South Plains Financial(US:SPFI)2025-05-06 20:31PART I. FINANCIAL INFORMATION Consolidated Financial Statements Presents unaudited consolidated financial statements, highlighting total assets of $4.41 billion, net income of $12.3 million, and a $0.15 per share dividend Consolidated Balance Sheets Total assets increased to $4.41 billion, driven by higher cash and deposits, with loans at $3.03 billion and equity at $443.7 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $536,300 | $359,082 | | Loans held for investment, net | $3,032,892 | $3,011,817 | | Securities available for sale | $571,527 | $577,240 | | Total Assets | $4,405,209 | $4,232,239 | | Liabilities & Equity | | | | Total deposits | $3,792,519 | $3,620,876 | | Total liabilities | $3,961,466 | $3,793,290 | | Total stockholders' equity | $443,743 | $438,949 | | Total Liabilities & Equity | $4,405,209 | $4,232,239 | Consolidated Statements of Comprehensive Income Net income rose to $12.3 million, with diluted EPS at $0.72, driven by a 9% increase in net interest income and improved comprehensive income Q1 2025 vs. Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $38,527 | $35,368 | | Provision for credit losses | $420 | $830 | | Noninterest Income | $10,625 | $11,409 | | Noninterest Expense | $33,030 | $31,930 | | Net Income | $12,294 | $10,874 | | Diluted EPS | $0.72 | $0.64 | | Comprehensive Income | $14,971 | $3,411 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $443.7 million, driven by net income and comprehensive income, partially offset by dividends and stock repurchases - Key drivers for the change in stockholders' equity in Q1 2025 were net income of $12.3 million, offset by cash dividends of $2.5 million and common stock repurchases of $8.3 million14 - The company repurchased 250,000 shares of common stock for $8.25 million during the first quarter of 202514 Consolidated Statements of Cash Flows Net cash increased by $177.2 million, with $26.1 million from operations, $9.8 million used in investing, and $160.9 million provided by financing activities Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,095 | $19,160 | | Net cash provided by (used in) investing activities | ($9,774) | $12,497 | | Net cash provided by financing activities | $160,897 | $10,124 | | Net change in cash and cash equivalents | $177,218 | $41,781 | Notes to Consolidated Financial Statements Notes detail accounting policies, securities portfolio with $86.2 million unrealized losses, loan portfolio composition, $43.0 million ACL, and strong capital adequacy Securities Available for Sale (March 31, 2025, in thousands) | Security Type | Fair Value | Gross Unrealized Loss | | :--- | :--- | :--- | | State and municipal | $169,018 | ($29,155) | | Residential mortgage-backed | $263,917 | ($50,234) | | Commercial mortgage-backed | $41,033 | ($5,232) | | Total | $571,527 | ($86,201) | Loan Portfolio Composition (March 31, 2025, in thousands) | Loan Category | Amount | | :--- | :--- | | Commercial real estate | $1,126,800 | | Commercial - general & specialized | $951,501 | | Consumer (1-4 family, auto, other) | $895,518 | | Construction | $102,041 | | Total Loans Held for Investment | $3,075,860 | - The Allowance for Credit Losses (ACL) on loans was $43.0 million, or 1.40% of loans held for investment, as of March 31, 2025, down slightly from $43.2 million at year-end 202440 - As of March 31, 2025, the company and its bank subsidiary met all 'well-capitalized' regulatory requirements, with a consolidated Total Capital to Risk-Weighted Assets ratio of 17.93%787981 - On April 17, 2025, the Company declared a cash dividend of $0.15 per share98 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 results, highlighting net income of $12.3 million, improved net interest margin, loan and deposit growth, and strong asset quality and capital positions Results of Operations Net income increased by $1.4 million, driven by a $3.2 million rise in net interest income and expanded net interest margin, despite higher noninterest expenses Key Performance Metrics (Annualized) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income (in millions) | $12.3 | $10.9 | | Diluted EPS | $0.72 | $0.64 | | Return on Average Assets | 1.16% | 1.04% | | Return on Average Equity | 11.30% | 10.72% | - Net interest income increased by $3.2 million YoY, driven by a $1.2 million increase in interest income and a $2.0 million decrease in interest expense117 - Noninterest income decreased by $0.8 million YoY, primarily due to a $1.8 million decline in mortgage banking activities income, which included a $1.6 million negative fair value adjustment on MSRs125128 - Noninterest expense increased by $1.1 million YoY, mainly due to a $453 thousand increase in salaries and a $247 thousand increase in professional services131132133 Financial Condition Total assets grew to $4.41 billion, with loans at $3.08 billion and deposits at $3.79 billion, while maintaining significant borrowing capacity - Loans held for investment grew by 0.7% to $3.08 billion in Q1 2025, with growth in residential and commercial land development, offset by decreases in seasonal agricultural loans136 - Total deposits increased by 4.7% to $3.79 billion, driven by a $70.2 million seasonal increase in public funds and organic growth182 - The company has significant available liquidity, including $1.13 billion in borrowing capacity from the FHLB and $655.9 million from the Federal Reserve Bank of Dallas, with no outstanding advances as of March 31, 2025189191 Allowance for Credit Losses and Asset Quality ACL was $43.0 million, with asset quality improving as nonperforming loans decreased to $6.5 million, and net charge-offs were $519 thousand Asset Quality Indicators (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans | $1,853 | $22,102 | | Allowance for credit losses | $42,968 | $43,237 | | Ratio of allowance to nonaccrual loans | 2,318.83% | 195.62% | | Ratio of nonaccrual loans to total loans | 0.06% | 0.72% | - Nonperforming loans decreased by $17.5 million to $6.5 million, mainly because a $19.0 million credit was placed back on accrual status and was subsequently repaid in full after quarter-end172 - Net charge-offs for Q1 2025 were $519 thousand (0.07% of average loans, annualized), down from $947 thousand (0.13% annualized) in Q1 2024164 Liquidity and Capital Resources The company maintains strong liquidity and capital, with stockholders' equity at $443.7 million and all regulatory capital ratios exceeding 'well-capitalized' minimums - The company has access to approximately $1.13 billion from the FHLB and $655.9 million from the Federal Reserve discount window to support liquidity needs202 Consolidated Capital Ratios | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | CET 1 capital (to risk-weighted assets) | 13.59% | 13.53% | | Tier 1 capital (to risk-weighted assets) | 14.87% | 14.80% | | Total capital (to risk-weighted assets) | 17.93% | 17.86% | | Tier 1 capital (to average assets) | 12.04% | 12.04% | Non-GAAP Financial Measures Provides reconciliation of GAAP to non-GAAP measures, with tangible book value per share increasing to $26.05, aiding investor evaluation of performance Non-GAAP Reconciliation and Ratios | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total stockholders' equity (GAAP) | $443,743 | $438,949 | | Less: Goodwill and other intangibles | ($20,884) | ($21,035) | | Tangible common equity (Non-GAAP) | $422,859 | $417,914 | | Book value per share (GAAP) | $27.33 | $26.67 | | Tangible book value per share (Non-GAAP) | $26.05 | $25.40 | Quantitative and Qualitative Disclosures About Market Risk Discusses market risk, primarily interest rate volatility, with simulations showing a 100 basis point rate increase would decrease NII by 1.13% over 12 months Net Interest Income Sensitivity Analysis (12-Month Horizon) | Change in Interest Rates (Basis Points) | % Change in Net Interest Income (as of March 31, 2025) | | :--- | :--- | | +300 | (3.53)% | | +200 | (2.25)% | | +100 | (1.13)% | | -100 | 0.05% | | -200 | 0.55% | Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting in Q1 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report235 - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2025236 PART II. OTHER INFORMATION Legal Proceedings The company is not involved in any litigation with a material adverse effect on its financial position or results of operations - The company is not presently involved in any litigation that management believes would result in a material adverse effect on its financial position or results of operations238 Risk Factors No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes in the risk factors disclosed by the Company in its 2024 Annual Report on Form 10-K239 Unregistered Sales of Equity Securities and Use of Proceeds Details stock repurchase activities, including the conclusion of a $10.0 million program and the approval and partial execution of a new $15.0 million program - On February 21, 2025, the board approved a new stock repurchase program for up to $15.0 million of the company's common stock241 Share Repurchase Activity (Q1 2025) | Month | Total Shares Repurchased | Average Price Paid Per Share | Total Dollar Amount Purchased | | :--- | :--- | :--- | :--- | | January 2025 | — | — | — | | February 2025 | — | — | — | | March 2025 | 250,000 | $33.00 | $8,250,000 | Defaults Upon Senior Securities This item is not applicable - Not applicable244 Mine Safety Disclosures This item is not applicable - Not applicable245 Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q1 2025246 Exhibits Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL data files - Exhibits filed include CEO/CFO certifications and XBRL data files247