BUSINESS COMBINATIONS

6 Months Ended

Jun. 30, 2026

BUSINESS COMBINATIONS [Abstract]

BUSINESS COMBINATIONS

2. BUSINESS COMBINATIONS

On April 1, 2026, SPFI completed the acquisition of BOH Holdings, Inc., a Texas corporation (“BOH”), pursuant to an Agreement and Plan of Reorganization (the “Reorganization Agreement”) dated December 1, 2025, which provided for the acquisition by SPFI of BOH through the merger of BOH with and into SPFI, with SPFI surviving the merger (the “Merger”). The Reorganization Agreement provided that immediately following the consummation of the Merger, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH, would be merged with and into City Bank, a Texas state banking association and wholly-owned subsidiary of SPFI, with City Bank surviving the merger. As a result of the merger, the Company increased its presence in the Houston, Texas market. At March 31, 2026, BOH had approximately $685.0 million in assets, $631.9 million in total gross loans, and $595.6 million in deposits. 

Under the terms of the Reorganization Agreement, shareholders of BOH received 0.1925 shares of the Company’s common stock for each share of BOH common stock held immediately prior to the effective time of the Merger, plus cash, without interest, in lieu of any fractional shares. As a result, the Company issued 2,803,535 shares of its common stock to the former shareholders of BOH.

The Merger was accounted for under ASC 805 as a business combination. Accordingly, the assets acquired and liabilities assumed were recorded at fair value as of the acquisition date. The determination of fair value requires management to make estimates related to discount rates, expected future cash flows, market conditions and other future events that are highly subjective in nature and subject to change. Fair value estimates related to the assets and liabilities from BOH are subject to adjustment for up to one year after the closing date of the acquisition as additional information becomes available. Valuations subject to refinement include, but are not limited to, loans, other assets and other liabilities.

The following table details the purchase consideration and the preliminary determination of the purchase consideration to the fair value of the assets acquired and liabilities assumed from BOH as of the closing date of the Merger on April 1, 2026 (dollars in thousands):

Purchase consideration:
Fair value of common stock issued	$	117,468
Cash paid to settle outstanding warrants and stock appreciation rights		597
Cash paid in lieu of fractional shares		3
Total consideration	$	118,068
Assets acquired:
Cash and due from banks	$	4,988
Interest-bearing deposits in banks		26,435
Securities available for sale		6,847
Loans held for investment, net		623,926
Premises and equipment, net		923
Bank-owned life insurance		11,214
Core deposit intangible (10 year life)		4,980
Deferred tax asset, net		840
Other assets		5,433
Total assets acquired		685,586
Liabilities assumed:
Noninterest-bearing deposits		92,315
Interest-bearing deposits		503,530
Short-term borrowings		15,000
Accrued expenses and other liabilities		3,950
Total liabilities assumed		614,795
Preliminary fair value of net assets acquired		70,791
Preliminary goodwill recorded in acquisition	$	47,277

The Company recorded preliminary goodwill of $47.3 million, none of which is anticipated to be deductible for tax purposes. The preliminary goodwill is primarily attributable to expected synergies, operational efficiencies, and other factors to arise from the transaction.

There was a total of $2.6 million of acquisition related expenses recorded in the six months ended June 30, 2026. This total was comprised of $708 thousand in personnel expenses, $1.2 million in professional services expense, and $693 thousand in data conversion expenses.

Acquired Loans

Acquired loans were recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected default rates, loss given default, and recovery rates. During the valuation process, the Company identified PCD and PSLs in the acquired loan portfolio. Loans acquired with evidence of credit quality deterioration since origination as of the acquisition date were accounted for as PCD. All remaining loans were considered to be PSLs. For both PSLs and PCD loans, the initial estimate of expected credit losses was included in the balance of loans with an offsetting amount recorded to the ACL as of the date of acquisition. Amortization or accretion of discounts or premiums on the acquired loans will be recognized based on payment structure and the contractual maturity of the individual loans.

The following table includes the fair value and unpaid principal balance of the acquired loans on the April 1, 2026 acquisition date (dollars in thousands):

	Unpaid Principal Balance		Premium (Discount)			ACL on Acquired Loans			Fair Value of Acquired Loans
PCD loans	$	89,004	$	(1,579	)	$	(3,173	)	$	84,252
PSLs		543,503		1,471			(5,300	)		539,674
	$	632,507	$	(108	)	$	(8,473	)	$	623,926

Pro Forma Information (unaudited)

The results of operations of BOH have been included in the Company’s consolidated financial statements prospectively beginning on April 1, 2026. The Company has determined it is impractical to disclose stand-alone revenues and earnings for the former BOH operations for the period subsequent to the acquisition date due to the streamlining and integration of processes. The following table presents selected unaudited pro forma financial information reflecting the acquisition of BOH assuming the Merger was completed as of January 1, 2025. The unaudited pro forma financial information includes adjustments for scheduled amortization and accretion of significant fair value adjustments recorded at the acquisition. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the combined financial results of the Company and BOH had the transaction actually been completed at the beginning of the periods presented, nor does it indicate future results for any other interim or full-year period.

Information for the three and six months ended June 30, 2026 reflects the actual results of the Company, excluding merger costs, and the actual results of BOH for the three months ended March 31, 2026, excluding merger costs and including amortization of intangible assets. Information for the three and six months ended June 30, 2025, includes BOH’s actual results for those periods and reflects adjustments related to the amortization of intangible assets.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2026		2025		2026		2025
Total revenue(1)	$	47,588	$	46,068	$	132,997	$	131,951
Net income		18,074		14,925		38,784		38,545

(1) Total revenue is defined as the sum of net interest income plus non-interest income.