Financial Data and Key Metrics Changes - The company reported a 17.8% increase in diluted earnings per share for the full year of 2025, with diluted EPS at $0.90 for Q4 2025 compared to $0.96 in the linked quarter [5][22] - Net interest income was $43 million for Q4 2025, consistent with the previous quarter, while the net interest margin (NIM) was 4% compared to 4.05% in the linked quarter [22][23] - Deposits held steady at $3.87 billion at the end of Q4 2025, with a year-over-year increase of $253 million or 7% [23][24] - The allowance for credit losses to total loans held for investment ratio was 1.44%, stable from the prior quarter, with a provision for credit losses of $1.8 million in Q4 compared to $500,000 in the linked quarter [24][25] Business Line Data and Key Metrics Changes - Loans held for investment increased by $91 million to $3.14 billion in Q4, driven by organic growth in multifamily property loans, direct energy loans, and other commercial loans [12] - The indirect auto loan portfolio remained relatively unchanged at $241 million, with a focus on maintaining credit quality [17][20] - Non-interest income was $10.9 million in Q4, flat compared to $11.2 million in the linked quarter, with a decline attributed to seasonal factors in mortgage banking revenues [20][21] Market Data and Key Metrics Changes - Loan growth in major metropolitan markets of Dallas, Houston, and El Paso increased by $15 million or 5.8% annualized to $1.03 billion [15] - The Houston market is highlighted as a key growth area, with the Bank of Houston acquisition expected to enhance the company's presence in this fast-growing region [6][16] Company Strategy and Development Direction - The company is focused on expanding its lending team in high-growth Texas markets and pursuing accretive M&A opportunities, including the acquisition of Bank of Houston [5][6] - The merger with Bank of Houston is projected to be approximately 11% accretive to earnings in 2027, with a tangible book value earned back in less than three years [9] - The company aims to enhance its earnings through organic growth and strategic acquisitions while maintaining a strong capital position [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth accelerating to a mid to high single-digit growth rate in 2026, driven by new hires and the Bank of Houston acquisition [10][14] - The company anticipates some headwinds in Q1 2026 from expected payoffs in the multifamily property portfolio but remains confident in its growth strategy [15][41] - Management emphasized the importance of maintaining credit quality and managing expenses while pursuing growth opportunities [20][81] Other Important Information - The company declared a quarterly dividend of $0.17 per share, marking its 27th consecutive dividend [11] - Tangible book value per share increased to $29.05 as of December 31, 2025, compared to $28.14 at the end of Q3 2025 [26] Q&A Session Summary Question: NIM outlook and loan growth impact - Management acknowledged the potential for NIM compression due to competitive pressures but aims to keep it stable [29][30] Question: Deposit growth expectations - Management believes they can reduce the deposit costs of Bank of Houston's deposits over time, which may offset NIM pressures [33] Question: M&A strategy and future acquisitions - The company is not pursuing aggressive acquisitions but is open to opportunities that align with their strategy [34] Question: Loan growth expectations and payoffs - Management noted that Q4 had fewer payoffs than previous quarters, which aided net growth, but expects some payoffs in Q1 2026 [41][42] Question: Indirect auto loan portfolio quality - Management provided insights into the credit quality of the indirect auto portfolio, emphasizing its stability despite some minor credit score fluctuations [44][48] Question: Mortgage banking and fee income drivers - The company is focused on hiring mortgage producers to enhance volume and is exploring other fee income opportunities [51][52]

South Plains Financial Fourth Quarter 2025 Earnings Presentation January 26, 2026 Safe Harbor Statement and Other Disclosures FORWARD-LOOKING STATEMENTS This presentation contains, and future oral and written statements of South Plains Financial, Inc. ("South Plains", "SPFI", or the "Company") and City Bank ("City Bank" or the "Bank") may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect South Plains' curr ...

Financial Performance - Net income for the fourth quarter of 2025 was $15.3 million, a decrease from $16.3 million in the third quarter of 2025 and $16.5 million in the fourth quarter of 2024[5]. - Diluted earnings per share for the fourth quarter of 2025 was $0.90, down from $0.96 in the previous quarter and the same quarter last year[5]. - Full year net income for 2025 was $58.5 million, compared to $49.7 million in 2024, representing a year-over-year growth of 17.6%[5]. - Net income for the quarter was $15,254,000, down from $16,318,000 in the prior quarter, representing a decrease of approximately 6.5%[26]. - Net income for the three months ended December 31, 2025, was $15,254,000, a decrease of 7.5% from $16,497,000 in the same period of 2024[33]. - Income before income taxes for the three months ended December 31, 2025, was $19,086,000, a decrease of 7.9% from $20,719,000 in the same period of 2024[33]. - Income tax expense for the twelve months ended December 31, 2025, was $15,602,000, compared to $13,575,000 in 2024, indicating an increase of 15.0%[33]. Asset and Liability Management - Total assets were $4.48 billion as of December 31, 2025, up from $4.23 billion a year earlier, reflecting a growth of 5.9%[5]. - Total assets as of December 31, 2025, reached $4,464,793 thousand, up from $4,302,079 thousand a year earlier[28]. - Total liabilities were $3,986,663,000 as of December 31, 2025, compared to $3,793,290,000 as of December 31, 2024, representing an increase of approximately 5.1%[32]. - Total stockholders' equity reached $493,837,000 as of December 31, 2025, compared to $494,949,000 as of December 31, 2024, showing a slight decrease of about 0.2%[32]. - Total stockholders' equity to total assets ratio improved to 11.02% from 10.67% in the prior quarter, reflecting stronger capital position[27]. Loan and Deposit Growth - Loans held for investment increased by $89.4 million, or 2.9%, during 2025, reaching $3.14 billion by year-end[5][11]. - Net loans held for investment amounted to $3,099,371,000 as of December 31, 2025, up from $3,001,817,000 as of December 31, 2024, indicating a growth of about 3.3%[32]. - Total loans held for investment as of December 31, 2025, amounted to $3,144,500,000, compared to $3,055,054,000 as of December 31, 2024[34]. - Demand deposits increased to $1,032,323 thousand as of December 31, 2025, compared to $978,742 thousand a year earlier[28]. - Total deposits as of December 31, 2025, were $3,874,007,000, an increase from $3,620,876,000 as of December 31, 2024[34]. Income and Expense Analysis - Noninterest income for the fourth quarter of 2025 was $10.9 million, a decrease from $11.2 million in the third quarter of 2025 and $13.3 million in the fourth quarter of 2024[9]. - Total noninterest income for the three months ended December 31, 2025, was $10,934,000, a decrease of 17.9% from $13,319,000 in the same period of 2024[33]. - Total noninterest expense for the twelve months ended December 31, 2025, was $132,620,000, an increase of 4.3% from $127,578,000 in 2024[33]. - Net interest income for the same quarter was $42,950,000, compared to $43,019,000 in the prior quarter, reflecting a slight decline[26]. - Net interest income after provision for credit losses for the twelve months ended December 31, 2025, was $161,804,000, up 13.3% from $142,798,000 in 2024[33]. Credit Quality and Provisioning - Provision for credit losses increased to $1,775,000 from $500,000 in the previous quarter, indicating a more cautious outlook on credit quality[26]. - Nonperforming loans stood at $9,805,000, a slight increase from $9,709,000 in the previous quarter, indicating potential credit quality concerns[26]. - Provision for credit losses for the twelve months ended December 31, 2025, was $5,195,000, compared to $4,300,000 in 2024, reflecting an increase of 20.8%[33]. Capital Position - Tangible book value per share increased over 14% to $29.05 at the end of 2025, compared to $25.40 at the end of 2024[3][5]. - The company has maintained a strong capital position with additional paid-in capital of $91,065,997 as of December 31, 2025, compared to $28,787,000 as of December 31, 2024, reflecting a substantial increase of approximately 216.5%[32]. - Tangible common equity increased to $473,389,000 in Q4 2025, compared to $457,222,000 in Q3 2025[36]. - Book value per share improved to $30.31 in Q4 2025 from $29.41 in Q3 2025[36].

Core Insights - South Plains Financial, Inc. reported strong financial results for the full year 2025, with a 17.8% growth in diluted earnings per share and a tangible book value per share increase of over 14% to $29.05 [4][6] Fourth Quarter 2025 Highlights - Net interest income for Q4 2025 was $43.0 million, unchanged from Q3 2025, and up from $38.5 million in Q4 2024 [5] - Net income for Q4 2025 was $15.3 million, down from $16.3 million in Q3 2025 and $16.5 million in Q4 2024 [6] - Diluted earnings per share for Q4 2025 was $0.90, compared to $0.96 in Q3 2025 and Q4 2024 [6] - The net interest margin for Q4 2025 was 4.00%, slightly down from 4.05% in Q3 2025 but up from 3.75% in Q4 2024 [6] Full Year 2025 Highlights - Full year net income was $58.5 million, an increase from $49.7 million in 2024 [6] - Loans held for investment grew by $89.4 million, or 2.9%, during 2025 [6] - Total assets reached $4.48 billion at the end of 2025, compared to $4.23 billion at the end of 2024 [6] Loan Portfolio and Composition - Loans held for investment were $3.14 billion as of December 31, 2025, reflecting a 3.0% increase from Q3 2025 [12] - The growth in loans was primarily driven by organic growth in multi-family property loans, direct energy loans, and other commercial loans [12] Deposits and Borrowings - Total deposits were $3.87 billion as of December 31, 2025, essentially unchanged from Q3 2025 but up 7.0% from $3.62 billion in Q4 2024 [14] - Noninterest-bearing deposits represented 26.4% of total deposits as of December 31, 2025 [14] Capital and Asset Quality - The ratio of allowance for credit losses to loans held for investment was 1.44% as of December 31, 2025, compared to 1.42% a year earlier [16] - The total risk-based capital ratio was 17.26% as of December 31, 2025 [6] Strategic Initiatives - The company entered into a definitive agreement to acquire BOH Holdings, Inc. and its banking subsidiary, Bank of Houston, which is expected to enhance scale in the Houston market [4][6] - The company aims to accelerate loan growth to a mid-to-high single-digit rate in 2026 as part of its growth strategy [4]

Core Viewpoint - South Plains Financial, Inc. has announced a quarterly cash dividend of $0.17 per share, reflecting a 6% increase from the previous dividend declared in November 2025 [1]. Group 1: Company Overview - South Plains Financial, Inc. is the parent company of City Bank, a Texas state-chartered bank headquartered in Lubbock, Texas [2]. - City Bank is recognized as one of the largest independent banks in West Texas, with additional operations in Dallas, El Paso, Greater Houston, the Permian Basin, College Station, Texas, and Ruidoso, New Mexico [2]. - The company offers a diverse range of commercial and consumer financial services targeting small and medium-sized businesses and individuals [2]. Group 2: Financial Performance - The declared dividend of $0.17 per share is set to be payable on February 17, 2026, to shareholders of record as of February 2, 2026 [1].

Core Viewpoint - South Plains Financial, Inc. will release its fourth quarter 2025 financial results on January 26, 2026, after market close, followed by a conference call to discuss these results [1]. Group 1: Financial Results Announcement - The fourth quarter 2025 financial results will be announced after market close on January 26, 2026 [1]. - A conference call and webcast will be held at 5:00 p.m. ET on the same day to discuss the financial results [1]. Group 2: Conference Call Participation - Investors and analysts can participate in the call by dialing 1-877-407-9716 or 1-201-493-6779 for international callers, approximately 10 minutes before the call starts [2]. - A live audio webcast will be available on the Company's website [2]. Group 3: Conference Call Replay - A replay of the conference call will be accessible within two hours after the call concludes, available through the Company's website and by dialing 1-844-512-2921 or 1-412-317-6671 for international callers [3]. - The replay will be available until February 9, 2026, with a pin code of 13757840 for telephone access [3]. Group 4: Company Overview - South Plains Financial, Inc. is the bank holding company for City Bank, headquartered in Lubbock, Texas, and is one of the largest independent banks in West Texas [4]. - The Company operates in various Texas markets, including Dallas, El Paso, Greater Houston, the Permian Basin, and College Station, as well as in Ruidoso, New Mexico [4]. - South Plains provides a range of commercial and consumer financial services, including commercial and retail banking, investment, trust, and mortgage services [4].

Core Points - South Plains Financial, Inc. has entered into a definitive merger agreement with BOH Holdings, Inc. [1] - The all-stock transaction is valued at approximately $106 million, with a price to tangible book value (P/TBV) of 1.4x [1] - The merger is expected to close between the first and second quarter of 2026, pending customary and shareholder approvals [1] Company Overview - South Plains Financial, Inc. is based in Lubbock, Texas, and is the parent company of City Bank [1] - BOH Holdings, Inc. is based in Houston, Texas, and is the parent company of Bank of Houston [1]

Core Viewpoint - South Plains Financial, Inc. has announced a definitive merger agreement to acquire BOH Holdings, Inc. in an all-stock transaction valued at approximately $105.9 million, enhancing its position as a leading community bank in Texas and expanding its footprint in the Houston market [1][2][5] Transaction Details - The merger will result in BOH being merged into South Plains, with South Plains as the surviving entity [1] - The transaction is valued at approximately $105.9 million, representing a price to estimated 2027 earnings ratio of 6.8x [5][6] - Upon completion, the pro forma company will have approximately $5.4 billion in assets, $3.8 billion in loans, and $4.6 billion in deposits [2][5] Strategic Rationale - The acquisition is part of South Plains' strategy to accelerate earnings power and expand its market reach through both organic growth and mergers and acquisitions [4] - The merger is expected to be 11% accretive to South Plains' earnings per share in 2027, with an attractive tangible book value per share earnback of less than 3.0 years [5] - The transaction will provide important scale in one of the fastest-growing metropolitan statistical areas (MSAs) in the country [5] Leadership and Integration - Following the merger, Jim Stein, CEO of BOH, will join South Plains and continue to lead the Houston team, ensuring continuity and integration of operations [4][6] - The cultural alignment between South Plains and BOH is emphasized as a critical factor for successful integration [4] Approval and Timeline - The boards of directors of both companies have unanimously approved the transaction, which is expected to close in the second quarter of 2026, pending regulatory approvals and BOH shareholder approval [7]

Financial Performance - Net income for Q3 2025 was $16.3 million, or $0.96 per diluted common share, up from $11.2 million, or $0.66 per diluted common share in Q3 2024, representing a 45.5% increase in net income year-over-year [113]. - For the nine months ended September 30, 2025, net income was $43.2 million, or $2.55 per diluted common share, compared to $33.2 million, or $1.96 per diluted common share for the same period in 2024, reflecting a 30.2% increase [114]. - Return on average equity (annualized) for Q3 2025 was 13.89%, compared to 10.36% in Q3 2024, indicating improved profitability [113]. - Return on average assets (annualized) for Q3 2025 was 1.47%, up from 1.05% in Q3 2024, showing enhanced asset efficiency [113]. Net Interest Income - Net interest income is the principal source of the Company's net income, driven by the difference between interest income and interest expense [115]. - The Company monitors yields on loans and interest-earning assets, costs of deposits, net interest spread, and net interest margin to evaluate net interest income [115]. - For the three months ended September 30, 2025, net interest income increased to $43.3 million, up 15.4% from $37.5 million in the same period of 2024 [122]. - Net interest income for the nine months ended September 30, 2025 was $124.0 million, an increase of $15.5 million, or 14.3%, compared to the same period in 2024 [124]. - The net interest margin for the three months ended September 30, 2025, was 4.05%, compared to 3.65% for the same period in 2024 [123]. - Net interest margin and net interest spread improved to 3.98% and 3.02%, respectively, for the nine months ended September 30, 2025, compared to 3.61% and 2.53% for the same period in 2024 [125]. Asset and Deposit Growth - Total assets of the company reached $4.41 billion as of September 30, 2025, compared to $4.26 billion in 2024 [122]. - Total deposits increased by $260.3 million, or 7.2%, to $3.88 billion at September 30, 2025, compared to $3.62 billion at December 31, 2024 [148]. - Noninterest-bearing demand deposits increased by $34.1 million for the three months ended September 30, 2025, compared to the same period in 2024 [122]. - Total average loans outstanding during the three months ended September 30, 2025, were $3,093.5 million, compared to $3,069.9 million for the same period in 2024 [174]. Credit Quality and Risk Management - The Company faces risks including economic growth rates, competition for deposits, and inflationary pressures that could impact future performance [107]. - The Company emphasizes the importance of maintaining effective internal controls and managing credit risk to safeguard financial results [112]. - The provision for credit losses for the nine months ended September 30, 2025 was $3.4 million, an increase of $300 thousand, or 9.7%, compared to $3.1 million for the same period in 2024 [128]. - The company continues to monitor credit quality due to ongoing economic uncertainties, including elevated interest rates and inflationary pressures [172]. - The allowance for credit losses (ACL) is evaluated quarterly, considering historical experience and current economic conditions [241]. Capital and Equity - As of September 30, 2025, total stockholders' equity increased to $477.8 million, up $38.9 million or 8.9% from $438.9 million as of December 31, 2024 [216]. - The Company is currently meeting all capital adequacy requirements and is classified as "well capitalized" under regulatory standards [218]. - Total capital to risk-weighted assets ratio was 17.34% as of September 30, 2025, compared to 17.86% as of December 31, 2024 [220]. - Tier 1 capital to risk-weighted assets ratio increased to 15.69% as of September 30, 2025, from 14.80% as of December 31, 2024 [220]. Interest Rate Risk Management - The ALCO Committee manages interest rate risk, considering factors such as earnings impact, regional economies, and liquidity [227]. - The company employs interest rate risk simulation models to assess the sensitivity of net interest income and fair value of equity [228]. - Under the static model, a 100 basis point shift in interest rates could lead to a maximum decline of 7.5% in estimated net interest income at risk for the subsequent one-year period [229]. - As of September 30, 2025, a 300 basis point increase in interest rates would result in a simulated decrease of 2.48% in net interest income [230].

Core Viewpoint - South Plains Financial (SPFI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Company Performance and Outlook - The upgrade reflects an improvement in South Plains Financial's underlying business, suggesting that investors may push the stock price higher in response to this positive trend [5][10]. - The Zacks Consensus Estimate for South Plains Financial indicates expected earnings of $3.39 per share for the fiscal year ending December 2025, with a 4.6% increase in estimates over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [9][10]. - Stocks rated Zacks Rank 1 have historically generated an average annual return of +25% since 1988, showcasing the effectiveness of the system [7].