South Plains Financial, Inc. · NASDAQ:SPFI
South Plains Financial — Investor Presentation (March 2021)
38 slides from South Plains Financial's investor presentation, Mar 2, 2021
Slide 1: South Plains Financial Investor Presentation March 2021
South Plains Financial Investor Presentation March 2021 1
Slide 2: Safe Harbor Statement and Other Disclosures
Safe Harbor Statement and Other Disclosures FORWARD-LOOKING STATEMENTSThis presentation contains, and future oral and written statements of South Plains Financial, Inc. (“South Plains” or the “Company”) and City Bank (“City Bank” or the “Bank”) may contain, statements about future events that consti
Slide 3: A Leading West Texas Franchise
A Leading West Texas Franchise 3 Financial Snapshot (As of Dec. 31, 2020) Our Company Bank holding company headquartered in Lubbock, Texas with $3.6 billion in total assetsOne of the largest independent banks headquartered in West TexasExecuted a successful IPO in May 2019; now one of two publicly-t
Slide 4: Our History and Growth Profile
Our History and Growth Profile 4 Our History Loans and Deposits ($M) First State Bank of Morton, a community bank that held approximately $1 million of total assets in 1941Parent company to First State Bank of Morton acquired South Plains National Bank of Levelland, Texas in 1991 and changed its nam
Slide 5: Investment Highlights
Investment Highlights 5 Improving Profitability Organic Growth Strong Credit Culture Enterprise Risk Management Experienced Management Team Emphasize Community Banking Capital Allocation to Drive Value 1 2 3 4 5 6 7
Slide 6: Experienced Management Team
Experienced Management Team 6 Curtis C. GriffithChairman & Chief Executive Officer Elected to the board of directors of First State Bank of Morton, Texas, in 1972 and employed by it in 1979Elected Chairman of the First State Bank of Morton board in 1984Chairman of the Board of City Bank and the Comp
Slide 7: Significant Insider Share Ownership
Significant Insider Share Ownership Stakeholders / Insiders currently own approximately 40.2% of the Company 7 Shares1 Name Title Position % Outstanding Market Value ($000’s) South Plains Financial ESOP ESOP 2,638,497 14.60% $50,000 Curtis C. Griffith Chairman & CEO 2,485,542 13.75% 47,101 Henry Taw
Slide 8: Emphasis on Community Banking
Emphasis on Community Banking 8 2 Our strategy - deliver best-in-class customer service and achieve our goal of becoming the preferred community bank in our market areasTo achieve our goal - we build long-lasting relationships with our customers by delivering high quality products and services Our f
Slide 9: Our Markets of Operation
Market Branches1 Deposits($ millions)1 Market Highlights 10 $1,939 Population in excess of 310,000 with major industries in agribusiness, education, and trade among othersHome of Texas Tech University – enrollment of 40,000 students 6 $271 Area produces about 71% of the crude oil in Texas and accoun
Slide 10: Our Markets of Operation (Cont'd)
Our Markets of Operation (Cont’d) 10 Deposit Market Share: Lubbock MSA Lubbock, Texas – Our Home Market Major industries include agriculture – primarily cotton, corn, and grain sorghum – as well as education, trade and transportation, health services and governmentHome to Texas Tech University – enr
Slide 11: Enterprise Risk Management
Enterprise Risk Management 11 3 We implemented a rigorous enterprise risk management (“ERM”) system in the aftermath of the financial crisis, and view this development as a defining event for our institution This system delivers a systematic approach to risk measurement and enhances the effectivenes
Slide 12: Our Credit Culture
Our Credit Culture 12 We have a service-driven, relationship-based, business-focused credit culture, rather than a price-driven, transaction-based cultureSubstantially all of our loans are made to borrowers located, or operating, in our primary market areas with whom we have ongoing relationships ac
Slide 13: Loan Approval Process
Loan Approval Process 13 Striking a Balance Between: In Our Decision Making and Responsiveness to Customers Prudence Disciplined Underwriting Flexibility Loans in excess of an individual officer’s lending limit up to $1 million may be approved by one of three lending and credit senior officersLoans
Slide 14: Credit Quality
Credit Quality 14 4Q’20 Highlights Credit Quality Ratios Recorded a $141 thousand provision for loan losses in 4Q’20 as compared to $6.1 million in 3Q’20 as the result of modest improvements in the economy and a decline in loans actively under a modificationTotal classified loans decreased $6 millio
Slide 15: COVID-19 Loan Modifications – Updated
(Dollars in thousands) Total # of Active Active Mod % Loan Segment Balance Loan Mods Mods of Segment Hospitality $ 123,495 11 $ 56,943 46.1% Hotels (Under Construction) 14,998 - - 0.0% All Other CRE 520,706 3 638 0.1% Oil & Gas 64,007 7 270 0.4% Restaurant & Retail - Owner Occ. 90,515 7 1,911 2.1% A
Slide 16: COVID-19 Loan Modifications – Updated
COVID-19 Loan Modifications – Updated (As of December 31, 2020) 16 Other modifications were primarily hotel loans that had interest-only periods of 12 months or a combination of a 90 day deferral and 9 months of interest-only Hospitality has the highest modification status at 46.1% of loans in that
Slide 17: Organic Growth Strategy
We are actively recruiting additional lenders and employees from other institutions. We have had success in this area which we believe is attributable to our employee ownership, long-standing market presence and desirable culture in which our employees can thrive We also cross-sell our various banki
Slide 18: Organic Growth Markets
Organic Growth Markets 18 El Paso Adjacent to Juarez, Mexico, which has a growing industrial center and an estimated population of 1.5 million people, and has contributed to significant growth in the El Paso MSACivil employers include a number of universities, including The University of Texas at El
Slide 19: Capital Allocation to Drive Value
Capital Allocation to Drive Value 19 Growth Through Accretive M&A We plan to take advantage of acquisition opportunities, and use a combination of public stock and cash to become the acquirer of choice in our core markets of West Texas and New MexicoCatalysts for acquisition activity include managem
Slide 20: Improving Profitability
Improving Profitability 20 We have invested heavily into our infrastructure including:Our Enterprise Risk Management system State-of-the-art operations center which houses the Bank’s back-office processing for deposit operations, loan operations, mortgage operations, and corporate trainingDigital an
Slide 21: Investment Highlights
Investment Highlights 21 Improving Profitability Organic Growth Strong Credit Culture Enterprise Risk Management Experienced Management Team Emphasize Community Banking Capital Allocation to Drive Value 1 2 3 4 5 6 7
Slide 22: Financial Update
Financial Update &%% South Plains as” Financial, Inc.
Slide 23: Fourth Quarter and Full Year 2020 Highlights
Fourth Quarter and Full Year 2020 Highlights 23 Note: Tangible book value per share and pre-tax, pre-provision income are non-GAAP measures. See appendix for the reconciliation to GAAP Source: Company documents Net Income of $15.9 million, compared to $16.7 million in 3Q’20 and $10.1 million in 4Q’1
Slide 24: Loan Portfolio
Loan Portfolio 24 Total Loans decreased $66.7 million compared to 3Q’20Decrease in total loans during the quarter was due primarily to:$41.8 million in forgiveness and paydowns on PPP loans$28.0 million in pay downs on seasonal agricultural production loansEarly payoff of a $16.0 million state and m
Slide 25: Loan Portfolio Composition
Loan Portfolio 25 Portfolio Composition (Dollars in thousands) Loan Portfolio 4Q’20 Commercial C&D $ 89.5 Residential C&D 166.1 CRE Owner/Occ. 208.5 Other CRE Non Owner/Occ. 435.5 Multi-Family 66.7 C&I 276.4 Agriculture 175.2 1-4 Family 360.3 Auto 205.8 Other Consumer 67.6 PPP 170.0 Total $ 2,221.6
Slide 26: Select Loan Industry Concentration Detail
DirectEnergy Select Loan Industry Concentration Detail 26 As of December 31, 2020 Hospitality Total operating hospitality loans of $123 million*$15 million in hotels under construction, with unfunded commitments of $9 million83% of balances are to limited service hotels43% of operating hospitality c
Slide 27: Noninterest Income
Noninterest Income 27 Noninterest Income$ in Millions 4Q’20 Highlights Noninterest income of $26.2 million, compared to $16.7 million in 4Q’19Revenue from mortgage banking activities:Improved $10.3 million based on an increase of 146% in production in 4Q’20 compared to 4Q’19Declined $4.5 million as
Slide 28: Mortgage Banking Overview
Mortgage Banking Overview 28 Mortgage Banking Activity$ in Millions 2020 Highlights 125% increase in mortgage loan originations for the full year 2020 to $1.4 Billion compared to $641 million for the full year 20192020 volume was 53% new home purchases and 47% refinancesNew home purchase volume incr
Slide 29: Diversified Revenue Stream
Diversified Revenue Stream Twelve Months Ended December 31, 2020 29 Total Revenues$223.9 million Noninterest Income$101.6 million Source: Company documents
Slide 30: Net Interest Income and Margin
Net Interest Income and Margin 30 Net Interest Income & Margin$ in Millions 4Q’20 Highlights Net interest income of $30.4 million, compared to $28.6 million in 4Q’19The increase as compared to 4Q’19 was a result of:$523 million rise in average interest-earnings assets primarily from the WTSB acquisi
Slide 31: Deposit Portfolio
Deposit Portfolio 31 Total Deposits$ in Millions 4Q’20 Highlights Total Deposits of $2.97 billion at 4Q’20, an increase of $30.5 million from 3Q’20Cost of interest-bearing deposits declined in 4Q’20 to 45bps from 106bps in 4Q’19Noninterest-bearing deposits represented 30.8% of deposits in 4Q’20, com
Slide 32: Investment Securities
Investment Securities 32 4Q’20 Highlights Investment Securities totaled $803.1 million at 4Q’20, an increase of $76.8 million from 3Q’20All municipal bonds are in TexasAll MBS, CMO, and Asset Backed securities are U.S. Government or GSE 4Q’20 Securities Composition $803.1mm Securities & Cash$ in Mil
Slide 33: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency 33 Noninterest Expense$ in Millions 4Q’20 Highlights Noninterest expense for 4Q’20 increased from 4Q’19 primarily due to an increase of $3.7 million in commissions and higher variable expenses related to strong mortgage activityManagement continues to focus on redu
Slide 34: Balance Sheet Highlights
Balance Sheet Highlights$ in Millions Balance Sheet Growth and Development 34 Tangible Book Value Per Share Note: Tangible book value per share is a non-GAAP measure. See appendix for the reconciliation to GAAP Source: Company documents
Slide 35: Strong Capital Base
Strong Capital Base 35 Tangible Common Equity to Tangible Assets Ratio Common Equity Tier 1 Ratio Tier 1 Capital to Average Assets Ratio Total Capital to Risk-Weighted Assets Ratio Source: Company documents Note: Tangible common equity to tangible assets is a non-GAAP measure. See appendix for the r
Slide 36: Appendix
Appendix South Plains Fin. al, In
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures 37 As of and for the quarter ended December 31,2020 September 30,2020 June 30,2020 March 31,2020 December 31,2019 Efficiency Ratio Noninterest expense $ 36,504 $ 35,993 $ 35,207 $ 34,011 $ 31,714 Net interest income $ 30,365 $ 31,273 $ 30,448 $ 30,199 $ 28,624 Tax equival
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures 38 As of December 31,2020 December 31,2019 Tangible common equity Total common stockholders' equity $ 370,048 $ 306,182 Less: goodwill and other intangibles (27,070) (27,389) Tangible common equity $ 342,978 $ 278,793 Tangible assets Total assets $ 3,599,160 $ 3,237,167 L
South Plains Financial — Investor Presentation (March 2021) on 6ix