EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2023

11.	EMPLOYEE BENEFITS

The Company sponsored the South Plains Financial, Inc. Employee Stock Ownership Plan (“ESOP”). Effective May 9, 2019, the ESOP was restated and amended. The 401(k) related assets, which consisted of participants’ elective and rollover accounts, were transferred to the newly formed City Bank 401(k) Plan (the “401(k) Plan”). The ESOP covered all employees who have completed one month of service.

On December 30, 2022, the board of directors of the Company adopted resolutions to terminate the ESOP, effective as of December 31, 2022. Upon termination of the ESOP, all ESOP participants became fully vested in their ESOP benefits without regard to whether they were fully vested in such benefits as of the effective date of the termination. As a result of the ESOP termination, all ESOP assets were distributed to the ESOP participants in a lump sum distribution of cash and Company stock, without consideration as to whether the participant consented to such distribution. However, in the event that an ESOP participant’s account exceeded $1,000 and the participant failed to consent to the distribution, the participant’s account balance was distributed to an individual retirement account for the participant’s benefit. Furthermore, if an ESOP participant’s account balance was $10,000 or less and the participant elected to receive a cash distribution, then the account balance was distributed to the ESOP participant in a lump sum cash payment. All ESOP participant account balances were distributed by April 30, 2023.

As of December 31, 2022 , the number of shares held by the ESOP was 2,574,100 and all were allocated to participants.

Under the provisions of the 401(k) Plan, participants may elect to contribute pre-tax salary deferrals and direct investment of those salary deferrals among investments offered in the 401(k) Plan. The Company may elect to contribute a safe harbor match equal to 100% of the first 5% of the participants’ compensation contributed. The expense for Company contributions to the 401(k) Plan was $1.8 million in 2023, $1.9 million in 2022, and $1.8 million in 2021.

Employee Health Benefits – The Company has a self-insured welfare benefit plan which provides health and dental benefits. For officers of the Company, there is no waiting period to be eligible, while there is a 60-day waiting period for all other employees. In addition, to be eligible, an employee must be scheduled to work on a full-time basis (at least 30 hours per week). The Company periodically evaluates the costs of the plan and determines the amount to be contributed by the Company and the amount, if any, to be contributed by the employee. Welfare benefit expense was approximately $4.4 million, $4.2 million, and $4.5 million for the years ended December 31, 2023, 2022, and 2021, respectively. In addition, benefit obligations have been accrued and include reported claims payable and claims incurred but not reported, for approximately $742 thousand and $653 thousand as of December 31, 2023 and 2022, respectively. The Company has limited its risk exposure for these benefits through a stop-loss policy with an independent third party insurer which reimburses benefits paid that exceed $150 thousand per participant per year.

Non-Qualified Plans – Certain Company executives, as determined by the Company’s Board from time-to-time, have post-retirement salary continuation agreements under an Executive Salary Continuation Plan. Retirement ages and retirement salary amounts are specified in each agreement. The Company accrues actuarial estimates of the costs of these benefits over the respective service periods; approximately $13.3 million and $12.9 million was accrued at December 31, 2023 and 2022, respectively. This plan is nonqualified, noncontributory, and unfunded. The charge to income for this plan during 2023, 2022, and 2021 was approximately $1.1 million, $1.0 million and, $1.0 million, respectively.