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

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)

 
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.

3
Table of Contents
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.

4
Table of Contents
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.

5
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
  
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       5       (5 )     —       —