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]

Financial Data and Key Metrics Changes - For the second quarter, diluted earnings per share increased to $0.86 from $0.72 in the linked quarter [20] - Net interest income rose to $42.5 million compared to $38.5 million in the linked quarter [20] - The net interest margin (NIM) improved to 4.07% from 3.81% in the linked quarter, positively impacted by a one-time interest recovery [21] Business Line Data and Key Metrics Changes - Loans held for investment increased by $23.1 million, or 3% annualized, to $3.1 billion in the second quarter [12] - The yield on loans increased to 6.99% from 6.67% in the linked quarter, boosted by a one-time interest recovery [12] - Non-interest income grew to $12.2 million from $10.6 million in the linked quarter, primarily due to increased mortgage banking revenues [18] Market Data and Key Metrics Changes - Loans in major metropolitan markets decreased by $26 million to $1.01 billion, with heightened loan payoffs exceeding new loan production [16] - The indirect auto loan portfolio modestly decreased to $241 million from $243 million in the linked quarter, reflecting changes in consumer spending behavior [17] Company Strategy and Development Direction - The company is pursuing a strategy focused on both organic growth and mergers and acquisitions (M&A) to increase bank assets [7][9] - The organic growth strategy emphasizes expanding lending capabilities and enhancing core deposit growth [8] - The company remains interested in accretive acquisitions but has not yet found suitable opportunities that meet its criteria [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic growth in Texas and the potential for loan growth to reaccelerate [16] - The company is cautiously optimistic about maintaining resilient economic growth across Texas markets in the second half of 2025 [18] - Management highlighted the importance of proactive management of the loan portfolio to address challenges and maintain credit quality [5] Other Important Information - The consolidated common equity Tier one risk-based capital ratio was 13.86% as of June 30, 2025, indicating a strong capital position [10] - The company recorded a provision for credit losses of $2.5 million in the second quarter, largely due to increased specific reserves and net charge-off activity [23] Q&A Session Summary Question: Loan pipeline and growth outlook - Management indicated that loan growth is expected to be flat to low single digits for the third quarter due to higher loan payoffs, but they feel good about the pipeline and originations [27][28] Question: Balance between hiring and M&A - Management confirmed that they intend to continue hiring new lenders even if they find suitable M&A opportunities, emphasizing the importance of relationship banking [30][31] Question: Increase in specific reserves - The increase in specific reserves was attributed to several loans entering non-accrual status and a conservative approach to credit quality management [32][33] Question: Margin outlook and deposit costs - Management discussed the potential for NIM expansion and the impact of deposit pricing on overall margins, indicating a focus on managing costs effectively [38][39] Question: M&A environment and valuation expectations - Management noted that buyer expectations are a significant impediment to M&A activity, but they are actively looking for opportunities that align with their culture and financial criteria [44][45] Question: Mortgage banking performance - Management indicated that mortgage banking performance has been flat but remains profitable, with a focus on maintaining relationships during challenging times [50][51] Question: Non-interest bearing deposits growth - The growth in non-interest bearing deposits was attributed to improved treasury management solutions and a focus on relationship building with existing customers [63][64]

Financial Data and Key Metrics Changes - For the second quarter, diluted earnings per share increased to $0.86 from $0.72 in the linked quarter [21] - Net interest income rose to $42.5 million compared to $38.5 million in the linked quarter [21] - The net interest margin (NIM) improved to 4.07% from 3.81% in the linked quarter, positively impacted by a one-time interest recovery [22][24] Business Line Data and Key Metrics Changes - Loans held for investment increased by $23.1 million, or 3% annualized, to $3.1 billion in the second quarter [14] - The yield on loans rose to 6.99% from 6.67% in the linked quarter, boosted by a one-time interest recovery [14] - Non-interest income increased to $12.2 million from $10.6 million in the linked quarter, primarily due to higher mortgage banking revenues [19] Market Data and Key Metrics Changes - Loans in major metropolitan markets decreased by $26 million to $1.01 billion, driven by higher loan payoffs exceeding new loan production [17] - The indirect auto loan portfolio modestly decreased to $241 million from $243 million in the linked quarter, reflecting changes in consumer spending behavior [18] Company Strategy and Development Direction - The company is pursuing a strategy focused on both organic growth and mergers and acquisitions (M&A) to increase bank assets [8][10] - The organic growth strategy emphasizes expanding lending capabilities and enhancing deposit growth [9] - The company remains interested in accretive acquisitions but is cautious and selective, ensuring any deal aligns with its culture and financial goals [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic growth in Texas and the potential for loan growth to reaccelerate [17] - The company is closely monitoring the impact of expected tariffs on the local economy and consumer behavior [19] - Management believes the bank is well-capitalized and positioned to weather potential economic headwinds [12][13] Other Important Information - The allowance for credit losses to total loans held for investment ratio was 1.45%, reflecting a slight increase from the prior quarter [24] - The tangible common equity to tangible assets ratio was 9.98%, indicating a strong capital position [20] Q&A Session Summary Question: Loan pipeline and growth expectations - Management indicated that loan growth is expected to be flat to low single digits in the third quarter due to higher loan payoffs [28][29] Question: Balance between hiring and M&A - Management confirmed that hiring efforts will continue regardless of M&A opportunities, emphasizing the importance of building relationships [31] Question: Increase in specific reserves - The increase in specific reserves was attributed to several loans entering non-accrual status, not just one large credit [33][34] Question: Margin outlook and deposit costs - Management noted that while deposit costs are declining, the outlook for net interest margin remains stable [40][41] Question: M&A environment and valuation expectations - Management highlighted that buyer expectations are a significant impediment to M&A activity, but the regulatory environment has improved [46][47] Question: Mortgage banking performance - Management expects mortgage banking performance to remain flat but is confident in maintaining profitability [50] Question: Non-interest bearing deposits growth - The growth in non-interest bearing deposits was attributed to improved treasury management solutions and relationship management [65][66] Question: Hiring strategy and expense growth - Management acknowledged that hiring will impact expenses in the short term but views it as essential for long-term growth [68]