SEC Filing | South Plains Financial

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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 September 30, 2024

☐	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 November 1, 2024, the registrant had 16,389,659 shares of common stock, par value $1.00 per share, outstanding.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	6
	Consolidated Statements of Cash Flows (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	54
Signatures		55

Table of Contents

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)

	September 30, 2024			December 31, 2023
	(Unaudited)
ASSETS
Cash and due from banks	$	60,863		$	62,821
Interest-bearing deposits in banks		410,304			267,337
Cash and cash equivalents		471,167			330,158
Securities available for sale		606,889			622,762
Loans held for sale ($9,490 and $6,615 at fair value at September 30, 2024 and December 31, 2023, respectively)		11,389			14,499
Loans held for investment		3,037,375			3,014,153
Allowance for credit losses on loans		(42,886	)		(42,356	)
Loans held for investment, net		2,994,489			2,971,797
Accrued interest receivable		19,155			20,881
Premises and equipment, net		53,323			55,070
Bank-owned life insurance		75,649			74,504
Goodwill		19,315			19,315
Intangible assets, net		1,882			2,429
Mortgage servicing rights		24,573			26,569
Deferred tax asset, net		18,889			19,413
Other assets		40,939			47,396
Total assets	$	4,337,659		$	4,204,793

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	998,480		$	974,201
Interest-bearing		2,720,880			2,651,952
Total deposits		3,719,360			3,626,153
Accrued expenses and other liabilities		64,870			61,358
Subordinated debt		63,914			63,775
Junior subordinated deferrable interest debentures		46,393			46,393
Total liabilities		3,894,537			3,797,679

Stockholders’ equity:
Common stock, $1.00 par value per share, 30,000,000 shares authorized; 16,386,627 and 16,417,099 issued and outstanding at September 30, 2024 and December 31, 2023, respectively		16,386			16,417
Additional paid-in capital		97,367			97,107
Retained earnings		371,782			345,264
Accumulated other comprehensive loss		(42,413	)		(51,674	)
Total stockholders’ equity		443,122			407,114
Total liabilities and stockholders’ equity	$	4,337,659		$	4,204,793

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

Table of Contents

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024		2023
Interest income:
Loans, including fees	$	51,505		$	46,242		$	151,008	$	128,703
Securities:
Taxable		5,300			5,422			16,096		16,027
Non-taxable		803			833			2,419		3,057
Federal funds sold and interest-bearing deposits in banks		4,032			4,031			10,052		7,010
Total interest income		61,640			56,528			179,575		154,797
Interest expense:
Deposits		22,653			18,965			65,945		44,768
Notes payable & other borrowings		—			—			—		5
Subordinated debt		835			1,012			2,505		3,037
Junior subordinated deferrable interest debentures		858			862			2,575		2,402
Total interest expense		24,346			20,839			71,025		50,212
Net interest income		37,294			35,689			108,550		104,585
Provision for credit losses		495			(700	)		3,100		4,010
Net interest income, after provision for credit losses		36,799			36,389			105,450		100,575
Noninterest income:
Service charges on deposit accounts		2,023			1,840			5,785		5,286
Income from insurance activities		28			30			92		1,478
Net gain on sales of loans		2,715			2,631			8,157		9,077
Bank card services and interchange fees		3,302			3,157			10,415		10,156
Other mortgage banking income (loss)		(825	)		1,971			1,075		3,069
Investment commissions		391			430			1,275		1,239
Fiduciary fees		613			582			2,087		1,779
Gain on sale of subsidiary		—			290			—		33,778
Other		2,388			1,346			5,867		4,218
Total noninterest income		10,635			12,277			34,753		70,080
Noninterest expense:
Salaries and employee benefits		18,767			18,709			56,954		61,400
Occupancy and equipment, net		4,255			4,111			12,204		12,246
Professional services		1,807			1,560			5,028		4,924
Marketing and development		1,015			853			2,629		2,573
IT and data services		1,092			818			3,168		2,570
Bank card expenses		1,500			1,451			4,413		4,119
Appraisal expenses		246			283			702		862
Realized loss on sale of securities		—			—			—		3,409
Other		4,446			3,704			12,532		12,246
Total noninterest expense		33,128			31,489			97,630		104,349
Income before income taxes		14,306			17,177			42,573		66,306
Income tax expense		3,094			3,683			9,353		13,885
Net income	$	11,212		$	13,494		$	33,220	$	52,421

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

Table of Contents

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (CONTINUED)

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Earnings per share:
Basic	$	0.68		$	0.80		$	2.02		$	3.09
Diluted	$	0.66		$	0.78		$	1.96		$	3.01

Net income	$	11,212		$	13,494		$	33,220		$	52,421
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale		25,268			(30,907	)		14,997			(29,393	)
Less: Change in fair value on hedged state and municipal securities		(4,196	)		2,091			(3,274	)		1,320
Reclassification adjustment for loss on sale of securities		—			—			—			3,409
Tax effect		(4,425	)		6,051			(2,462	)		5,179
Other comprehensive income (loss)		16,647			(22,765	)		9,261			(19,485	)
Comprehensive income (loss)	$	27,859		$	(9,271	)	$	42,481		$	32,936

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

Table of Contents

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
Nine Months Ended September 30, 2023
Balance at beginning of period		17,027,197		$	17,027		$	112,834		$	292,261		$	(65,108	)	$	357,014
Net income		—			—			—			52,421			—			52,421
Cash dividends declared - $0.39 per share		—			—			—			(6,609	)		—			(6,609	)
Other comprehensive loss		—			—			—			—			(19,485	)		(19,485	)
Impact of adoption of ASU 2016-13 - CECL		—			—			—			(997	)		—			(997	)
Issuance of stock related to stock-based awards, net of 26,872 shares for cashless exercise and net of 15,769 shares for taxes		40,720			40			(433	)		—			—			(393	)
Repurchases of common stock		(467,475	)		(467	)		(11,393	)		—			—			(11,860	)
Stock-based compensation		—			—			1,625			—			—			1,625
Balance at end of period		16,600,442		$	16,600		$	102,633		$	337,076		$	(84,593	)	$	371,716

Nine Months Ended September 30, 2024
Balance at beginning of period		16,417,099		$	16,417		$	97,107		$	345,264		$	(51,674	)	$	407,114
Net income		—			—			—			33,220			—			33,220
Cash dividends declared - $0.41 per share		—			—			—			(6,702	)		—			(6,702	)
Other comprehensive income		—			—			—			—			9,261			9,261
Issuance of stock related to stock-based awards, net of 7,213 shares for cashless exercise and net of 4,675 shares for taxes		23,327			23			(155	)		—			—			(132	)
Repurchases of common stock		(53,799	)		(54	)		(1,286	)		—			—			(1,340	)
Stock-based compensation		—			—			1,701			—			—			1,701
Balance at end of period		16,386,627		$	16,386		$	97,367		$	371,782		$	(42,413	)	$	443,122

Three Months Ended September 30, 2023
Balance at beginning of period		16,952,072		$	16,952		$	111,133		$	325,772		$	(61,828	)	$	392,029
Net income		—			—			—			13,494			—			13,494
Cash dividends declared - $0.13 per share		—			—			—			(2,190	)		—			(2,190	)
Other comprehensive loss		—			—			—			—			(22,765	)		(22,765	)
Issuance of stock related to stock-based awards, net of 2,732 shares for cashless exercise and net of 1,877 shares for taxes		2,891			2			(53	)		—			—			(51	)
Repurchases of common stock		(354,521	)		(354	)		(8,958	)		—			—			(9,312	)
Stock-based compensation		—			—			511			—			—			511
Balance at end of period		16,600,442		$	16,600		$	102,633		$	337,076		$	(84,593	)	$	371,716