STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2025

7. STOCK-BASED COMPENSATION

Equity Incentive Plan

The 2019 Equity Incentive Plan (“Plan”) was approved by the Company’s Board of Directors on January 16, 2019 and by its shareholders on March 6, 2019. The purpose of the Plan is to: (i) attract and retain the best available personnel for positions of substantial responsibility, (ii) provide additional incentive to employees, directors and consultants, and (iii) promote the success of the Company’s business. The Plan permits the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, and other stock-based awards. The maximum aggregate number of shares of common stock that may be issued pursuant to all awards under the Plan was 5,413,184 at September 30, 2025. The maximum aggregate number of shares that may be issued under the Plan may be increased annually by up to 3% of the total issued and outstanding common shares of the Company at the beginning of each fiscal year.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock and similar peer company averages. The Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes in to account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

Options

A summary of activity in the Plan during the period indicated is presented in the table below (dollars in thousands, except per share data):

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Nine Months Ended September 30, 2025
Outstanding at beginning of year:		1,175,787		$	17.83			$	24,477
Granted		30,024			34.01				139
Exercised		(51,138	)		18.55				(1,028	)
Forfeited		—			—				—
Expired		—			—				—

Balance at end of period		1,154,673		$	18.22		4.02	$	23,588

Exercisable at end of period		1,082,045		$	17.38		3.73	$	23,018

Vested at end of period		1,082,045		$	17.38		3.73	$	23,018

A summary of assumptions used to calculate the fair values of the awards granted during the periods noted is presented below:

	Nine Months Ended September 30,
	2025			2024
Expected volatility		41.21	%		40.45	%
Expected dividend yield		1.80	%		1.80	%
Expected term (years)		6.1			6.1
Risk-free interest rate		4.43	%		3.94	%
Weighted average grant date fair value	$	13.35		$	11.10

The total intrinsic value of options exercised during the nine months ended September 30, 2025 and 2024 was $917 thousand and $134 thousand, respectively.

Restricted Stock Awards and Units

A summary of activity in the Plan during the period indicated is presented in the table below:

	Number of Shares			Weighted- Average Grant Date Fair Value
Nine Months Ended September 30, 2025
Outstanding at beginning of year:		187,895		$	26.51
Granted		73,488			34.30
Vested		(18,271	)		29.86
Forfeited		(1,590	)		27.69

Balance at end of period		241,522		$	28.61

Restricted stock units granted under the Plan typically vest from one to four years, but vesting periods may vary. Compensation expense for these grants will be recognized over the vesting period of the awards based on the fair value of the stock at the issue date. The total fair value of restricted stock units vested during each of the nine months ended September 30, 2025 and 2024 was $546 thousand and $643 thousand, respectively.

For the three months ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense related to the Plan of $621 thousand and $563 thousand, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded stock-based compensation expense related to the Plan of $1.9 million and $1.7 million, respectively.

The total unrecognized compensation cost for the awards outstanding under the Plan at September 30, 2025 was $4.2 million and will be recognized over a weighted average remaining period of 1.66 years.

Employee Stock Purchase Plan – The Company maintains the South Plains Financial, Inc. 2023 Employee Stock Purchase Plan (the “ESPP”) offering eligible employees an opportunity to purchase shares of Company common stock at a 15% discount from the lesser of fair market value on the first or last day of each six-month offering period, beginning August 1, 2024. The ESPP provides for the purchase of up to an aggregate of one million shares of the Company’s common stock by the employees. A maximum of 1,200 shares per employee may be purchased per offering period. The ESPP benefit is treated as compensation to the employee, and the compensation expense will be recognized over the service period based on the grant date fair value of the rights determined at the beginning of the purchase period, adjusted for forfeitures and certain modifications. Stock-based compensation expense related to the ESPP was $29 thousand and $94 thousand for the three and nine months ended September 30, 2025, respectively. At September 30, 2025, there was $39 thousand of total unrecognized compensation expense related to estimated ESPP shares. These costs are expected to be recognized over a period of seven months. As of September 30, 2025, 15,925 shares were issued under the ESPP.

A summary of assumptions used to calculate the grant date fair value of the ESPP rights for the period indicated is presented below:

	Nine Months Ended September 30, 2025
Expected volatility	29.24% to 36.08%
Expected dividend yield	1.70% to 1.89%
Expected term (years)		0.5
Risk-free interest rate	4.12% to 5.02%