South Plains Financial(US:SPFI)2024-04-25 23:10Financial Data and Key Metrics Changes - For Q1 2024, diluted earnings per share increased to $0.64 from $0.61 in the linked quarter and $0.53 in the year-ago quarter [51] - Net interest income was $35.4 million, slightly up from $35.2 million in the linked quarter [23] - Net interest margin (NIM) improved to 3.56% from 3.52% in the linked quarter, driven by higher loan yields [24] Business Line Data and Key Metrics Changes - Loan portfolio grew by $22 million or 8.5% annualized to $1.06 billion in major metropolitan markets [17] - Indirect auto loan portfolio decreased by approximately $13 million to $273.4 million [19] - Non-interest income increased to $11.4 million from $9.1 million in the linked quarter, primarily due to a rise in mortgage banking revenues [20] Market Data and Key Metrics Changes - The company experienced modest deposit growth despite competitive pressures in the current banking environment [14] - Non-performing loans decreased to $3.4 million from $5.2 million at the end of 2023, indicating improved credit quality [25] - The average cost of deposits rose to 241 basis points, an increase of 17 basis points from the linked quarter [53] Company Strategy and Development Direction - The company is focused on building long-term customer relationships rather than transactional ones, emphasizing a solutions-based sales approach [15] - Investments in people, branches, and infrastructure are aimed at capturing high-quality loan and deposit relationships in the Permian Basin [9] - The company plans to continue paying dividends and has authorized a $10 million stock repurchase program, reflecting confidence in its intrinsic value [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about organic growth opportunities despite recent headwinds affecting loan growth [18] - The company anticipates modest upward pressure on deposit costs in the second quarter, which could slightly impact NIM [25] - Management is confident in achieving low-single-digit loan growth for the year, supported by a strong pipeline [103] Other Important Information - The company remains well-capitalized with a tangible common equity to tangible assets ratio of 9.22% [26] - The board authorized an 8% increase in the quarterly dividend, marking the 20th consecutive dividend payment [7] Q&A Session Summary Question: What is the expected increase in fees from the treasury platform? - Management indicated a potential lift in fees of under 10% to 15% as a result of recent changes [31] Question: What is the appetite for stock buybacks versus M&A? - Management stated that while they will continue stock buybacks, they believe buying back shares provides immediate benefits compared to pursuing acquisitions in the current environment [62] Question: Is the mid-single-digit growth number still reasonable? - Management confirmed that despite exiting some credits, they remain confident in achieving low-single-digit growth, with potential for improvement in the second quarter [63][79] Question: How are new loan yields trending? - New loan yields are coming in higher than average, with a good mix of growth in multifamily and C&I business [85] Question: What is the outlook for non-interest bearing deposits? - Management is optimistic about maintaining non-interest bearing deposits around 26.5% of total deposits, despite competitive pressures [90]