South Plains Financial Q4 Earnings Call Highlights

Core Viewpoint - South Plains Financial reported strong financial results for the fourth quarter and full year 2025, highlighting earnings growth, net interest margin (NIM) expansion, and strategic initiatives, while also discussing expectations for loan growth in 2026 and the pending acquisition of BOH Holdings and its banking subsidiary, Bank of Houston [4][6][16]. Financial Performance - Fourth-quarter diluted EPS was $0.90, down from $0.96 in the previous quarter, primarily due to a larger provision for credit losses and one-time interest income items [2]. - Full-year 2025 results included a 17.8% increase in diluted EPS, 33 basis points of NIM expansion, and tangible book value per share growth of over 14% to $29.05 [3][6]. - Net interest income for the fourth quarter was $43 million, essentially unchanged from the third quarter [2]. Loan Growth and Yields - Loans held for investment increased by $91 million to $3.14 billion in the fourth quarter, driven by organic growth in multifamily property loans and other commercial loans [7][9]. - Loan yields were 6.79% in the fourth quarter, down from 6.92% in the linked quarter, with expectations for moderation in yields as Federal Reserve rate cuts take effect [8][12]. Acquisition of BOH Holdings - The pending acquisition of BOH Holdings/Bank of Houston is expected to close in early Q2 2026, projected to be about 11% accretive to earnings in 2027 [5][16]. - The combined company is expected to have over $1 billion in loans in the Houston region, enhancing scale and customer relationships [15][17]. Deposit Dynamics - Deposits ended the quarter at $3.87 billion, steady from the linked quarter, with a 7% increase from year-end 2024 [13]. - The cost of deposits decreased by 9 basis points to 2.01%, attributed to deposit repricing following Federal Reserve rate reductions [14]. Credit Quality and Expenses - The allowance for credit losses was stable at 1.44% of total loans held for investment, with a provision for credit losses of $1.8 million in the fourth quarter [18]. - Non-interest income was $10.9 million in the fourth quarter, with a slight decline due to lower mortgage banking revenue [20]. - Non-interest expense remained unchanged at $33 million, with expectations for modest increases in the first quarter due to hiring and project work [21]. Capital and Returns - Tangible common equity to tangible assets increased to 10.61% at quarter-end, and the company authorized a $0.17 per share quarterly dividend, marking the 27th consecutive dividend [22].