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

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 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.
3
Item 1.
3
 
3
 
4
 
6
 
7
 
8
Item 2.
28
Item 3.
 51
Item 4.
 51
PART II.
52
Item 1.
52
Item 1A.
52
Item 2.
52
Item 3.
52
Item 4.
52
Item 5.
52
Item 6.
54
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.

3
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.

4
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.

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
  
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
  
                                                 
Three Months Ended September 30, 2024