South Plains Financial, Inc. · NASDAQ:SPFI
South Plains Financial — Investor Presentation (March 2022)
35 slides from South Plains Financial's investor presentation, Mar 8, 2022
Slide 1: South Plains Financial Investor Presentation
South Plains Financial Investor Presentation March 8, 2022 1
Slide 2: Safe Harbor Statement and Other Disclosures
Safe Harbor Statement and Other Disclosures About South Plains Financial, Inc. South Plains Financial, Inc. ("South Plains" or the "Company") is the bank holding company for City Bank, a Texas state-chartered bank headquartered in Lubbock, Texas ("City Bank" or the "Bank"). City Bank is one of the l
Slide 3: Safe Harbor Statement and Other Disclosures
Safe Harbor Statement and Other Disclosures NON-GAAP FINANCIAL MEASURES Management believes that certain non-GAAP performance measures used in this presentation provide meaningful information about underlying trends in its business and operations. Non-GAAP financial measures should be viewed in addi
Slide 4: A Leading West Texas Franchise
A Leading West Texas Franchise Our Company Financial Snapshot (As of Dec. 31, 2021) ➢ Bank holding company headquartered in Lubbock, Texas with Balance Sheet (Dollars in thousands) $3.9 billion in total assets 4Q’21 Total Assets $3,901,855 ➢ One of the largest independent banks headquartered in West
Slide 5: Our History and Growth Profile
Our History and Growth Profile Our History Total Assets ($M) $3,599 $3,902 ➢ First State Bank of Morton, a community bank that held $3,237 approximately $1 million of total assets in 1941 $2,573 $2,713 ➢ Parent company to First State Bank of Morton acquired South Plains National Bank of Levelland, T
Slide 6: Investment Highlights
Investment Highlights 1 Experienced Management Team 2 Emphasize Community Banking 3 Enterprise Risk Management 4 Strong Credit Culture 5 Organic Growth 6 Capital Allocation to Drive Value 7 Improving Profitability 6
Slide 7: Experienced Management Team
1 Experienced Management Team ▪ 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 Chairman & Chief Executive board in 1984 Officer ▪ Chairman of the Board of City Bank and
Slide 8: Significant Insider Share Ownership
1 Significant Insider Share Ownership Stakeholders / Insiders currently own approximately 38.2% of the Company Shares1 Name Title Position % Outstanding Market Value ($000’s) South Plains Financial ESOP ESOP 2,549,335 14.35% $70,897 * Curtis C. Griffith Chairman & CEO 2,058,263 11.59% 57,240 *** Hen
Slide 9: Emphasis on Community Banking
2 Emphasis on Community Banking Our Goal ➢ Our strategy - deliver best-in-class customer service and achieve our goal of becoming the preferred community bank in our market areas ➢ To achieve our goal - we build long-lasting relationships with our customers by delivering high quality products and se
Slide 10: Our Markets of Operation
2 Our Markets of Operation Deposits Market Branches1 Market Highlights ($ millions)1 ✓ Population in excess of 320,000 with major industries in agribusiness, Lubbock / 10 $2,129 education, and trade among others South Plains ✓ Home of Texas Tech University – enrollment of 40,000 students ✓ Responsib
Slide 11: Our Markets of Operation (Cont'd)
2 Our Markets of Operation (Cont’d) Lubbock, Texas – Our Home Market Deposit Market Share: Lubbock MSA ➢ Major industries include agriculture – primarily cotton, corn, and Headquarters In-Market grain sorghum – as well as education, trade and transportation, Deposits Market Rank Institution City Sta
Slide 12: Enterprise Risk Management
3 Enterprise Risk Management We implemented a rigorous enterprise risk management (“ERM”) system in the aftermath of the 2008 financial crisis, and view this development as a defining event for our institution Significantly improved asset This system delivers a Integrating this system into quality b
Slide 13: Our Credit Culture
4 Our Credit Culture ➢ We have a service-driven, relationship-based, business-focused credit culture, rather than a price-driven, transaction-based culture ➢ Substantially all of our loans are made to borrowers located, or operating, in our primary market areas with whom we have ongoing relationship
Slide 14: Loan Approval Process
4 Loan Approval Process Striking a Balance Between: Prudence Disciplined Underwriting Flexibility In Our Decision Making and Responsiveness to Customers ➢ Loan relationships in excess of an individual officers lending authority up to $3 million may be approved with joint authorities of the market pr
Slide 15: Credit Quality 4Q'21 Highlights
Credit Quality Credit Quality Ratios 4Q’21 Highlights 0.67% 0.64% ✓ While growth continued in the loan portfolio, 0.54% the Company made no provision for loan 0.45% 0.42% 0.45% 0.43% loss in 4Q’21 in light of the general 0.37% improvements in the economy and a decline 0.32% 0.30% in classified loans
Slide 16: Organic Growth Strategy
5 Organic Growth Strategy Homegrown Returns ➢ We focus on leveraging our banking platform in our metropolitan markets of Dallas, Houston and El Paso, where we target customers looking for our relationship-based approach to banking and our sophisticated products and services ➢ Our strategy is to cont
Slide 17: Organic Growth Markets
5 Organic Growth Markets ✓ Largest MSA in Texas, responsible for a total GDP of almost $524 Billion in 2019 ✓ Estimated population of around 7.6 million as of 2020, which is a little over 26% of the state’s population ✓ Population has steadily expanded over the past decade, with an increase of over
Slide 18: Capital Allocation to Drive Value
6 Capital Allocation to Drive Value ➢ Stock repurchase programs: o Repurchased $3.1 million and $4.4 million of stock in 4Q’21 and 3Q’21, respectively o Approved a new $10 million program effective November 6, 2021 ➢ Dividends: o 12 consecutive quarterly dividends paid o Growth of 114% in dividends
Slide 19: Improving Profitability
7 Improving Profitability ➢ We have invested heavily into our infrastructure including: o Our Enterprise Risk Management system o State-of-the-art operations center which houses City Bank’s back-office processing for deposit operations, loan operations, mortgage operations, and corporate training o
Slide 20: Investment Highlights
Investment Highlights 1 Experienced Management Team 2 Emphasize Community Banking 3 Enterprise Risk Management 4 Strong Credit Culture 5 Organic Growth 6 Capital Allocation to Drive Value 7 Improving Profitability 20
Slide 21: Financial Update
Financial Update South Plains ~¥ Financial, Inc.
Slide 22: Fourth Quarter 2021 Highlights
Fourth Quarter 2021 Highlights ✓Net income of $14.6 million, compared to $15.2 million in 3Q’21 and $15.9 million in 4Q’20 ✓Diluted earnings per share of $0.79, compared to $0.82 in 3Q’21 and $0.87 in 4Q’20 ✓Average cost of deposits declined to 23 bps, compared to 25 bps in 3Q’21 and 31 bps in 4Q’20
Slide 23: Loan Portfolio 4Q'21 Highlights
Loan Portfolio Total Loans Held for Investment 4Q’21 Highlights $ in Millions 0 ✓ Total loans increased by $8.5 million compared 5.90% to 3Q’21, primarily due to: $2,429 $2,438 0 5.70% ✓ $30.5 million organic net loan growth $2,303 $2,243 $2,222 ✓ Partially offset by SBA forgiveness and 0 5.50% repa
Slide 24: Loan Portfolio 4Q'21 Highlights
Loan Portfolio Portfolio Composition 4Q’21 Highlights ✓ Active loan modifications attributed to the Other COVID-19 pandemic were 0.7%, or $15.9 PPP, Commercial Consumer, 2% C&D, 4% million, of total loans at December 31, 2021. 3% Residential Auto, 10% C&D, 9% All of these active modified loans are i
Slide 25: Select Loan Industry Concentration Detail
Select Loan Industry Concentration Detail As of December 31, 2021 Hotels by Geography • Total operating hospitality loans of $113 million* Lubbock, Other, 6% 5% • $8 million in hotels under construction, with no unfunded commitments Amarillo area, El Paso, 29% 10% • 83% of balances are to limited se
Slide 26: Mortgage Banking Overview
Mortgage Banking Overview Mortgage Banking Activity 4Q’21 Highlights $ in Millions ✓ $49 million decrease in interest rate lock $458 $435 commitments at 12/31/21 compared to 9/30/21 $400 $379 $374 $369 ✓ Mortgage loan originations decreased 16.1% $21 in 4Q’21 compared to 3Q’21 $314 $18 $19 ✓ Mortgag
Slide 27: Diversified Revenue Stream
Diversified Revenue Stream Twelve Months Ended December 31, 2021 Total Revenues Noninterest Income $219.2 million $97.5 million Investment Other, 5% Services, 2% Trust, 3% Insurance, 9% Net Interest Income, 56% Service Charges Mortgage, 61% on Deposits, 7% Noninterest Income, 44% Interchange Fees, 1
Slide 28: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Margin 4Q’21 Highlights $ in Millions ✓ Net interest income of $31.4 million, compared to $31.2 million in 3Q’21; the $31.4 $30.4 $31.2 increase was due to: $29.5 $29.6 ✓ Growth of $66.1 million in average loans outstanding ✓ Partially offset by 9
Slide 29: Deposit Portfolio
Deposit Portfolio Total Deposits 4Q’21 Highlights $ in Millions ✓ Total Deposits of $3.34 billion at 4Q’21, an increase of $129 million from 3Q’21 $3,341 $3,156 $3,158 $3,212 ✓ Largest increase was experienced in $2,974 personal accounts ✓ Cost of interest-bearing deposits declined in 4Q’21 to 35 bp
Slide 30: Investment Securities
Investment Securities Securities & Cash $ in Millions 4Q’21 Highlights ✓ Investment Securities totaled $724.5 million $300 $413 $384 $487 $328 at 12/31/21, a decrease of $28.1 million from 3Q’21 $803 $777 $778 $753 $725 ✓ All municipal bonds are in Texas ✓ All MBS, CMO, and Asset Backed securities 4
Slide 31: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency Noninterest Expense 4Q’21 Highlights $40 .0 $ in Millions $38.1 ✓ Noninterest expense for 4Q’21 decreased $38 .0 $37.1 $36.8 $2.0 million from 3Q’21 primarily due to: $36.5 92.0% $36.1 ✓ $1.1 million decrease in personnel $36 .0 $34 .0 expense related to the season
Slide 32: Balance Sheet Growth and Development
Balance Sheet Growth and Development Balance Sheet Highlights Tangible Book Value Per Share $ in Millions $21.51 $3,902 $3,599 $3,341 $20.90 $2,974 $20.35 $2,438 $2,222 $19.28 $18.97 $370 $407 Total Assets Total Loans Total Total 4Q20 1Q21 2Q21 3Q21 4Q21 HFI Deposits Stockholders' Equity December 31
Slide 33: Strong Capital Base
Strong Capital Base Tangible Common Equity to Tangible Assets Ratio Common Equity Tier 1 Ratio 13.23% 9.94% 9.94% 13.14% 9.85% 12.96% 12.91% 9.60% 12.69% 9.39% 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 Tier 1 Capital to Average Assets Ratio Total Capital to Risk-Weighted Assets Ratio 10.83%
Slide 34: Appendix
Appendix sm South Plains <a’ Financial, Inc.
Slide 35: Non-GAAP Financial Measures
Non-GAAP Financial Measures Unaudited $ in Thousands As of the quarter ended December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Tangible common equity Total common stockholders' equity $ 407,427 $ 398,276 $ 392,815 $ 374,671 $ 370,048 Less: goodwill and other intangi
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