South Plains Financial (NasdaqGS:SPFI) Q3 2025 Earnings Call October 23, 2025 05:00 PM ET Company ParticipantsBrent Bates - Chief Credit OfficerBrett Rabatin - Managing Director and Head of Equity ResearchCory Newsom - PresidentWoody Lay - VPSteve Crockett - CFO and TreasurerJoe Yanchunis - Senior Equity Research AssociateCurtis Griffith - Chairman and CEOConference Call ParticipantsStephen Scouten - Managing Director and Senior Research AnalystOperatorGood afternoon, ladies and gentlemen, and welcome to th ...

Financial Data and Key Metrics Changes - For Q3 2025, diluted earnings per share increased to $0.96 from $0.86 in the linked quarter, primarily due to a reduction in provision for credit losses and an increase in net interest income [18] - Net interest income rose to $43 million from $42.5 million in the linked quarter, while the net interest margin (NIM) was 4.05%, slightly down from 4.07% [18][19] - The consolidated common equity Tier 1 risk-based capital ratio was 14.41%, and the Tier 1 leverage ratio was 12.37% as of September 30, 2025 [8] Business Line Data and Key Metrics Changes - Loans held for investment decreased by $45.5 million to $3.05 billion, primarily due to a $46.5 million decrease in multifamily property loans [9] - The indirect auto loan portfolio remained relatively unchanged at $239 million, down from $296 million a year ago, with a focus on maintaining credit quality [13][15] - Non-interest income for Q3 was $11.2 million, down from $12.2 million in the linked quarter, mainly due to a decrease in mortgage banking revenues [16][17] Market Data and Key Metrics Changes - Deposits increased by $142.2 million to $3.88 billion, with significant growth in non-interest-bearing deposits, which rose to $50.7 million [19] - The non-interest-bearing deposit-to-total deposit ratio increased to 27% from 26.7% in the linked quarter [19] Company Strategy and Development Direction - The company aims to grow its lending team by up to 20% to enhance loan growth, with a focus on organic growth and potential M&A opportunities [5][7] - The management is optimistic about accelerating loan growth in 2026, despite current headwinds from higher-than-normal loan paydowns [5][16] - The company is actively engaging in discussions with potential acquisition targets that align with its conservative nature and culture [6][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's strong financial position and the potential for organic growth, while also being cautious about economic conditions [4][21] - The management noted that while there have been challenges, such as increased loan paydowns, they expect these to moderate in the coming year [9][16] - The company remains focused on maintaining asset quality and is prepared for varying economic conditions [21] Other Important Information - The company redeemed $50 million in subordinated debt, which was done to avoid higher interest rates as the debt was transitioning to a floating rate [22] - The tangible common equity to tangible assets ratio was 10.25%, an increase of 27 basis points from the previous quarter [22] Q&A Session Summary Question: Plans for increasing the lending team - The company plans to increase its lending team by up to 20%, with a current base of about 40 lenders, focusing solely on production staff [27][30] Question: Growth in specific markets - Growth is expected in the Permian, Houston, and Dallas MSA markets [30] Question: Concerns about subprime loan concentration - Management clarified that there has not been a significant increase in subprime loans, and any changes in credit scores are being monitored closely [33][34] Question: Impact of redeemed subordinated debt - The $50 million subordinated debt was redeemed to avoid an increase in interest payments, with no additional expenses incurred from the redemption [36][38] Question: Vulnerability of the commercial real estate book - Management acknowledged that while there are scheduled payoffs, they are not lowering credit standards and are focused on finding new business [88]

South Plains Financial (NasdaqGS:SPFI) Q3 2025 Earnings Call October 23, 2025 05:00 PM ET Speaker7Good afternoon, ladies and gentlemen, and welcome to the South Plains Financial, Inc. Third Quarter 2025 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the call over to St ...