South Plains Financial(SPFI) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, providing a detailed financial overview Consolidated Balance Sheets (Unaudited) Consolidated Balance Sheets (Unaudited) | Metric | Sep 30, 2022 (Thousands) | Dec 31, 2021 (Thousands) | Change (Thousands) | % Change | | :-------------------------------- | :----------------------- | :----------------------- | :----------------- | :------- | | Total Assets | $3,992,690 | $3,901,855 | $90,835 | 2.33% | | Cash and cash equivalents | $329,962 | $486,821 | $(156,859) | -32.22% | | Loans held for investment, net | $2,650,709 | $2,395,479 | $255,230 | 10.65% | | Total Deposits | $3,460,536 | $3,341,222 | $119,314 | 3.57% | | Total Liabilities | $3,650,891 | $3,494,428 | $156,463 | 4.48% | | Total Stockholders' Equity | $341,799 | $407,427 | $(65,628) | -16.11% | Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - 3 Months Ended Sep 30 | Metric | 3 Months Ended Sep 30, 2022 (Thousands) | 3 Months Ended Sep 30, 2021 (Thousands) | Change (Thousands) | % Change | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :----------------- | :------- | | Total interest income | $41,108 | $34,438 | $6,670 | 19.37% | | Total interest expense | $6,006 | $3,260 | $2,746 | 84.23% | | Net interest income | $35,102 | $31,178 | $3,924 | 12.58% | | Provision for loan losses | $(782) | $0 | $(782) | N/A | | Total noninterest income | $20,937 | $25,791 | $(4,854) | -18.82% | | Total noninterest expense | $37,401 | $38,063 | $(662) | -1.74% | | Net income | $15,458 | $15,190 | $268 | 1.76% | | Basic EPS | $0.89 | $0.85 | $0.04 | 4.71% | | Diluted EPS | $0.86 | $0.82 | $0.04 | 4.88% | | Other comprehensive income (loss) | $(26,678) | $(4,111) | $(22,567) | -549.00% | | Comprehensive income (loss) | $(11,220) | $11,079 | $(22,299) | -201.27% | Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - 9 Months Ended Sep 30 | Metric | 9 Months Ended Sep 30, 2022 (Thousands) | 9 Months Ended Sep 30, 2021 (Thousands) | Change (Thousands) | % Change | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | :----------------- | :------- | | Total interest income | $114,940 | $100,436 | $14,504 | 14.44% | | Total interest expense | $12,786 | $10,121 | $2,665 | 26.33% | | Net interest income | $102,154 | $90,315 | $11,839 | 13.11% | | Provision for loan losses | $(2,867) | $(1,918) | $(949) | -49.48% | | Total noninterest income | $63,469 | $74,541 | $(11,072) | -14.85% | | Total noninterest expense | $111,381 | $111,898 | $(517) | -0.46% | | Net income | $45,619 | $44,000 | $1,619 | 3.68% | | Basic EPS | $2.61 | $2.44 | $0.17 | 6.97% | | Diluted EPS | $2.52 | $2.38 | $0.14 | 5.88% | | Other comprehensive income (loss) | $(87,212) | $(7,025) | $(80,187) | -1141.49% | | Comprehensive income (loss) | $(41,593) | $36,975 | $(78,568) | -212.52% | Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Consolidated Statements of Changes in Stockholders' Equity (Unaudited) | Metric | 9 Months Ended Sep 30, 2022 (Thousands) | 9 Months Ended Sep 30, 2021 (Thousands) | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Beginning Balance (Dec 31) | $407,427 | $370,048 | | Net income | $45,619 | $44,000 | | Cash dividends declared | $(5,973) | $(3,784) | | Other comprehensive loss | $(87,212) | $(7,025) | | Repurchases of common stock | $(18,926) | $(6,082) | | Ending Balance (Sep 30) | $341,799 | $398,276 | - The decrease in total stockholders' equity for the nine months ended September 30, 2022, was primarily driven by a significant other comprehensive loss of $87.2 million and common stock repurchases of $18.9 million, partially offset by net income of $45.6 million[15] Consolidated Statements of Cash Flows (Unaudited) Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | 9 Months Ended Sep 30, 2022 (Thousands) | 9 Months Ended Sep 30, 2021 (Thousands) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net cash provided by operating activities | $118,945 | $77,701 | | Net cash used in investing activities | $(369,934) | $(176,780) | | Net cash provided by financing activities | $94,130 | $126,372 | | Net change in cash and cash equivalents | $(156,859) | $27,293 | | Ending cash and cash equivalents | $329,962 | $327,600 | - The company experienced a significant net cash outflow of $156.9 million for the nine months ended September 30, 2022, primarily due to increased cash used in investing activities, which more than offset cash provided by operating and financing activities[18] Notes to Consolidated Financial Statements (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - South Plains Financial, Inc. (SPFI) is a Texas-based bank holding company offering commercial and retail banking, insurance, investment, trust, and mortgage services through its subsidiaries across Texas and Eastern New Mexico[20] - The interim financial statements are unaudited and prepared in accordance with GAAP for interim information, reflecting management's necessary adjustments of a normal and recurring nature[21] - Key accounting estimates include the allowance for loan losses, stock-based compensation, derivatives, mortgage servicing rights, valuation of foreclosed assets, and fair values of financial instruments, which are susceptible to significant change[22] - The Company adopted ASU No. 2016-02 (Topic 842) on leases effective January 1, 2022, recognizing a $9.4 million right-of-use (ROU) asset and a $10.3 million lease liability, with a $717 thousand debit to retained earnings[50] - The Company expects to adopt ASU 2016-13 (CECL model) effective January 1, 2023, which replaces the incurred loss model with an expected loss model for credit losses on financial assets[63](index=63&type=