8-K
SOUTH PLAINS FINANCIAL, INC. (SPFI)
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): July 18, 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<br><br> <br>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 July 18, 2024, South Plains Financial, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2024. 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 July 18, 2024, officers of the Company will have a conference call with respect to the Company’s financial results for the second quarter ended June 30, 2024. An earnings release slide presentation highlighting the Company’s financial results for the second quarter ended June 30, 2024 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 8.01 | Other Events. |
|---|
On July 18, 2024, South Plains Financial, Inc. issued a press release announcing the declaration of a quarterly cash dividend of $0.14 per share on its outstanding common stock. The dividend will be paid on August 12, 2024 to shareholders of record as of the close of business on July 29, 2024. A copy of the press release is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits. |
| --- | --- |
| 99.1 | Press release, dated July 18, 2024, announcing second quarter 2024 financial results of South Plains Financial, Inc. |
| 99.2 | Earnings release slide presentation, dated July 18, 2024. |
| 99.3 | Press release, dated July 18, 2024, announcing South Plains Financial, Inc. quarterly cash dividend. |
| 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: July 18, 2024 | By: | /s/ Steven B. Crockett |
| Steven B. Crockett | ||
| --- | ||
| Chief Financial Officer and Treasurer |
Exhibit 99.1
South Plains Financial, Inc. Reports Second Quarter 2024 Financial Results
LUBBOCK, Texas, July 18, 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 ended June 30, 2024.
Second Quarter 2024 Highlights
| ● | Net income for the second quarter of 2024 was $11.1 million, compared to $10.9 million for the first quarter of 2024 and $29.7 million for the second quarter of 2023.<br> The decrease in net income for the second quarter of 2024 as compared to the second quarter of 2023 was primarily due to the sale of Windmark Insurance Agency, Inc. (“Windmark”) in the second quarter of 2023, which resulted in a gain of $33.5<br> million before taxes and related expenses. |
|---|---|
| ● | Diluted earnings per share for the second quarter of 2024 was $0.66, compared to $0.64 for the first quarter of 2024 and $1.71 for the second quarter of 2023. |
| --- | --- |
| ● | Average cost of deposits for the second quarter of 2024 was 243 basis points, compared to 241 basis points for the first quarter of 2024 and 169 basis points for the<br> second quarter of 2023. |
| --- | --- |
| ● | Net interest margin, calculated on a tax-equivalent basis, was 3.63% for the second quarter of 2024, compared to 3.56% for the first quarter of 2024 and 3.65% for the<br> second quarter of 2023. |
| --- | --- |
| ● | Nonperforming assets to total assets were 0.57% at June 30, 2024, compared to 0.10% at March 31, 2024 and 0.51% at June 30, 2023. |
| --- | --- |
| ● | Return on average assets for the second quarter of 2024 was 1.07% annualized, compared to 1.04% annualized for the first quarter of 2024 and 2.97% annualized for the<br> second quarter of 2023. |
| --- | --- |
| ● | Tangible book value (non-GAAP) per share was $24.15 as of June 30, 2024, compared to $23.56 as of March 31, 2024 and $21.82 as of June 30, 2023. |
| --- | --- |
| ● | The consolidated total risk-based capital ratio, Common Equity Tier 1 risk-based capital ratio, and Tier 1 leverage ratio at June 30, 2024 were 16.86%, 12.61%, and<br> 11.81%, respectively. These ratios significantly exceeded the minimum regulatory levels necessary to be deemed “well-capitalized”. |
| --- | --- |
Curtis Griffith, South Plains’ Chairman and Chief Executive Officer, commented, “Our second quarter results demonstrate our successful efforts to drive profitability and returns as we continue to strive to be a high performing bank. Strength in the quarter came from robust loan growth which lifted the yield on our loan portfolio and contributed to our net interest margin expansion. We also continued to closely manage our liquidity with a focus on maximizing the profitability and returns of the Bank. This led to a modest reduction in customer deposits as we worked to keep deposit costs steady through the quarter. Importantly, we believe competitive pressures for deposits have started to ease while new loan yields have remained robust, leading to our solid net interest margin expansion in the quarter. We also continue to aggressively manage the credit quality of our loan portfolio, having moved a multi-family property loan to nonaccrual during the period. This is a loan that we have had rated substandard since June of last year and have been closely monitoring and proactively working on the credit over that time period. Our actions demonstrate our credit culture, which is focused on identifying problems early, working with our borrowers and taking the appropriate steps to resolve challenges. Looking forward, we believe we are in a solid position as the credit quality of our loan portfolio is strong, we have ample opportunities to drive organic growth across our markets, and we continue to significantly exceed the minimum regulatory levels necessary for the Company and the Bank to be deemed well capitalized.”
Results of Operations, Quarter Ended June 30, 2024
Net Interest Income
Net interest income was $35.9 million for the second quarter of 2024, compared to $35.4 million for the first quarter of 2024 and $34.6 million for the second quarter of 2023. Net interest margin, calculated on a tax-equivalent basis, was 3.63% for the second quarter of 2024, compared to 3.56% for the first quarter of 2024 and 3.65% for the second quarter of 2023. The average yield on loans was 6.60% for the second quarter of 2024, compared to 6.53% for the first quarter of 2024 and 5.94% for the second quarter of 2023. The average cost of deposits was 243 basis points for the second quarter of 2024, which is 2 basis points higher than the first quarter of 2024 and 74 basis points higher than the second quarter of 2023.
Interest income was $59.2 million for the second quarter of 2024, compared to $58.7 million for the first quarter of 2024 and $50.8 million for the second quarter of 2023. Interest income increased $481 thousand in the second quarter of 2024 from the first quarter of 2024, which was primarily comprised of an increase of $1.6 million in loan interest income and a decrease of $930 thousand in interest income on other interest-earning assets. The growth in loan interest income was due to an increase in average loans of $68.1 million and a rise of 7 basis points in the yield on loans. The decrease in interest income on other interest-earning assets was predominately a result of deploying liquidity into loans during the quarter. Interest income increased $8.4 million in the second quarter of 2024 compared to the second quarter of 2023. This increase was primarily due to an increase of average loans of $188.5 million and higher market interest rates during the period, resulting in growth of $7.7 million in loan interest income, and a higher liquidity level year over year.
Interest expense was $23.3 million for the second quarter of 2024, compared to $23.4 million for the first quarter of 2024 and $16.2 million for the second quarter of 2023. Interest expense was flat compared to the first quarter of 2024 and increased $7.1 million compared to the second quarter of 2023. The $7.1 million increase was 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 were higher during the second quarter of 2024 compared to the second quarter of 2023, which also contributed to the higher interest expense.
Noninterest Income and Noninterest Expense
Noninterest income was $12.7 million for the second quarter of 2024, compared to $11.4 million for the first quarter of 2024 and $47.1 million for the second quarter of 2023. The increase from the first quarter of 2024 was primarily due to increases of $1.0 million in bank card services and interchange revenue mainly as a result of continued growth in customer card usage and incentives received during the period and $408 thousand in income from investments in Small Business Investment Companies. These increases were partially offset by a decrease of $548 thousand in mortgage banking revenues, mainly from a decrease of $735 thousand in the fair value adjustment of the mortgage servicing rights assets as interest rates that affect the value were relatively flat after rising modestly in the first quarter of 2024. The decrease in noninterest income for the second quarter of 2024 as compared to the second quarter of 2023 was primarily due to the $33.5 million gain on sale of Windmark in the second quarter of 2023 and a decrease of $1.9 million in mortgage banking activities revenue. The decrease of $1.9 million in mortgage banking revenues was mainly from a decline of $1.1 million in the fair value adjustment of the mortgage servicing rights assets as interest rates that affect the value were relatively flat after rising modestly in the second quarter of 2023 and an increase of $14.3 million in originations of mortgage loans held for sale due to typical seasonality.
Noninterest expense was $32.6 million for the second quarter of 2024, compared to $31.9 million for the first quarter of 2024 and $40.5 million for the second quarter of 2023. The $642 thousand increase from the first quarter of 2024 was largely the result of a rise of $436 thousand in mortgage commission expense as mortgage loan originations increased. The decrease in noninterest expense for the second quarter of 2024 as compared to the second quarter of 2023 was largely the result of second quarter 2023 activities of $4.5 million in personnel and transaction expenses as part of the aforementioned Windmark sale plus related incentive compensation and a $3.4 million loss on the sale of securities.
Loan Portfolio and Composition
Loans held for investment were $3.09 billion as of June 30, 2024, compared to $3.01 billion as of March 31, 2024 and $2.98 billion as of June 30, 2023. The $82.5 million, or 2.7%, increase during the second quarter of 2024 as compared to the first quarter of 2024 remained relationship-focused and occurred primarily in direct-energy loans, seasonal agricultural-related loans, and single-family property loans, partially offset by decreases in consumer auto loans. As of June 30, 2024, loans held for investment increased $115.2 million, or 3.9%, from June 30, 2023, primarily attributable to strong organic loan growth, occurring mainly in multi-family property loans, direct-energy loans, and single-family property loans, partially offset by decreases in consumer auto loans.
Deposits and Borrowings
Deposits totaled $3.62 billion as of June 30, 2024, compared to $3.64 billion as of March 31, 2024 and $3.57 billion as of June 30, 2023. Deposits decreased by $14.1 million, or 0.4%, in the second quarter of 2024 from March 31, 2024. As of June 30, 2024, deposits increased $50.0 million, or 1.4%, from June 30, 2023. Noninterest-bearing deposits were $951.6 million as of June 30, 2024, compared to $974.2 million as of March 31, 2024 and $1.10 billion as of June 30, 2023. Noninterest-bearing deposits represented 26.3% of total deposits as of June 30, 2024. The quarterly change in total deposits was mainly due to a modest decrease in noninterest-bearing deposits. The year-over-year increase in total deposits was primarily the result of growth of $71 million in brokered deposits in the third quarter of 2023 given the overall focus in the banking industry on improving liquidity.
Asset Quality
The Company recorded a provision for credit losses in the second quarter of 2024 of $1.8 million, compared to $830 thousand in the first quarter of 2024 and $3.7 million in the second quarter of 2023. The provision during the first quarter of 2024 was largely attributable to net charge-off activity, increased loan balances, and higher nonperforming loans during the quarter.
The ratio of allowance for credit losses to loans held for investment was 1.40% as of June 30, 2024, compared to 1.40% as of March 31, 2024 and 1.45% as of June 30, 2023.
The ratio of nonperforming assets to total assets was 0.57% as of June 30, 2024, compared to 0.10% as of March 31, 2024 and 0.51% as of June 30, 2023. A previously classified $20.6 million multi-family property credit was placed on nonaccrual status in the second quarter of 2024 after the maturity date was accelerated. Annualized net charge-offs were 0.10% for the second quarter of 2024, compared to 0.13% for the first quarter of 2024 and 0.05% for the second quarter of 2023.
Capital
Book value per share increased to $25.45 at June 30, 2024, compared to $24.87 at March 31, 2024. The change was primarily driven by $8.8 million of net income after dividends paid. Tangible common equity to tangible assets (non-GAAP) increased 22 basis points to 9.44% in the second quarter of 2024.
Conference Call
South Plains will host a conference call to discuss its second quarter 2024 financial results today, July 18, 2024, at 5:00 p.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 13747117. The replay will be available until August 1, 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 bank failures and any continuation of 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 in our market areas and related changes in deposit customer behavior; the impact of changes in market interest rates, whether due to continued elevated interest rates or potential reduction in interest rates and a resulting decline in net interest income; the persistence of the current inflationary pressures, or the resurgence of elevated levels of inflation, 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; increases in unemployment rates in the United States and our market areas; declines in commercial real estate values and 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; 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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br><br> <br>2024 | March 31,<br><br> <br>2024 | December 31,<br><br> <br>2023 | September 30,<br><br> <br>2023 | June 30,<br><br> <br>2023 | |||||||||||
| Selected Income Statement Data: | |||||||||||||||
| Interest income | $ | 59,208 | $ | 58,727 | $ | 57,236 | $ | 56,528 | $ | 50,821 | |||||
| Interest expense | 23,320 | 23,359 | 22,074 | 20,839 | 16,240 | ||||||||||
| Net interest income | 35,888 | 35,368 | 35,162 | 35,689 | 34,581 | ||||||||||
| Provision for credit losses | 1,775 | 830 | 600 | (700 | ) | 3,700 | |||||||||
| Noninterest income | 12,709 | 11,409 | 9,146 | 12,277 | 47,112 | ||||||||||
| Noninterest expense | 32,572 | 31,930 | 30,597 | 31,489 | 40,499 | ||||||||||
| Income tax expense | 3,116 | 3,143 | 2,787 | 3,683 | 7,811 | ||||||||||
| Net income | 11,134 | 10,874 | 10,324 | 13,494 | 29,683 | ||||||||||
| Per Share Data (Common Stock): | |||||||||||||||
| Net earnings, basic | 0.68 | 0.66 | 0.63 | 0.80 | 1.74 | ||||||||||
| Net earnings, diluted | 0.66 | 0.64 | 0.61 | 0.78 | 1.71 | ||||||||||
| Cash dividends declared and paid | 0.14 | 0.13 | 0.13 | 0.13 | 0.13 | ||||||||||
| Book value | 25.45 | 24.87 | 24.80 | 22.39 | 23.13 | ||||||||||
| Tangible book value (non-GAAP) | 24.15 | 23.56 | 23.47 | 21.07 | 21.82 | ||||||||||
| Weighted average shares outstanding, basic | 16,425,360 | 16,429,919 | 16,443,908 | 16,842,594 | 17,048,432 | ||||||||||
| Weighted average shares outstanding, dilutive | 16,932,077 | 16,938,857 | 17,008,892 | 17,354,182 | 17,386,515 | ||||||||||
| Shares outstanding at end of period | 16,424,021 | 16,431,755 | 16,417,099 | 16,600,442 | 16,952,072 | ||||||||||
| Selected Period End Balance Sheet Data: | |||||||||||||||
| Cash and cash equivalents | 298,006 | 371,939 | 330,158 | 352,424 | 295,581 | ||||||||||
| Investment securities | 591,031 | 599,869 | 622,762 | 584,969 | 628,093 | ||||||||||
| Total loans held for investment | 3,094,273 | 3,011,799 | 3,014,153 | 2,993,563 | 2,979,063 | ||||||||||
| Allowance for credit losses | 43,173 | 42,174 | 42,356 | 42,075 | 43,137 | ||||||||||
| Total assets | 4,220,936 | 4,218,993 | 4,204,793 | 4,186,440 | 4,150,129 | ||||||||||
| Interest-bearing deposits | 2,672,948 | 2,664,397 | 2,651,952 | 2,574,361 | 2,473,755 | ||||||||||
| Noninterest-bearing deposits | 951,565 | 974,174 | 974,201 | 1,046,253 | 1,100,767 | ||||||||||
| Total deposits | 3,624,513 | 3,638,571 | 3,626,153 | 3,620,614 | 3,574,522 | ||||||||||
| Borrowings | 110,261 | 110,214 | 110,168 | 122,493 | 122,447 | ||||||||||
| Total stockholders’ equity | 417,985 | 408,712 | 407,114 | 371,716 | 392,029 | ||||||||||
| Summary Performance Ratios: | |||||||||||||||
| Return on average assets (annualized) | 1.07 | % | 1.04 | % | 0.99 | % | 1.27 | % | 2.97 | % | |||||
| Return on average equity (annualized) | 10.83 | % | 10.72 | % | 10.52 | % | 14.01 | % | 31.33 | % | |||||
| Net interest margin ^(1)^ | 3.63 | % | 3.56 | % | 3.52 | % | 3.52 | % | 3.65 | % | |||||
| Yield on loans | 6.60 | % | 6.53 | % | 6.29 | % | 6.10 | % | 5.94 | % | |||||
| Cost of interest-bearing deposits | 3.33 | % | 3.27 | % | 3.14 | % | 2.93 | % | 2.45 | % | |||||
| Efficiency ratio | 66.72 | % | 67.94 | % | 68.71 | % | 65.34 | % | 49.39 | % | |||||
| Summary Credit Quality Data: | |||||||||||||||
| Nonperforming loans | 23,452 | 3,380 | 5,178 | 4,783 | 21,039 | ||||||||||
| Nonperforming loans to total loans held for investment | 0.76 | % | 0.11 | % | 0.17 | % | 0.16 | % | 0.71 | % | |||||
| Other real estate owned | 755 | 862 | 912 | 242 | 249 | ||||||||||
| Nonperforming assets to total assets | 0.57 | % | 0.10 | % | 0.14 | % | 0.12 | % | 0.51 | % | |||||
| Allowance for credit losses to total loans held for investment | 1.40 | % | 1.40 | % | 1.41 | % | 1.41 | % | 1.45 | % | |||||
| Net charge-offs to average loans outstanding (annualized) | 0.10 | % | 0.13 | % | 0.08 | % | 0.05 | % | 0.05 | % |
| As of and for the quarter ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30<br><br> <br>2024 | March 31,<br><br> <br>2024 | December 31,<br><br> <br>2023 | September 30,<br><br> <br>2023 | June 30,<br><br> <br>2023 | |||||||||||
| Capital Ratios: | |||||||||||||||
| Total stockholders’ equity to total assets | 9.90 | % | 9.69 | % | 9.68 | % | 8.88 | % | 9.45 | % | |||||
| Tangible common equity to tangible assets (non-GAAP) | 9.44 | % | 9.22 | % | 9.21 | % | 8.40 | % | 8.96 | % | |||||
| Common equity tier 1 to risk-weighted assets | 12.61 | % | 12.67 | % | 12.41 | % | 12.19 | % | 12.11 | % | |||||
| Tier 1 capital to average assets | 11.81 | % | 11.51 | % | 11.33 | % | 11.13 | % | 11.67 | % | |||||
| Total capital to risk-weighted assets | 16.86 | % | 17.00 | % | 16.74 | % | 16.82 | % | 16.75 | % | |||||
| (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 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2024 | June 30, 2023 | |||||||||||||
| Average<br><br> <br>Balance | Interest | Yield/Rate | Average<br><br> <br>Balance | Interest | Yield/Rate | |||||||||
| Assets | ||||||||||||||
| Loans | $ | 3,082,601 | $ | 50,579 | 6.60 | % | $ | 2,894,087 | $ | 42,872 | 5.94 | % | ||
| Debt securities - taxable | 533,553 | 5,285 | 3.98 | % | 575,983 | 5,365 | 3.74 | % | ||||||
| Debt securities - nontaxable | 155,408 | 1,022 | 2.64 | % | 210,709 | 1,403 | 2.67 | % | ||||||
| Other interest-bearing assets | 225,720 | 2,545 | 4.53 | % | 149,996 | 1,484 | 3.97 | % | ||||||
| Total interest-earning assets | 3,997,282 | 59,431 | 5.98 | % | 3,830,775 | 51,124 | 5.35 | % | ||||||
| Noninterest-earning assets | 171,472 | 182,752 | ||||||||||||
| Total assets | $ | 4,168,754 | $ | 4,013,527 | ||||||||||
| Liabilities & stockholders’ equity | ||||||||||||||
| NOW, Savings, MMDA’s | $ | 2,221,427 | 17,652 | 3.20 | % | $ | 2,059,182 | 12,484 | 2.43 | % | ||||
| Time deposits | 392,778 | 3,977 | 4.07 | % | 299,358 | 1,949 | 2.61 | % | ||||||
| Short-term borrowings | 3 | - | 0.00 | % | 325 | 5 | 6.17 | % | ||||||
| Notes payable & other long-term borrowings | - | - | 0.00 | % | - | - | 0.00 | % | ||||||
| Subordinated debt | 63,845 | 835 | 5.26 | % | 76,031 | 1,013 | 5.34 | % | ||||||
| Junior subordinated deferrable interest debentures | 46,393 | 856 | 7.42 | % | 46,393 | 789 | 6.82 | % | ||||||
| Total interest-bearing liabilities | 2,724,446 | 23,320 | 3.44 | % | 2,481,289 | 16,240 | 2.63 | % | ||||||
| Demand deposits | 960,106 | 1,075,514 | ||||||||||||
| Other liabilities | 70,854 | 76,727 | ||||||||||||
| Stockholders’ equity | 413,348 | 379,997 | ||||||||||||
| Total liabilities & stockholders’ equity | $ | 4,168,754 | $ | 4,013,527 | ||||||||||
| Net interest income | $ | 36,111 | $ | 34,884 | ||||||||||
| Net interest margin ^(2)^ | 3.63 | % | 3.65 | % | ||||||||||
| (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 | ||||||
|---|---|---|---|---|---|---|
| June 30,<br><br> <br>2024 | December 31,<br><br> <br>2023 | |||||
| Assets | ||||||
| Cash and due from banks | $ | 46,024 | $ | 62,821 | ||
| Interest-bearing deposits in banks | 251,982 | 267,337 | ||||
| Securities available for sale | 591,031 | 622,762 | ||||
| Loans held for sale | 16,585 | 14,499 | ||||
| Loans held for investment | 3,094,273 | 3,014,153 | ||||
| Less: Allowance for credit losses | (43,173 | ) | (42,356 | ) | ||
| Net loans held for investment | 3,051,100 | 2,971,797 | ||||
| Premises and equipment, net | 53,952 | 55,070 | ||||
| Goodwill | 19,315 | 19,315 | ||||
| Intangible assets | 2,064 | 2,429 | ||||
| Mortgage servicing rights | 26,426 | 26,569 | ||||
| Other assets | 162,457 | 162,194 | ||||
| Total assets | $ | 4,220,936 | $ | 4,204,793 | ||
| Liabilities and Stockholders’ Equity | ||||||
| Noninterest-bearing deposits | $ | 951,565 | $ | 974,201 | ||
| Interest-bearing deposits | 2,672,948 | 2,651,952 | ||||
| Total deposits | 3,624,513 | 3,626,153 | ||||
| Subordinated debt | 63,868 | 63,775 | ||||
| Junior subordinated deferrable interest debentures | 46,393 | 46,393 | ||||
| Other liabilities | 68,177 | 61,358 | ||||
| Total liabilities | 3,802,951 | 3,797,679 | ||||
| Stockholders’ Equity | ||||||
| Common stock | 16,424 | 16,417 | ||||
| Additional paid-in capital | 97,766 | 97,107 | ||||
| Retained earnings | 362,855 | 345,264 | ||||
| Accumulated other comprehensive income (loss) | (59,060 | ) | (51,674 | ) | ||
| Total stockholders’ equity | 417,985 | 407,114 | ||||
| Total liabilities and stockholders’ equity | $ | 4,220,936 | $ | 4,204,793 |
South Plains Financial, Inc.
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands)
| Three Months Ended | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30,<br><br> <br>2024 | June 30,<br><br> <br>2023 | June 30,<br><br> <br>2024 | June 30,<br><br> <br>2023 | |||||
| Interest income: | ||||||||
| Loans, including fees | $ | 50,571 | $ | 42,864 | $ | 99,503 | $ | 82,461 |
| Other | 8,637 | 7,957 | 18,432 | 15,808 | ||||
| Total interest income | 59,208 | 50,821 | 117,935 | 98,269 | ||||
| Interest expense: | ||||||||
| Deposits | 21,629 | 14,433 | 43,292 | 25,803 | ||||
| Subordinated debt | 835 | 1,013 | 1,670 | 2,025 | ||||
| Junior subordinated deferrable interest debentures | 856 | 789 | 1,717 | 1,540 | ||||
| Other | - | 5 | - | 5 | ||||
| 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 deposits | 1,949 | 1,745 | 3,762 | 3,446 | ||||
| Income from insurance activities | 30 | 37 | 64 | 1,448 | ||||
| Mortgage banking activities | 3,397 | 5,258 | 7,342 | 7,544 | ||||
| Bank card services and interchange fees | 4,052 | 4,043 | 7,113 | 6,999 | ||||
| Gain on sale of subsidiary | — | 33,488 | — | 33,488 | ||||
| Other | 3,281 | 2,541 | 5,837 | 4,878 | ||||
| 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 | ||||
| Net occupancy expense | 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 | ||||
| Other | 6,746 | 10,259 | 13,531 | 16,950 | ||||
| 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 |
South Plains Financial, Inc.
Reconciliation of Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands)
| For the quarter ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br><br> <br>2024 | March 31,<br><br> <br>2024 | December 31,<br><br> <br>2023 | September 30,<br><br> <br>2023 | June 30,<br><br> <br>2023 | |||||||||||
| Pre-tax, pre-provision income | |||||||||||||||
| Net income | $ | 11,134 | $ | 10,874 | $ | 10,324 | $ | 13,494 | $ | 29,683 | |||||
| Income tax expense | 3,116 | 3,143 | 2,787 | 3,683 | 7,811 | ||||||||||
| Provision for credit losses | 1,775 | 830 | 600 | (700 | ) | 3,700 | |||||||||
| Pre-tax, pre-provision income | $ | 16,025 | $ | 14,847 | $ | 13,711 | $ | 16,477 | $ | 41,194 | |||||
| Efficiency Ratio | |||||||||||||||
| Noninterest expense | $ | 32,572 | $ | 31,930 | $ | 30,597 | $ | 31,489 | $ | 40,499 | |||||
| Net interest income | 35,888 | 35,368 | 35,162 | 35,689 | 34,581 | ||||||||||
| Tax equivalent yield adjustment | 223 | 223 | 225 | 229 | 303 | ||||||||||
| Noninterest income | 12,709 | 11,409 | 9,146 | 12,277 | 47,112 | ||||||||||
| Total income | 48,820 | 47,000 | 44,533 | 48,195 | 81,996 | ||||||||||
| Efficiency ratio | 66.72 | % | 67.94 | % | 68.71 | % | 65.34 | % | 49.39 | % | |||||
| Noninterest expense | $ | 32,572 | $ | 31,930 | $ | 30,597 | $ | 31,489 | $ | 40,499 | |||||
| Less: Subsidiary transaction and related expenses | — | — | — | — | (4,532 | ) | |||||||||
| Less: net loss on sale of securities | — | — | — | — | (3,409 | ) | |||||||||
| Adjusted noninterest expense | 32,572 | 31,930 | 30,597 | 31,489 | 32,558 | ||||||||||
| Total income | 48,820 | 47,000 | 44,533 | 48,195 | 81,996 | ||||||||||
| Less: gain on sale of subsidiary | — | — | — | (290 | ) | (33,488 | ) | ||||||||
| Adjusted total income | 48,820 | 47,000 | 44,533 | 47,905 | 48,508 | ||||||||||
| Adjusted efficiency ratio | 66.72 | % | 67.94 | % | 68.71 | % | 65.73 | % | 67.12 | % | |||||
| As of | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| June 30,<br><br> <br>2024 | March 31,<br><br> <br>2024 | December 31,<br><br> <br>2023 | September 30,<br><br> <br>2023 | June 30,<br><br> <br>2023 | |||||||||||
| Tangible common equity | |||||||||||||||
| Total common stockholders’ equity | $ | 417,985 | $ | 408,712 | $ | 407,114 | $ | 371,716 | $ | 392,029 | |||||
| Less: goodwill and other intangibles | (21,379 | ) | (21,562 | ) | (21,744 | (21,936 | (22,149 | ||||||||
| Tangible common equity | $ | 396,606 | $ | 387,150 | $ | 385,370 | $ | 349,780 | $ | 369,880 | |||||
| Tangible assets | |||||||||||||||
| Total assets | $ | 4,220,936 | $ | 4,218,993 | $ | 4,204,793 | $ | 4,186,440 | $ | 4,150,129 | |||||
| Less: goodwill and other intangibles | (21,379 | ) | (21,562 | ) | (21,744 | (21,936 | (22,149 | ||||||||
| Tangible assets | $ | 4,199,557 | $ | 4,197,431 | $ | 4,183,049 | $ | 4,164,504 | $ | 4,127,980 | |||||
| Shares outstanding | 16,424,021 | 16,431,755 | 16,417,099 | 16,600,442 | 16,952,072 | ||||||||||
| Total stockholders’ equity to total assets | 9.90 | % | 9.69 | % | 9.68 | 8.88 | 9.45 | ||||||||
| Tangible common equity to tangible assets | 9.44 | % | 9.22 | % | 9.21 | 8.40 | 8.96 | ||||||||
| Book value per share | $ | 25.45 | $ | 24.87 | $ | 24.80 | $ | 22.39 | $ | 23.13 | |||||
| Tangible book value per share | $ | 24.15 | $ | 23.56 | $ | 23.47 | $ | 21.07 | $ | 21.82 |
All values are in US Dollars.
Exhibit 99.2
South Plains Financial Second Quarter 2024 Earnings Presentation July 18, 2024
Safe Harbor Statement and Other Disclosures FORWARD-LOOKING STATEMENTS This presentation contains, and future oral and written statements of South Plains Financial, Inc. (“South Plains”, “SPFI”, or the “Company”) and City Bank (“City Bank” or the “Bank”) may contain, statements about future events that constitute 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. Forward-looking statements include, but are not limited to: (i) projections and estimates of revenues, expenses, income or loss, earnings or loss per share, and other financial items, (ii) statements of plans, objectives and expectations of South Plains or its management, (iii) statements of future economic performance, and (iv) statements of assumptions underlying such statements. Forward-looking statements should not be relied on because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of South Plains and City Bank. These risks, uncertainties and other factors may cause the actual results, performance, and achievements of South Plains and City Bank to be materially different from the anticipated future results, performance or achievements expressed in, or implied by, the forward-looking statements. Factors that could cause such differences 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 bank failures and any continuation of 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 in our markets and related changes in deposit customer behavior; the impact of changes in market interest rates, whether due to continued elevated interest rates or potential reductions in interest rates and a resulting decline in net interest income; the persistence of the current inflationary pressures, or the resurgence of elevated levels of inflation 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; increases in unemployment rates in the United States and our market areas; declines in commercial real estate values and 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; 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. Due to these and other possible uncertainties and risks, South Plains 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 presentation. Additional information regarding these factors 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 U.S. Securities and Exchange Commission (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. Further, any forward-looking statement speaks only as of the date on which it is made and South Plains undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as required by applicable law. All forward-looking statements, express or implied, herein are qualified in their entirety by this cautionary statement. NON-GAAP FINANCIAL MEASURES Management believes that certain non-GAAP performance measures used in this presentation provide meaningful information about underlying trends in its business and operations and provide both management and investors a more complete understanding of the Company’s financial position and performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, SPFI’s reported results prepared in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition of the Company as reported under GAAP. Numbers in this presentation may not sum due to rounding. 2
Today’s Speakers Curtis C. Griffith Chairman & Chief Executive Officer Elected to the board of directors of First State Bank of Morton, Texas, in 1972 and employed by it in 1979 Elected Chairman of the First State Bank of Morton board in 1984 Chairman of the Board of City Bank and the Company since 1993 Steven B. Crockett Chief Financial Officer & Treasurer Appointed Chief Financial Officer in 2015 Previously Controller of City Bank and the Company for 14 and 5 years respectively Began career in public accounting in 1994 by serving for seven years with a local firm in Lubbock, Texas Cory T. Newsom President Entire banking career with the Company focused on lending and operations Appointed President and Chief Executive Officer of the Bank in 2008 Joined the Board in 2008 3
Second Quarter 2024 Highlights Net income for the second quarter of 2024 was $11.1 million, compared to $10.9 million for the first quarter of 2024 Diluted earnings per share for the second quarter of 2024 was $0.66, compared to $0.64 for the first quarter of 2024 Net interest margin was 3.63% for the first quarter of 2024, compared to 3.56% for the first quarter of 2024 Loans held for investment were $3.09 billion as of June 30, 2024, compared to $3.01 billion as of March 31, 2024 Deposits totaled $3.62 billion as of June 30, 2024, compared to $3.64 billion as of March 31, 2024 Estimated uninsured and uncollateralized deposits at City Bank comprise 18% of total deposits, with an average deposit account size of approximately $35 thousand at June 30, 2024 Efficiency ratio improved to 66.7% as of June 20, 2024, compared to 67.9% as of March 31, 2024 Tangible book value (non-GAAP) per share was $24.15 as of June 30, 2024, compared to $23.56 as of March 31, 2024 4 Loans Held for Investment (“HFI”) $3.09 B Average Yield on Loans 6.60% Net Income $11.1 M EPS - Diluted $0.66 Net Interest Margin (1) (“NIM”) 3.63% Total Deposits $3.62 B Return on Average Assets (“ROAA”) 1.07% Efficiency Ratio 66.72% Source: Company documents Note: See appendix for the reconciliation of non-GAAP measures to GAAP (1) Net interest margin is calculated on a tax-equivalent basis (non-GAAP)
Granular Deposit Base & Ample Liquidity Total Borrowing Capacity $1.77 Billion 5 Total Deposit Base Breakdown Average deposit account size is approximately $35 thousand City Bank’s percentage of estimated uninsured or uncollateralized deposits is 23% of total deposits City Bank had $1.77 billion of available borrowing capacity, as follows: Federal Home Loan Bank of Dallas - $1.1 billion Federal Reserve Bank of Dallas Discount Window - $679 million No borrowings utilized from these sources during 2Q’24 Source: Company documents (1) No securities are currently pledged to this program; amount represents securities available to be pledged Data as of June 30, 2024
Loan Portfolio 2Q’24 Highlights Loans HFI increased $82.5 million from Q1’24: Occurred primarily in direct-energy loans, seasonal agricultural-related loans, and single-family property loans Partially offset by decreases in consumer auto loans. As of June 30, 2024, loans HFI increased $115.2 million, or 3.9%, from June 30, 2023 The average yield on loans was 6.60% for the 2Q’24, compared to 6.53% for the 1Q’24. Total Loans HFI $ in Millions 6 Source: Company documents
Attractive Markets Poised for Organic Growth El Paso Basin Dallas / Ft. Worth Population of 865,000+ Adjacent in proximity to Juarez, Mexico’s growing industrial center and an estimated population of 1.5 million people Home to four universities including The University of Texas at El Paso Focus on commercial real estate lending Largest MSA in Texas and fourth largest in the nation Steadily expanding population that accounts for over 26% of the state’s population MSA with the largest job growth in 2022 (+5.9%) Attractive location for companies interested in relocating to more efficient economic environments Focus on commercial real estate lending Houston Second largest MSA in Texas and fifth largest in the nation Total Non-Farm Employment was up 5.6% in 2022 compared to 2021 Called the “Energy Capital of the World,” the area also boasts the world’s largest medical center and second busiest port in the U.S Focus on commercial real estate lending Lubbock Basin Population in excess of 320,000 with major industries in agribusiness, education, and trade among others Home of Texas Tech University – enrollment of 40,000 students Focus on community bank approach and expanding local relationships 7
Major Metropolitan Market Loan Growth 2Q’24 Highlights Loans HFI in our major metropolitan markets(1) increased by $8 million, to $1.07 billion during 2Q’24 Our major metropolitan market loan portfolio represents 34.5% of the Bank’s total loans at June 30, 2024 Total Metropolitan Market(1) Loans $ in Millions 8 5.00% Source: Company documents (1) The Bank defines its “major metropolitan markets” to include Dallas, Houston and El Paso, Texas
Loan HFI Portfolio Loan Mix Loan Portfolio ($ in millions) Commercial C&D $ 149.5 Residential C&D 231.5 CRE Owner/Occ. 333.0 Other CRE Non Owner/Occ. 567.9 Multi-Family 284.5 C&I 434.5 Agriculture 182.9 1-4 Family 568.6 Auto 272.4 Other Consumer 69.5 Total $ 3,094.3 Fixed vs. Variable Rate 9 Source: Company documents Data as of June 30, 2024
Indirect Auto Overview Indirect Auto Highlights Indirect auto loans totaled $253.7 million at June 30, 2024 Management is carefully managing the portfolio; yields are improving as a portion of monthly principal amortization is redeployed into higher rate loans During 2Q’24 there was approximately $19.7 million in net principal reduction Strong credit quality in the sector, positioned for resiliency across economic cycles: Super Prime Credit (>719): $153.5 million Prime Credit (719-660): $74.4 million Near Prime Credit (659-620): $21.6 million Sub-Prime Credit (619-580): $3.3 million Deep Sub-Prime Credit (<580): $889 thousand Loans past due 30+ days: 21 bps Non-car/truck (RV, boat, etc.) is 2% of portfolio Indirect Auto Credit Breakdown 10 Source: Company documents Data as of June 30, 2024
Noninterest Income Overview Noninterest Income $ in Millions 2Q’24 Highlights Noninterest income was $12.7 million for 2Q’24, compared to $11.4 million for 1Q’24; change was primarily due to: Increase of $1.0 million in bank card services and interchange from continued growth in customer card usage and incentives received; and Increase of $408 thousand in income from investments in Small Business Investment Companies. Partially offset by a decrease of $548 thousand in mortgage banking revenues: 2Q’24 MSR FV change - $(680) thousand 1Q’24 MSR FV change - $55 thousand 11 Source: Company documents Note: Mortgage servicing rights fair value (“MSR FV”)
Diversified Revenue Stream Six Months Ended June 30, 2024 Total Revenues $48.6 million Noninterest Income $24.1 million 12 Source: Company documents
Net Interest Income and Margin Net Interest Income & Margin(1) $ in Millions 2Q’24 Highlights Net interest income (“NII”) of $35.9 million, compared to $35.4 million in 1Q’24 2Q’24 NIM increased 7 bps to 3.63% as compared to 3.56% in 1Q’24 as the in yield on loans increased 7 bps while the cost of deposits increased 2 bps during the quarter 13 3.54% Source: Company documents (1) Net interest margin is calculated on a tax-equivalent basis (non-GAAP)
Deposit Portfolio Total Deposits $ in Millions 2Q’24 Highlights Total deposits of $3.62 billion at 2Q’24, a decrease of $14.1 million from 1Q’24 Cost of interest-bearing deposits increased to 3.33% in 2Q’24 from 3.27% in 1Q’24 Average cost of deposits was relatively stable at 2.43% in 2Q’24 as compared to 2.41% in 1Q’24 Noninterest-bearing deposits to total deposits was 26.3% at June 30, 2024, compared to 26.8% at March 31, 2024 Strategic initiatives implemented to stabilize noninterest-bearing deposits while also growing core deposits 14 Source: Company documents
Credit Quality 2Q’24 Highlights Credit Quality Ratios Net Charge-Offs to Average Loans ACL to Total Loans HFI 15 Provision for credit losses of $1.8 million in 2Q’24, compared to $830 thousand in 1Q’24; increase attributable to net charge-off activity, increased loan balances and higher nonperforming loans. Allowance for Credit Losses (“ACL”) to loans HFI was 1.40% at June 30, 2024 Nonperforming loans totaled $23.5 million at June 30, 2024. Previously classified $20.6 million multi-family property credit placed on nonaccrual status in 2Q24. Source: Company documents
Non-Owner Occupied CRE Portfolio 16 Details NOO CRE was 39.9% of total LHI at June 30, 2024, compared to 40.1% at March 31, 2024 NOO CRE portfolio is made up of $852.4 million of income producing loans and $381.0 of construction, acquisition, and development loans Weighted average LTV of income-producing NOO CRE was 55% Office NOO CRE loans were 4.5% of total LHI and had a weighted average LTV of 61% NOO CRE loans past due 90+ days or nonaccrual: 67 basis points NOO CRE(1) Sector Breakdown Source: Company documents Data as of June 30, 2024 (1) Non-owner occupied commercial real estate (“NOO CRE”) NOO CRE Portfolio ($ in millions) Property Type Total Income-producing: Multi-family $284.5 Retail 171.4 Office 139.1 Hospitality 64.1 Other 193.3 Construction, acquisition, and development: Residential construction 108.1 Other 272.9 Total $1,233.4
Investment Securities 2Q’24 Highlights Investment securities totaled $591.0 million, a $8.8 million decrease from 1Q’24. All municipal bonds are in Texas; fair value hedges of $124 million All MBS, CMO, and Asset Backed securities are U.S. Government or GSE Duration of the securities portfolio was 6.75 years at June 30, 2024 2Q’24 Securities Composition $591.0 million Securities & Cash $ in Millions 17 Source: Company documents
Noninterest Expense and Efficiency Noninterest Expense $ in Millions 2Q’24 Highlights Noninterest expense for 2Q’24 increased $642 thousand to $32.6 million from 1Q’24 primarily due to: A rise of $436 thousand in mortgage commission expense as loan originations increased Efficiency ratio improved to 66.7% in 2Q’24 from 67.9% in 1Q’24 Will continue to manage expenses to drive profitability 18 Source: Company documents
Balance Sheet Growth and Development Balance Sheet Highlights $ in Millions Tangible Book Value Per Share(1) 19 Source: Company documents (1) Tangible book value per share is a non-GAAP measure. See appendix for the reconciliation of non-GAAP measures to GAAP
Strong Capital Base Common Equity Tier 1 Ratio Tier 1 Capital to Average Assets Ratio Total Capital to Risk-Weighted Assets Ratio 20 Source: Company documents (1) Tangible common equity to tangible assets ratio is a non-GAAP measure. See appendix for the reconciliation of non-GAAP measures to GAAP Tangible Common Equity to Tangible Assets Ratio(1)
SPFI’s Core Purpose and Values Align Centered on Relationship-Based Business Our Core Purpose is: To use the power of relationships to help people succeed and live better HELP ALL STAKEHOLDERS SUCCEED Employees great benefits and opportunities to grow and make a difference. Customers personalized advice and solutions to achieve their goals. Partners responsive, trusted win-win partnerships enabling both parties to succeed together. Shareholders share in the prosperity and performance of the Bank. THE POWER OF RELATIONSHIPS At SPFI, we build lifelong, trusted relationships so you know you always have someone in your corner that understands you, cares about you, and stands ready to help. LIVE BETTER We want to help everyone live better. At the end of the day, we do what we do to help enhance lives. We create a great place to work, help people achieve their goals, and invest generously in our communities because there’s nothing more rewarding than helping people succeed and live better. 21
Appendix 22
Non-GAAP Financial Measures 23 June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Pre-tax, pre-provision income Net income $ 11,134 $ 10,874 $ 10,324 $ 13,494 $ 29,683 Income tax expense 3,116 3,143 2,787 3,683 7,811 Provision for credit losses 1,775 830 600 (700) 3,700 Pre-tax, pre-provision income $ 16,025 $ 14,847 $ 13,711 $ 16,477 $ 41,194 As of June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Tangible common equity Total common stockholders’ equity $ 417,985 $ 408,712 $ $ 407,114 $ $ 371,716 $ $ 392,029 Less: goodwill and other intangibles (21,379) (21,562) (21,744) (21,936) (22,149) Tangible common equity $ 396,606 $ 387,150 $ $ 385,370 $ $ 349,780 $ $ 369,880 Tangible assets Total assets $ 4,220,936 $ 4,218,993 $ $ 4,204,793 $ $ 4,186,440 $ $ 4,150,129 Less: goodwill and other intangibles (21,379) (21,562) (21,744) (21,936) (22,149) Tangible assets $ 4,199,557 $ 4,197,431 $ $ 4,183,049 $ $ 4,164,504 $ $ 4,127,980 Shares outstanding 16,424,021 16,431,755 16,417,099 16,600,442 16,952,072 Total stockholders’ equity to total assets 9.90% 9.69% 9.68% 8.88% 9.45% Tangible common equity to tangible assets 9.44% 9.22% 9.21% 8.40% 8.96% Book value per share $ 25.45 $ 24.87 $ 24.80 $ 22.39 $ 23.13 Tangible book value per share $ 24.15 $ 23.56 $ 23.47 $ 21.07 $ 21.82 For the quarter ended Source: Company documents $ in thousands
Non-GAAP Financial Measures 24 Efficiency Ratio Noninterest expense $ 32,572 $ 31,930 $ 30,597 $ 31,489 $ 40,499 Net interest income 35,888 35,368 35,162 35,689 34,581 Tax equivalent yield adjustment 223 223 225 229 303 Noninterest income 12,709 11,409 9,146 12,277 47,112 Total income 48,820 47,000 44,533 48,195 81,996 Efficiency ratio 66.72% 67.94% 68.71% 65.34% 49.39% Noninterest expense $ 32,572 $ 31,930 $ 30,597 $ 31,489 $ 40,499 Less: Subsidiary transaction and related expenses — — — — (4,532) Less: net loss on sale of securities — — — — (3,409) Adjusted noninterest expense 32,572 31,930 30,597 31,489 32,558 Total income 48,820 47,000 44,533 48,195 81,996 Less: gain on sale of subsidiary — — — (290) (33,488) Adjusted total income 48,820 47,000 44,533 47,905 48,508 Adjusted efficiency ratio 66.72% 67.94% 68.71% 65.73% 67.12% June 30, 2024 March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 For the quarter ended Source: Company documents $ in thousands
Exhbit 99.3
South Plains Financial, Inc. Declares Quarterly Cash Dividend
LUBBOCK, Texas, July 18, 2024 (GLOBE NEWSWIRE) – South Plains Financial, Inc. (NASDAQ:SPFI) (“South Plains”), the parent company of City Bank, today announced that its Board of Directors has declared a quarterly cash dividend of $0.14 per share of common stock. The dividend is payable on August 12, 2024 to shareholders of record as of the close of business on July 29, 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.
| Contact: | Mikella Newsom, Chief Risk Officer and Secretary |
|---|---|
| investors@city.bank | |
| (866) 771-3347 |
Source: South Plains Financial, Inc.