65,108
)
 
$
357,014
 
Net income
   
     
     
     
38,927
     
     
38,927
 
Cash dividends declared  - $0.26 per share
   
     
     
     
(4,419
)
   
     
(4,419
)
Other comprehensive income
   
     
     
     
     
3,280
     
3,280
 
Impact of adoption of ASU 2016-13 - CECL
                      (997 )           (997 )
Issuance of stock related to stock-based awards, net of 24,140 shares for cashless exercise and net of 13,892 shares for taxes
   
37,829
     
38
     
(380
)
   
     
     
(342
)
Repurchases of common stock
   
(112,954
)
   
(113
)
   
(2,435
)
   
     
     
(2,548
)
Stock-based compensation
   
     
     
1,114
     
     
     
1,114
 
Balance at end of period
   
16,952,072
   
$
16,952
   
$
111,133
   
$
325,772
   
$
(61,828
)
 
$
392,029
 
                                                 
Six Months Ended June 30, 2024
                                               
Balance at beginning of period
   
16,417,099
   
$
16,417
   
$
97,107
   
$
345,264
   
$
(51,674
)
 
$
407,114
 
Net income
   
     
     
     
22,008
     
     
22,008
 
Cash dividends declared  - $0.27 per share
   
     
     
     
(4,417
)
   
     
(4,417
)
Other comprehensive loss
   
     
     
     
     
(7,386
)
   
(7,386
)
Issuance of stock related to stock-based awards, net of 4,051 shares for cashless exercise and net of 4,675 shares for taxes
   
20,721
     
21
     
(153
)
   
     
     
(132
)
Repurchases of common stock
   
(13,799
)
   
(14
)
   
(326
)
   
     
     
(340
)
Stock-based compensation
   
     
     
1,138
     
     
     
1,138
 
Balance at end of period
   
16,424,021
   
$
16,424
   
$
97,766
   
$
362,855
   
$
(59,060
)
 
$
417,985
 
                                                 
Three Months Ended June 30, 2023
                                               
Balance at beginning of period
   
17,062,572
   
$
17,062
   
$
112,981
   
$
298,300
   
$
(60,379
)
 
$
367,964
 
Net income
   
     
     
     
29,683
     
     
29,683
 
Cash dividends declared  - $0.13 per share
   
     
     
     
(2,211
)
   
     
(2,211
)
Other comprehensive loss
   
     
     
     
     
(1,449
)
   
(1,449
)
Issuance of stock related to stock-based awards, net of 10,567 shares for cashless exercise
    2,454       3       (3 )                  
Repurchases of common stock
    (112,954 )     (113 )     (2,435 )                 (2,548 )
Stock-based compensation
   
     
     
590
     
     
     
590
 
Balance at end of period
   
16,952,072
   
$
16,952
   
$
111,133
   
$
325,772
   
$
(61,828
)
 
$
392,029
 
                                                 
Three Months Ended June 30, 2024                                                
Balance at beginning of period
   
16,431,755
   
$
16,432
   
$
97,406
   
$
354,011
   
$
(59,137
)
 
$
408,712
 
Net income
   
     
     
     
11,134
     
     
11,134
 
Cash dividends declared  - $0.14 per share
   
     
     
     
(2,290
)
   
     
(2,290
)
Other comprehensive income
   
     
     
     
     
77
     
77
 
Issuance of stock related to stock-based awards, net of 1,445 shares for cashless exercise
    4,659