South Plains Financial, Inc. · NASDAQ:SPFI
South Plains Financial — Investor Presentation (December 2021)
35 slides from South Plains Financial's investor presentation, Dec 8, 2021
Slide 1: South Plains Financial Investor Presentation December 2021
South Plains Financial Investor Presentation December 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
New Mexico Texas Dallas Bryan /College Station Houston Midland Odessa El Paso Lubbock Ruidoso SanAntonio Ft. Worth Austin Albuquerque Santa Fe City Bank Branch Locations A Leading West Texas Franchise 3 Financial Snapshot (As of Sept. 30, 2021) Our Company Bank holding company headquartered in Lubbo
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 40.4% of the Company 7 Shares1 Name Title Position % Outstanding Market Value ($000’s) South Plains Financial ESOP ESOP 2,551,769 14.32% $62,212 Curtis C. Griffith Chairman & CEO 2,488,233 13.96% 60,663 Henry Taw
Slide 8: Emphasis on Community Banking
Emphasis on Community Banking 8 2 Our strategy - deliver best-in-class customer service and achieve our goal of becoming the preferred community bank in our market areasTo achieve our goal - we build long-lasting relationships with our customers by delivering high quality products and services Our f
Slide 9: Our Markets of Operation
Market Branches1 Deposits($ millions)1 Market Highlights 10 $2,027 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 $274 Responsible for the production of over four million barrels
Slide 10: Our Markets of Operation (Cont'd): Lubbock MSA
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 Loan relationships in excess of an individual officers lending authority up to $3 million may be approved with joint authorities of the market pre
Slide 14: Credit Quality
Credit Quality 14 3Q’21 Highlights Credit Quality Ratios While growth was experienced in the loan portfolio and classified loans increased, the Company made no provision for loan loss in 3Q’21 in light of the general improvements in the economy and a decline in loans actively under a modification.To
Slide 15: Organic Growth Strategy
We are actively recruiting additional lenders from other institutions with the goal of adding 20 lenders to our 60 lender team over a two-year timeframe. We are actively hiring in all of our markets with a focus on Dallas and Houston where we have commercial loan offices. As we put our excess liquid
Slide 16: Organic Growth Markets
New Mexico Texas Dallas Bryan /College Station Houston Midland Odessa El Paso Lubbock Ruidoso SanAntonio Ft. Worth Austin Albuquerque Santa Fe City Bank Branch Locations Organic Growth Markets 16 El Paso Adjacent to Juarez, Mexico, which has a growing industrial center and an estimated population of
Slide 17: Capital Allocation to Drive Value
Capital Allocation to Drive Value 17 6 Stock repurchase programs:Repurchased $4.4 million of stock in 3Q’21Approved a new $10 million program effective November 6, 2021Dividends:11 consecutive quarterly dividends paidGrowth of 114% in dividends paid in 2021 (2021 - $0.30/per share vs. 2020 - $0.14/p
Slide 18: Improving Profitability
Improving Profitability 18 We have invested heavily into our infrastructure including:Our Enterprise Risk Management system State-of-the-art operations center which houses City Bank’s back-office processing for deposit operations, loan operations, mortgage operations, and corporate trainingDigital a
Slide 19: Investment Highlights
Investment Highlights 19 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 20: Financial Update
Financial Update &%% South Plains ‘“aiy’ Financia
Slide 21: Third Quarter 2021 Highlights
Third Quarter 2021 Highlights 21 Note: Tangible book value per share is a non-GAAP measures. See appendix for the reconciliation to GAAP Source: Company documents Net income of $15.2 million, compared to $13.7 million in 2Q’21 and $16.7 million in 3Q’20Diluted earnings per share of $0.82, compared t
Slide 22: Loan Portfolio
Loan Portfolio 22 3Q’21 Highlights Total loans increased by $125.6 million compared to 2Q’21, primarily due to:$177.6 million in organic net growth; Partially offset by a net decrease of $52.0 million in Paycheck Protection Program (“PPP”) loans, primarily due to PPP loan forgiveness received from t
Slide 23: Loan Portfolio Composition
Loan Portfolio 23 Portfolio Composition Loan Portfolio ($ in millions) 9/30/21 Commercial C&D $ 85.3 Residential C&D 215.8 CRE Owner/Occ. 219.9 Other CRE Non Owner/Occ. 458.4 Multi-Family 130.7 C&I 353.0 Agriculture 208.1 1-4 Family 387.1 Auto 239.4 Other Consumer 69.1 PPP 62.2 Total $ 2,429.0 Sourc
Slide 24: Select Loan Industry Concentration Detail
DirectEnergy Select Loan Industry Concentration Detail 24 As of September 30, 2021 Hospitality Total operating hospitality loans of $129 million*$6 million in hotels under construction, with unfunded commitments of <$2 million85% of balances are to limited service hotels37% of operating hospitality
Slide 25: Noninterest Income
Noninterest Income 25 Noninterest Income$ in Millions 3Q’21 Highlights Noninterest income of $25.8 million, compared to $22.3 million in 2Q’21; the increase is primarily due to:Seasonal increase of $2.6 million in noninterest income from insurance activities $1.1 million increase in mortgage banking
Slide 26: Mortgage Banking Overview
Mortgage Banking Overview 26 Mortgage Banking Activity$ in Millions 3Q’21 Highlights $75 million decrease in interest rate lock commitments at 9/30/21 compared to 9/30/20Mortgage loan originations decreased 1.6% in 3Q’21 compared to 2Q’21Mortgage servicing rights asset valuation – a positive adjustm
Slide 27: Diversified Revenue Stream
Diversified Revenue Stream Nine Months Ended September 30, 2021 27 Total Revenues$164.9 million Noninterest Income$74.5 million Source: Company documents
Slide 28: Net Interest Income and Margin
Net Interest Income and Margin 28 Net Interest Income & Margin$ in Millions 3Q’21 Highlights Net interest income of $31.2 million, compared to $29.6 million in 2Q’21Increase was mainly the result of the growth of $82.9 million in average loans outstanding3Q’21 net interest margin (“NIM”) of 3.58%, a
Slide 29: Deposit Portfolio
Deposit Portfolio 29 Total Deposits$ in Millions 3Q’21 Highlights Total Deposits of $3.21 billion at 3Q’21, an increase of $53.8 million from 2Q’21largest increase was experienced in non-personal demand accounts Cost of interest-bearing deposits declined in 3Q’21 to 37 bps from 40 bps in 2Q’21Nonint
Slide 30: Investment Securities
Investment Securities 30 3Q’21 Highlights Investment Securities totaled $752.6 million at 9/30/21, the fair value of securities decreased $6 million due to market conditions from 6/30/21All municipal bonds are in TexasAll MBS, CMO, and Asset Backed securities are U.S. Government or GSE 3Q’21 Securit
Slide 31: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency 31 Noninterest Expense$ in Millions 3Q’21 Highlights Noninterest expense for 3Q’21 increased $1.3 million from 2Q’21 primarily due to:$739 thousand increase in personnel expense from an additional $1.2 million in commissions for insurance activities partially offse
Slide 32: Balance Sheet Highlights
Balance Sheet Highlights$ in Millions Balance Sheet Growth and Development 32 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 33: Strong Capital Base
Strong Capital Base 33 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 34: Appendix
Appendix South Plains Fin al, In
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures 35 As of and for the quarter ended September 30,2021 June 30,2021 March 31,2021 December 31,2020 September 30,2020 Pre-Tax, Pre-Provision Income Net income $ 15,190 $ 13,650 $ 15,160 $ 15,924 $ 16,731 Income tax expense 3,716 3,422 3,738 3,968 4,147 Provision for loan los
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