Financial Data and Key Metrics Changes - For Q3 2025, diluted earnings per share increased to $0.96 from $0.86 in the linked quarter, driven by reduced provision for credit losses and increased net interest income [16] - Net interest income rose to $43 million from $42.5 million in the previous quarter, while the net interest margin (NIM) was 4.05%, slightly down from 4.07% [16][17] - The consolidated common equity Tier 1 risk-based capital ratio was 14.41%, and the Tier 1 leverage ratio was 12.37% as of September 30, 2025 [7] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $45.5 million to $3.05 billion, primarily due to a $46.5 million decline in multifamily property loans [8] - The indirect auto loan portfolio remained relatively stable at $239 million, down from $296 million a year ago, with a focus on maintaining credit quality [12] - Non-interest income for Q3 was $11.2 million, down from $12.2 million in the linked quarter, mainly due to a decrease in mortgage banking revenues [14][15] Market Data and Key Metrics Changes - Deposits increased by $142.2 million to $3.88 billion, with significant growth in non-interest-bearing deposits, which rose to 27% of total deposits [17] - The major metro loan portfolio represented 33.2% of the total loan portfolio, with steady performance in Dallas, Houston, and El Paso [11] Company Strategy and Development Direction - The company aims to grow its lending team by up to 20% to enhance loan growth, with a focus on organic growth and potential M&A opportunities [5][6] - The management is optimistic about accelerating loan growth in 2026, despite current headwinds from higher-than-normal loan paydowns [5][14] - The company is actively engaging in discussions with potential acquisition targets that align with its conservative nature and culture [6][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's strong financial position and ability to capitalize on growth opportunities, despite challenges in the current economic environment [4][86] - The management noted that while there are concerns about credit quality, particularly in the indirect auto portfolio, they have not seen significant increases in delinquencies [63][70] Other Important Information - The company redeemed $50 million in subordinated debt to avoid higher interest rates, reflecting a proactive approach to managing capital costs [20] - The tangible common equity to tangible assets ratio was 10.25%, indicating a solid capital position [21] Q&A Session Summary Question: Plans for increasing the lending team - The company plans to increase its lending team by up to 20%, with a current base of about 40 lenders, focusing on production staff [26][28] Question: Concerns about subprime loan concentration - Management clarified that there has not been a significant increase in subprime loans, and the data presented was updated to reflect current borrower credit scores [32][33] Question: Impact of redeemed subordinated debt - The redeemed subordinated debt was previously at 4.5% and would have increased to 8%, with no additional expenses incurred during the redemption [35][37] Question: Vulnerability of the commercial real estate book - Management acknowledged scheduled payoffs in the commercial real estate book but emphasized that they will not lower credit standards to retain loans [80][81]

Financial Data and Key Metrics Changes - For Q3 2025, diluted earnings per share increased to $0.96 from $0.86 in the linked quarter, primarily due to a reduction in provision for credit losses and an increase in net interest income [19][22] - Net interest income rose to $43 million from $42.5 million in the linked quarter, with a net interest margin of 4.05%, slightly down from 4.07% [19][20] - The allowance for credit losses to total loans held for investment ratio remained at 1.45%, with a provision for credit losses of $500,000 compared to $2.5 million in the linked quarter [22] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $45.5 million to $3.05 billion, primarily due to a $46.5 million decrease in multifamily property loans [10] - The indirect auto loan portfolio remained relatively unchanged at $239 million, with a focus on maintaining credit quality [13][14] - Non-interest income for Q3 was $11.2 million, down from $12.2 million in the linked quarter, mainly due to a decrease in mortgage banking revenues [17] Market Data and Key Metrics Changes - Deposits increased by $142.2 million to $3.88 billion, driven by organic growth in both retail and commercial deposits, particularly in the Lubbock market [20] - Non-interest bearing deposits increased to 27% of total deposits, up from 26.7% in the linked quarter [20] Company Strategy and Development Direction - The company aims to grow its lending team by up to 20% to accelerate loan growth, with a focus on recruiting experienced lenders in key markets such as the Permian, Houston, and Dallas [6][12] - The company is exploring further acquisitions while maintaining a conservative approach, focusing on cultural fit and successful banks with loyal customer bases [7][49] - The management emphasizes organic growth initiatives, stating that they are in the early stages and expect significant growth in the coming year [8][99] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth reaccelerating in 2026 as the level of payoffs is expected to diminish [16] - The company remains cautious about economic conditions but believes it is well-positioned to manage varying economic environments [22] - Management highlighted the importance of maintaining credit quality and monitoring potential credit stress in the indirect auto portfolio [72][78] Other Important Information - The company redeemed $50 million in subordinated debt, which was expected to result in a lower interest expense moving forward [23] - The tangible common equity to tangible assets ratio was 10.25%, indicating a strong capital position [24] Q&A Session Summary Question: Plans for increasing the lending team - Management confirmed plans to increase the lending team by up to 20%, with current numbers indicating over 10% growth achieved so far this year [27][28] Question: Concerns about subprime and deep subprime loans - Management clarified that the increase in subprime and deep subprime concentrations is due to updated data, not an actual increase in risk [34][35] Question: Impact of redeemed subordinated debt - Management stated there were no expenses incurred from redeeming the subordinated debt, as it was done within the call period [36][38] Question: Previous hiring initiatives and their success - Management reflected on past hiring initiatives, emphasizing a rigorous process to ensure cultural fit and successful integration [42][43] Question: M&A target criteria - Management reiterated that cultural fit is crucial for any acquisition, alongside the need for successful banks with loyal customer bases [47][49] Question: Credit score migration concerns - Management acknowledged some downward migration in credit scores but noted that delinquencies have not risen, indicating a stable credit profile [72][78]

Financial Performance - Net income for 3Q'25 was $163 million, compared to $146 million for 2Q'25[7] - Diluted earnings per share for 3Q'25 was $096, compared to $086 for 2Q'25[7] - Return on average assets for 3Q'25 was 147%, compared to 134% for 2Q'25[7] - Net interest margin was 405% for 3Q'25, compared to 407% for 2Q'25[7] - Noninterest income was $112 million for 3Q'25, compared to $122 million for 2Q'25[35] Loan Portfolio - Loans held for investment were $305 billion as of September 30, 2025, compared to $310 billion as of June 30, 2025[7] - Average yield on loans was 692% for 3Q'25, compared to 699% for 2Q'25[7] - Major metropolitan market loan portfolio represents 332% of the Bank's total loans HFI at September 30, 2025[19] Deposits - Total deposits were $388 billion as of September 30, 2025, compared to $374 billion as of June 30, 2025[7] - Noninterest-bearing deposits to total deposits were 270% at September 30, 2025, up from 267% at June 30, 2025[48]

Financial Performance - Net interest income for Q3 2025 was $43.0 million, up from $42.5 million in Q2 2025 and $37.3 million in Q3 2024, reflecting a year-over-year increase of 15.2%[4] - Net income for Q3 2025 was $16.3 million, compared to $14.6 million in Q2 2025 and $11.2 million in Q3 2024, representing a 45.5% increase year-over-year[6] - Diluted earnings per share for Q3 2025 was $0.96, an increase from $0.86 in Q2 2025 and $0.66 in Q3 2024[6] - Noninterest income for Q3 2025 was $11.2 million, down from $12.2 million in Q2 2025, primarily due to a decrease in mortgage banking revenues[8] - Interest income for Q3 2025 was $64,520,000, an increase from $61,640,000 in Q3 2024, representing a year-over-year growth of 4.5%[27] - Total interest income for Q3 2025 was $64,520,000, an increase of 3% from $61,640,000 in Q3 2024[34] - Noninterest income increased to $11,165,000 in Q3 2025, up from $10,635,000 in Q3 2024, marking a growth of 5%[34] - Net income for Q3 2025 was $16,318,000, a significant increase of 46% from $11,212,000 in Q3 2024[34] Asset Quality - The provision for credit losses in Q3 2025 was $500 thousand, a decrease from $2.5 million in Q2 2025, indicating improved credit quality[13] - The ratio of nonperforming assets to total assets was 0.26% as of September 30, 2025, down from 0.59% a year earlier, reflecting improved asset quality[15] - Nonperforming loans to total loans held for investment ratio was 0.32% in Q3 2025, slightly down from 0.34% in Q2 2025, indicating improved asset quality[27] - The provision for credit losses decreased to $500,000 in Q3 2025 from $495,000 in Q3 2024, indicating improved credit quality[27] - The provision for credit losses for Q3 2025 was $500,000, compared to $495,000 in Q3 2024, indicating a slight increase[34] Capital and Liquidity - Total deposits increased by $142.2 million, or 3.8%, to $3.88 billion as of September 30, 2025, compared to $3.74 billion as of June 30, 2025[11] - Cash and cash equivalents rose to $635,046,000 in Q3 2025, up from $471,167,000 in Q3 2024, indicating improved liquidity[27] - Total stockholders' equity to total assets ratio increased to 10.67% in Q3 2025 from 10.22% in Q3 2024, reflecting a stronger capital position[28] - Stockholders' equity increased to $477,802 thousand as of September 30, 2025, compared to $438,949 thousand as of December 31, 2024[33] - Tangible common equity as of September 30, 2025, was $457,222,000, up from $421,925,000 as of September 30, 2024, reflecting a year-over-year increase of 8%[36] - The book value per share increased to $29.41 as of September 30, 2025, compared to $27.04 a year earlier, representing an increase of 8.8%[36] Growth and Strategy - The company plans to expand its lending team by up to 20% to support future growth and is exploring potential M&A opportunities that align with its conservative approach[3] - Total assets as of September 30, 2025, were $4,479,437,000, an increase from $4,337,659,000 a year earlier, representing a growth of 3.3%[27] - Total loans held for investment as of September 30, 2025, were $3,053,480,000, slightly down from $3,055,054,000 as of December 31, 2024[35] - Total deposits increased to $3,881,143,000 as of September 30, 2025, compared to $3,620,876,000 as of December 31, 2024, representing a growth of 7%[35] Efficiency and Performance Ratios - Return on average assets (annualized) improved to 1.47% in Q3 2025 from 1.05% in Q3 2024, showcasing enhanced operational efficiency[27] - The efficiency ratio improved to 60.69% in Q3 2025 from 68.80% in Q3 2024, demonstrating better cost management[27] - The average yield on taxable debt securities for the three months ended September 30, 2025, was 3.69%, down from 4.02% in the same period of 2024[29] - The company reported a net interest margin of 3.98% for the nine months ended September 30, 2025, compared to 3.61% for the same period in 2024[31]

Core Viewpoint - South Plains Financial, Inc. reported strong financial results for the third quarter of 2025, showcasing solid earnings growth driven by net interest income expansion and improved credit quality in its loan portfolio [3][6]. Financial Performance - Net interest income for Q3 2025 was $43.0 million, up from $42.5 million in Q2 2025 and $37.3 million in Q3 2024 [4][29]. - Net interest margin was 4.05% for Q3 2025, slightly down from 4.07% in Q2 2025 but up from 3.65% in Q3 2024 [6][29]. - Net income for Q3 2025 was $16.3 million, compared to $14.6 million in Q2 2025 and $11.2 million in Q3 2024 [6][29]. - Diluted earnings per share increased to $0.96 in Q3 2025 from $0.86 in Q2 2025 and $0.66 in Q3 2024 [6][29]. Loan and Deposit Trends - Loans held for investment decreased to $3.05 billion as of September 30, 2025, from $3.10 billion as of June 30, 2025, primarily due to a decrease in multi-family property loans [11]. - Total deposits increased to $3.88 billion as of September 30, 2025, up from $3.74 billion as of June 30, 2025, reflecting a 3.8% growth [12][29]. Asset Quality - The provision for credit losses was $500 thousand in Q3 2025, down from $2.5 million in Q2 2025, indicating improved credit quality [15][29]. - The ratio of nonperforming assets to total assets was 0.26% as of September 30, 2025, compared to 0.25% in Q2 2025 and 0.59% in Q3 2024 [16][29]. Capital Position - Tangible book value per share increased to $28.14 as of September 30, 2025, from $26.70 as of June 30, 2025 [6][29]. - The consolidated total risk-based capital ratio was 17.34% as of September 30, 2025, indicating a strong capital position [6][29].

Core Viewpoint - South Plains Financial, Inc. will release its third quarter 2025 financial results on October 23, 2025, after market close, followed by a conference call to discuss the results [1]. Group 1: Financial Results Announcement - The third quarter 2025 financial results will be announced after market close on October 23, 2025 [1]. - A conference call and webcast will take place at 5:00 p.m. ET on the same day to discuss the financial results [1]. Group 2: Participation Details - Investors and analysts can join 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: Replay Information - 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 November 6, 2025, with a pin code of 13756126 for telephone access [3]. Group 4: Company Overview - South Plains Financial, Inc. is the parent company of City Bank, a Texas state-chartered bank headquartered in Lubbock, Texas [4]. - City Bank is one of the largest independent banks in West Texas, with operations in various Texas markets and Ruidoso, New Mexico [4]. - The company offers a wide range of commercial and consumer financial services, including commercial and retail banking, investment, trust, and mortgage services [4].

PART I. FINANCIAL INFORMATION This section presents the unaudited consolidated financial statements and management's discussion and analysis for South Plains Financial, Inc. [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, and notes [Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Consolidated%20Balance%20Sheets%20%28Unaudited%29) This section presents the unaudited consolidated balance sheets, detailing assets, liabilities, and equity for the reported periods | ASSETS (Dollars in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :------------------ | | Cash and cash equivalents | $470,496 | $359,082 | | Securities available for sale | $570,000 | $577,240 | | Loans held for investment, net | $3,053,968 | $3,011,817 | | Total assets | $4,363,674 | $4,232,239 | | LIABILITIES AND STOCKHOLDERS' EQUITY (Dollars in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :------------------ | | Total deposits | $3,738,938 | $3,620,876 | | Total liabilities | $3,909,600 | $3,793,290 | | Total stockholders' equity | $454,074 | $438,949 | | Total liabilities and stockholders' equity | $4,363,674 | $4,232,239 | - Total assets increased by **$131.4 million (3.1%)** from December 31, 2024, to June 30, 2025, reaching **$4.36 billion**, driven by increases in cash and cash equivalents and net loans held for investment[9](index=9&type=chunk)[160](index=160&type=chunk) - Total deposits increased by **$118.1 million (3.3%)** to **$3.74 billion** at June 30, 2025, compared to **$3.62 billion** at December 31, 2024[9](index=9&type=chunk)[160](index=160&type=chunk)[207](index=207&type=chunk) [Consolidated Statements of Comprehensive Income (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Unaudited%29) This section presents the unaudited consolidated statements of comprehensive income, detailing revenues, expenses, and net income | (Dollars in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $64,135 | $59,208 | $124,057 | $117,935 | | Total interest expense | $21,632 | $23,320 | $43,027 | $46,679 | | Net interest income | $42,503 | $35,888 | $81,030 | $71,256 | | Provision for credit losses | $2,500 | $1,775 | $2,920 | $2,605 | | Total noninterest income | $12,165 | $12,709 | $22,790 | $24,118 | | Total noninterest expense | $33,543 | $32,572 | $66,573 | $64,502 | | Net income | $14,605 | $11,134 | $26,899 | $22,008 | | Basic earnings per share | $0.90 | $0.68 | $1.65 | $1.34 | | Diluted earnings per share | $0.86 | $0.66 | $1.58 | $1.30 | - Net income for the three months ended June 30, 2025, increased by **31.2%** to **$14.6 million ($0.86 diluted EPS)** from **$11.1 million ($0.66 diluted EPS)** in the prior year period[13](index=13&type=chunk)[122](index=122&type=chunk) - Net interest income for the three months ended June 30, 2025, rose by **$6.6 million (18.4%)** to **$42.5 million**, driven by increased loan interest income and decreased interest expense on deposits[13](index=13&type=chunk)[132](index=132&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28Unaudited%29) This section presents the unaudited consolidated statements of changes in stockholders' equity, detailing movements in equity components | (Dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Beginning Balance | $438,949 | $407,114 | | Net income | $26,899 | $22,008 | | Cash dividends declared | $(4,904) | $(4,417) | | Other comprehensive income (loss) | $375 | $(7,386) | | Repurchases of common stock | $(8,526) | $(340) | | Ending Balance | $454,074 | $417,985 | - Total stockholders' equity increased by **$15.1 million (3.4%)** to **$454.1 million** at June 30, 2025, from **$438.9 million** at December 31, 2024, primarily due to net income and other comprehensive income, partially offset by dividends and stock repurchases[15](index=15&type=chunk)[228](index=228&type=chunk) - Cash dividends declared for the six months ended June 30, 2025, were **$0.30 per share**, totaling **$4.9 million**, an increase from **$0.27 per share ($4.4 million)** in the same period of 2024[15](index=15&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) This section presents the unaudited consolidated statements of cash flows, detailing cash movements from operating, investing, and financing | (Dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $40,841 | $37,337 | | Net cash used in investing activities | $(35,369) | $(62,960) | | Net cash provided by (used in) financing activities | $105,942 | $(6,529) | | Net change in cash and cash equivalents | $111,414 | $(32,152) | | Ending cash and cash equivalents | $470,496 | $298,006 | - Net cash provided by financing activities significantly increased to **$105.9 million** for the six months ended June 30, 2025, compared to a net use of **$6.5 million** in the prior year, primarily due to a substantial increase in net change in deposits[17](index=17&type=chunk) - Cash and cash equivalents increased by **$111.4 million** during the first six months of 2025, reaching **$470.5 million**, a reversal from a decrease of **$32.2 million** in the same period of 2024[17](index=17&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed notes to the unaudited consolidated financial statements, explaining accounting policies and disclosures [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the Company's operations, basis of presentation, use of estimates, recent accounting pronouncements, and subsequent events - South Plains Financial, Inc. operates as a bank holding company through its subsidiaries, primarily City Bank, offering commercial and retail banking, investment, trust, and mortgage services across Texas and Eastern New Mexico[19](index=19&type=chunk) - The interim consolidated financial statements are unaudited and prepared in accordance with GAAP for interim financial information and SEC Form 10-Q instructions, relying on management's estimates for items like allowance for credit losses, stock-based compensation, and fair values[21](index=21&type=chunk)[22](index=22&type=chunk) - Recent accounting pronouncements (ASU 2023-06, ASU 2023-09, ASU 2024-03) are not expected to have a material impact on the Company's financial statements upon adoption[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) [

Core Insights - South Plains Financial (SPFI) is experiencing solid improvement in earnings estimates, which is likely to positively impact its stock price [1][2] - The Zacks Rank system indicates a strong correlation between earnings estimate revisions and stock price movements, with SPFI currently holding a Zacks Rank 1 (Strong Buy) [2][9] Earnings Estimates - Current-quarter earnings estimate is $0.87 per share, reflecting a +31.8% change from the previous year [6] - The consensus estimate for the current quarter has increased by 7.41% over the last 30 days, with two upward revisions and no negative changes [6] - For the full year, the earnings estimate stands at $3.24 per share, representing an +11.0% change from the prior year [7] - The full-year consensus estimate has risen by 5.03% due to two upward revisions and no negative revisions [8] Stock Performance - SPFI shares have gained 8.2% over the past four weeks, indicating investor confidence in the company's earnings growth prospects [10]

Core Viewpoint - South Plains Financial (NASDAQ: SPFI) has shown strong performance over the past year, with a 32% increase in stock value, and a notable 10% rise following better-than-expected Q2 earnings [1] Financial Performance - The company reported Q2 earnings that exceeded expectations, contributing to the recent stock price surge [1] M&A Considerations - Management has indicated that the company is exploring potential mergers and acquisitions (M&A) as part of its growth strategy [1]

Core Viewpoint - South Plains Financial (SPFI) reported quarterly earnings of $0.86 per share, exceeding the Zacks Consensus Estimate of $0.77 per share, and showing an increase from $0.66 per share a year ago, representing an earnings surprise of +11.69% [1][2] Financial Performance - The company achieved revenues of $54.67 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 5.74%, compared to $48.6 million in the same quarter last year [2] - Over the last four quarters, South Plains Financial has consistently surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - South Plains Financial shares have increased approximately 5.4% since the beginning of the year, while the S&P 500 has gained 6.2% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions prior to the earnings release [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.81 on revenues of $52.85 million, and for the current fiscal year, it is $3.08 on revenues of $206.15 million [7] - The outlook for the industry, specifically the Banks - Southeast sector, is favorable, ranking in the top 25% of over 250 Zacks industries, which historically outperforms the bottom 50% by more than 2 to 1 [8]