South Plains Financial, Inc. · NASDAQ:SPFI
South Plains Financial — Q2 2023 Earnings Presentation
24 slides from South Plains Financial's earnings presentation, Jul 25, 2023
Slide 1: South Plains Financial Second Quarter 2023 Earnings Presentation
South Plains Financial Second Quarter 2023 Earnings Presentation July 25, 2023
Slide 2: Safe Harbor Statement and Other Disclosures
Safe Harbor Statement and Other Disclosures FORWARD-LOOKING STATEMENTS This presentation contains, and future oral and written statements of South Plains Financial, Inc. (“South Plains” or the “Company” or “SPFI”) and City Bank (“City Bank” or the “Bank”) may contain, statements about future events
Slide 3: Today's Speakers
Today’s Speakers ▪ Elected to the board of directors of First State Bank of Morton, Texas, in 1972 and employed by it in 1979 Curtis C. Griffith ▪ Elected Chairman of the First State Bank of Morton board Chairman & Chief Executive in 1984 Officer ▪ Chairman of the Board of City Bank and the Company
Slide 4: Second Quarter 2023 Highlights
Second Quarter 2023 Highlights Deposit Growth Organic Loan Growth Net Income Net Interest Margin (1) 1.9% 6.8% $29.7 M (“NIM”) 3.65% Uninsured / Uncollaterized Loans Held for Investment EPS - Diluted Average Yield on Loans Deposits 16% (“HFI”) $2.98 B $1.71 5.94% ➢ Diluted earnings per share for the
Slide 5: Granular Deposit Base & Ample Liquidity
Granular Deposit Base & Ample Liquidity Total Deposit Base Total Borrowing Capacity Breakdown $1.82 Billion Rural FHLB Commercial: Markets: Discount 45% 81% Window: FHLB: $612 Retail: $1,010 45% Metro Markets: Public 19% FRB - BTFP: Funds: 10% Numbers in millions $200 ✓ Average deposit account size
Slide 6: Loan Portfolio
Loan Portfolio Total Loans HFI 2Q'23 Highlights $ in Millions ✓ Loans HFI increased $190.4 million from 1Q'23, $2,979 primarily due to organic net loan growth 5.94% $2,789 o Organic net loan growth was primarily driven $2,748 $2,690 by increases in commercial real estate, $2,580 5.78% residential mo
Slide 7: Attractive Markets Poised for Organic Growth
Attractive Markets Poised for Organic Growth ✓ Largest MSA in Texas and fourth largest in the ✓ Population of 865,000+ nation ✓ Adjacent in proximity to Juarez, Mexico’s ✓ Steadily expanding population that accounts for growing industrial center and an estimated over 26% of the state’s population po
Slide 8: Metropolitan Loan Growth
Metropolitan Loan Growth Total Metropolitan Loans 2Q'23 Highlights $ in Millions ✓ Loans HFI in our Dallas, Houston and El Paso metro markets increased 7.3% in 2Q'23 as compared to 1Q’23 $954.8 ✓ Major metropolitan market loan portfolio represents 32% of Bank’s total loans at June 30, $889.8 $878.8
Slide 9: Loan HFI Portfolio
Loan HFI Portfolio Loan Mix Fixed vs. Variable Rate at 6/30/23 Other Fixed - Matures over 1 year Consumer, Commercial 3% C&D, 6% 25% Fixed - Matures 12mo or less Auto, 11% Residential C&D, 8% 7% Variable - Immediately 46% Repricable 16% Variable - Mature or Reprice 12mo or less CRE Variable - Mature
Slide 10: CRE Portfolio
CRE Portfolio CRE Sector Breakdown Office Highlights ✓ 6.1% of total loans HFI ✓ 29% is owner-occupied Convenience Store, 4% Other, 14% ✓ Average loan size is $864 thousand Multifamily, 20% Office - Owner ✓ Medical offices comprise 11% of office loans Occ, 5% Restaurant, 6% Warehouse, 19% CRE Portfo
Slide 11: Indirect Auto Overview
Indirect Auto Overview Indirect Auto Credit Breakdown Indirect Auto Highlights 1.6% 0.2% ✓ Indirect auto loans totaled $297.9 million ✓ Disciplined underwriting approach, management 8.4% anticipates a modest reduction of the portfolio over time while improving yields ✓ Strong credit quality in secto
Slide 12: Noninterest Income Overview
Noninterest Income Overview Noninterest Income 2Q'23 Highlights $ in Millions $50.0 $47.1 ✓ Noninterest income of $47.1 million, $45.0compared to $10.7 million in 1Q'23, primarily due to: $40.0 o The $33.5 million gain on sale of Windmark on April 1, 2023 $35.0 o An increase of $3.0 million in mortg
Slide 13: Diversified Revenue Stream
Diversified Revenue Stream Six Months Ended June 30, 2023 Total Revenues Noninterest Income $81.7 million $47.1 million Insurance, Service Charges 3% Trust, 2% on Deposits, 6% Investment Services, 1% Noninterest Income, 58% Interchange Fees, 12% Net Interest Gain on Sale of Income, 42% Subsidiary, 5
Slide 14: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Margin 2Q'23 Highlights $ in Millions ✓ Net interest income (“NII”) of $34.6 million, compared to $34.3 million in 1Q'23 $37.1 $36.3 $35.1 $34.3 $34.6 ✓ 2Q'23 NIM of 3.65%, a decrease of 10 bps compared to 1Q’23, though stable from March ‘23 ✓ Int
Slide 15: Deposit Portfolio
Deposit Portfolio Total Deposits 2Q'23 Highlights $ in Millions ✓ Total deposits of $3.57 billion at 2Q'23, an increase of $66.5 million from 1Q'23 $3,508 $3,574 $3,426 $3,460 $3,406 o Growth in deposits was driven by an $81 million increase in brokered deposits o Partially offset by a $67 million d
Slide 16: Credit Quality
Credit Quality Credit Quality Ratios 2Q'23 Highlights 0.71% ✓ The Company recorded a provision for credit losses of $3.7 million in 2Q'23, compared to 0.51% $1 million in 1Q'23 0.31% 0.29% o The provision was for loan growth and 0.28% 0.27% 0.20% 0.20% 0.20% 0.19% $1.3 million for specific reserves
Slide 17: Investment Securities
Investment Securities Securities & Cash 2Q'23 Highlights $ in Millions ✓ Investment securities totaled $628 million at $376 June 30, 2023, a decrease of $70.5 million $330 $235 $328 $296 from March 31, 2023 o The decrease was largely the result of $764 $711 $702 $699 a strategic sale of $56 million
Slide 18: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency Noninterest Expense 2Q'23 Highlights $ in Millions ✓ Noninterest expense for 2Q’23 increased $45.0 $8.1 million from 1Q'23 primarily due to: 112.0% $40.5 o $4.5 million in transaction expenses $40.0 and related incentive-based 102.0% $37.4 compensation from the Win
Slide 19: Balance Sheet Growth and Development
Balance Sheet Growth and Development Balance Sheet Highlights Tangible Book Value Per Share $ in Millions $4,150 $3,975 $3,575 $21.82 $3,426 $2,979 $2,580 $20.19 $19.50 $19.57 $18.61 $364 $392 Total Assets Total Loans Total Total 2Q22 3Q22 4Q22 1Q23 2Q23 HFI Deposits Stockholders' Note: Tangible boo
Slide 20: Strong Capital Base
Strong Capital Base Tangible Common Equity to Tangible Assets Ratio Common Equity Tier 1 Ratio 8.96% 8.60% 8.50% 8.54% 12.24% 12.11% 11.81% 11.92% 11.67% 8.00% 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Tier 1 Capital to Average Assets Ratio Total Capital to Risk-Weighted Assets Ratio 11.68%
Slide 21: SPFI's Core Purpose and Values Align
SPFI’s Core Purpose and Values Align: Centered on Relationship-Based Business THE POWER OF RELATIONSHIPS At SPFI, we build lifelong, trusted relationships so you know you always have someone in your corner that understands you, cares about you, and stands ready to help. Our Core Purpose is: To use t
Slide 22: Appendix
South Plains Financial, Inc. Appendix
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures For the quarter ended March 31, December 31, September 30, June 30, March 31, 2023 2022 2022 2022 2022 Pre-tax, pre-provision income Net income $ 9,244 $ 12,621 $ 15,458 $ 15,883 $ 14,278 Income tax expense 2,391 3,421 3,962 4,001 3,527 Provision for credit losses 1,010 2
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures As of and for the quarter ended June 30, 2023 Efficiency Ratio Noninterest expense $ 40,499 Net interest income $ 34,581 Tax equivalent yield adjustment 303 Noninterest income 47,112 Total income $ 81,996 Efficiency ratio 49.39% Noninterest expense $ 40,499 Less: Windmark
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