South Plains Financial(SPFI) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Consolidated Financial Statements Unaudited consolidated financial statements, including balance sheets, income, equity, and cash flows, are presented with detailed notes on accounting policies and financial instruments Consolidated Balance Sheets (Unaudited) The consolidated balance sheets show an increase in total assets to $4.34 billion and total liabilities, primarily from deposits, with stockholders' equity also rising Consolidated Balance Sheet Highlights (Dollars in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Assets | | | | | Cash and cash equivalents | $471,167 | $330,158 | +$141,009 | | Securities available for sale | $606,889 | $622,762 | -$15,873 | | Loans held for investment, net | $2,994,489 | $2,971,797 | +$22,692 | | Total assets | $4,337,659 | $4,204,793 | +$132,866 | | Liabilities | | | | | Total deposits | $3,719,360 | $3,626,153 | +$93,207 | | Total liabilities | $3,894,537 | $3,797,679 | +$96,858 | | Stockholders' Equity | | | | | Total stockholders' equity | $443,122 | $407,114 | +$36,008 | Consolidated Statements of Comprehensive Income (Unaudited) Net income decreased for both the three and nine months ended September 30, 2024, primarily due to lower noninterest income and higher interest expense, despite increased net interest income Key Income Statement Data (Dollars in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total interest income | $61,640 | $56,528 | $179,575 | $154,797 | | Total interest expense | $24,346 | $20,839 | $71,025 | $50,212 | | Net interest income | $37,294 | $35,689 | $108,550 | $104,585 | | Provision for credit losses | $495 | $(700) | $3,100 | $4,010 | | Total noninterest income | $10,635 | $12,277 | $34,753 | $70,080 | | Total noninterest expense | $33,128 | $31,489 | $97,630 | $104,349 | | Net income | $11,212 | $13,494 | $33,220 | $52,421 | | Basic EPS | $0.68 | $0.80 | $2.02 | $3.09 | | Diluted EPS | $0.66 | $0.78 | $1.96 | $3.01 | | Other comprehensive income (loss) | $16,647 | $(22,765) | $9,261 | $(19,485) | | Comprehensive income (loss) | $27,859 | $(9,271) | $42,481 | $32,936 | Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Total stockholders' equity increased for the nine months ended September 30, 2024, driven by net income and positive other comprehensive income, partially offset by dividends and stock repurchases Changes in Stockholders' Equity (Nine Months Ended September 30, 2024 vs. 2023) (Dollars in thousands) | Metric | Sep 30, 2024 | Sep 30, 2023 | | :-------------------------------- | :----------- | :----------- | | Balance at beginning of period | $407,114 | $357,014 | | Net income | $33,220 | $52,421 | | Cash dividends declared | $(6,702) | $(6,609) | | Other comprehensive income (loss) | $9,261 | $(19,485) | | Repurchases of common stock | $(1,340) | $(11,860) | | Stock-based compensation | $1,701 | $1,625 | | Balance at end of period | $443,122 | $371,716 | Consolidated Statements of Cash Flows (Unaudited) Net cash from operating activities significantly increased, investing activities shifted to an inflow, and financing activities decreased for the nine months ended September 30, 2024 Cash Flow Summary (Nine Months Ended September 30, 2024 vs. 2023) (Dollars in thousands) | Cash Flow Activity | 2024 | 2023 | | :-------------------------------- | :----------- | :----------- | | Net cash provided by operating activities | $55,209 | $51,979 | | Net cash provided by (used in) investing activities | $767 | $(129,760) | | Net cash provided by financing activities | $85,033 | $195,322 | | Net change in cash and cash equivalents | $141,009 | $117,541 | | Ending cash and cash equivalents | $471,167 | $352,424 | Notes to Consolidated Financial Statements (Unaudited) This section provides detailed disclosures and explanations for the unaudited consolidated financial statements, covering significant accounting policies, specific asset and liability categories, equity, and other financial instruments 1. Summary of Significant Accounting Policies This section outlines the Company's nature of operations, basis of presentation, use of estimates, recent accounting pronouncements, and subsequent events - SPFI is a Texas-based bank holding company operating through subsidiaries like City Bank, offering commercial and retail banking, investment, trust, and mortgage services in Texas and Eastern New Mexico[15] - The interim financial statements are unaudited but reflect all necessary adjustments for fair presentation, prepared in accordance with GAAP for interim information and SEC Form 10-Q instructions[18] - Management's estimates, particularly for the allowance for credit losses, stock-based compensation, derivatives, mortgage servicing rights, and fair values of financial instruments, are susceptible to significant change[19] Nature of Operations South Plains Financial, Inc. is a Texas corporation and registered bank holding company, conducting principal activities through its subsidiaries, primarily City Bank, across Texas and Eastern New Mexico - SPFI operates through subsidiaries like City Bank, offering commercial and retail banking, investment, trust, and mortgage services[15] - On April 1, 2023, SPFI sold its wholly-owned subsidiary, Windmark Insurance Agency, Inc., for $36.1 million, resulting in a pre-tax gain of $33.8 million[16] Basis of Presentation and Consolidation The consolidated financial statements include SPFI and its wholly-owned subsidiaries, with all significant intercompany balances and transactions eliminated - Consolidated financial statements include SPFI and its wholly-owned subsidiaries, with intercompany balances eliminated[17] - Interim statements are unaudited but reflect management's opinion of all necessary adjustments for fair presentation, prepared under GAAP for interim information and SEC Form 10-Q[18] Use of Estimates The preparation of financial statements requires management to make significant estimates and assumptions, particularly regarding the adequacy of the allowance for credit losses, stock-based compensation, derivatives, mortgage servicing rights, and fair values of financial instruments - Key estimates include the adequacy of the allowance for credit losses, stock-based compensation, derivatives, mortgage servicing rights, and fair values of financial instruments[19] Recent Accounting Pronouncements Recent ASUs, including 2023-06 (Disclosure Improvements), 2023-07 (Segment Reporting), and 2023-09 (Income Taxes), are not expected to materially impact the Company's financial statements - ASU 2023-06 (Disclosure Improvements) is not expected to have a material impact[21] - ASU 2023-07 (Segment Reporting) is effective