SPFI — South Plains Financial, Inc.

Summary of SPFI Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Earnings Per Share (EPS): Increased to $0.96 from $0.85 in the previous quarter.
• Net Interest Income: Rose to $50.3 million, up $7.4 million quarter-over-quarter, primarily due to the acquisition of Bank of Houston (BOH).
• Net Interest Margin (NIM): Slightly decreased to 4.00% from 4.04% in the previous quarter.
• Loans Held for Investment: Increased by $677.3 million to $3.77 billion, driven by $632 million from BOH and $35 million in organic growth.
• Deposits: Grew by $613 million to $4.64 billion, with $596 million from BOH and $17 million in organic growth.
• Non-Interest Income: Increased to $14.1 million from $11.3 million, boosted by higher mortgage banking revenues and card services.

2. Strategic Updates and Business Highlights:

• Leadership Transition: Curtis Griffith will retire as CEO at year-end 2026, with Cory Newsom taking over. Griffith will remain as Chairman in a non-executive role.
• Acquisition of Bank of Houston: Integration is largely complete, with positive performance from the acquired portfolio. The bank is focused on optimizing the balance sheet and reducing higher-cost funding sources.
• Organic Growth Focus: The bank is prioritizing disciplined organic loan growth and exploring further M&A opportunities that align with its culture and strategic goals.

3. Forward Guidance and Outlook:

• Loan Growth: The bank maintains a full-year loan growth guidance in the mid-single digits despite anticipated paydowns being a headwind.
• Deposit Growth: Moderate growth is expected in the second half of the year, starting from a higher base than previous years.
• NIM Management: The bank aims to maintain its NIM in the current range, with potential improvements as higher-cost deposits mature.

4. Bad News, Challenges, or Points of Concern:

• Paydowns: Elevated levels of loan payoffs were noted, which may continue to impact overall loan growth.
• Credit Quality: An uptick in classified and non-performing loans, primarily from BOH, was observed, although the overall credit quality remains a strength.
• Cost of Funds: The bank faces challenges in managing deposit costs amid increased competition, which could pressure margins.

5. Notable Q&A Insights:

• Cost of Funds Management: Management indicated ongoing efforts to optimize the cost of funds from BOH, with expectations for improvements in the upcoming quarters.
• Loan-to-Deposit Ratio: The bank is comfortable with its current ratio but has room for growth, aiming to balance loan growth with maintaining a healthy deposit base.
• Cross-Selling Opportunities: Efforts to cross-sell services to BOH customers have begun, with expectations for revenue upticks in the fourth quarter.
• Future Growth Drivers: Management highlighted organic growth, lender hires, and potential M&A as key drivers for earnings growth over the next few years.

Overall, SPFI reported solid financial performance in Q2 2026, successfully integrated BOH, and is well-positioned for future growth despite some challenges related to loan paydowns and competitive pressures on deposit costs.