South Plains Financial, Inc. · NASDAQ:SPFI
South Plains Financial — Q3 2022 Earnings Presentation
22 slides from South Plains Financial's earnings presentation, Oct 21, 2022
Slide 1: South Plains Financial Third Quarter 2022 Earnings Presentation
South Plains Financial Third Quarter 2022 Earnings Presentation October 21, 2022
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: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights Organic Loan Growth Net Income ROAA Net Interest Margin (1) 17.0% Annualized $15.5 M 1.53% (“NIM”) 3.70% Loans Held for Investment EPS - Diluted Efficiency Ratio Average Yield on Loans (“HFI”) $2.69 B $0.86 66.4% 5.12% ➢ Diluted earnings per share was $0.86 per share, a
Slide 5: Loan Portfolio
Loan Portfolio Total Loans HFI 3Q'22 Highlights $ in Millions $2,690 ✓ Loans HFI increased $109.9 million from 2Q’22, primarily due to organic net loan growth $2,580 o Organic net loan growth remained $2,438 $2,454 $2,429 5.57% relationship-focused, occurring primarily in commercial real estate loan
Slide 6: Attractive Markets Poised for Organic Growth
Attractive Markets Poised for Organic Growth ✓ Largest metropolitan statistical area (“MSA”) in ✓ Population of 865,000+ Texas. Steadily expanding population that accounts for over 26% of the state’s population ✓ Adjacent in proximity to Juarez, Mexico’s growing industrial center and an estimated ✓
Slide 7: Metropolitan Loan Growth
Metropolitan Loan Growth Total Metropolitan Loans 3Q'22 Highlights $ in Millions ✓ Loans HFI in our Dallas, Houston and El Paso metro markets totaled $849.3 million in 3Q’22 an increase of 14.6%, annualized, from 2Q’22 $849.3 o Expansion of lending team across the $819.4 Company’s metro markets is d
Slide 8: Loan HFI Portfolio
Loan HFI Portfolio Loan Mix Fixed vs. Variable Rate at 9/30/22 Other Fixed - Matures over 1 year Consumer, Commercial 3% C&D, 5% 24% Fixed - Matures 12mo or less Auto, 11% Residential C&D, 10% 8% Variable - Immediately 43% Repricable 18% Variable - Mature or Reprice CRE 12mo or less 1-4 Family, Owne
Slide 9: Indirect Auto Overview
Indirect Auto Overview Indirect Auto Credit Breakdown Indirect Auto Highlights ✓ Indirect auto loans totaled $280.4 million at 4% the end of 3Q’22 ✓ Disciplined underwriting approach to 19% selectively grow indirect auto lending portfolio ✓ Strong credit quality in sector positioned for resiliency a
Slide 10: Mortgage Banking Overview
Mortgage Banking Overview Mortgage Banking Activity 3Q'22 Highlights $ in Millions ✓ Mortgage loan originations decreased 26.6% $458 in 3Q'22 compared to 2Q’22 primarily due to $435 higher market interest rates and seasonality $400 $379 $374 $369 ✓ Managing the business for profitability as $21 volu
Slide 11: Noninterest Income Overview
Noninterest Income Overview Noninterest Income 3Q'22 Highlights $ in Millions $28.0 ✓ Noninterest income of $20.9 million, $25.8 $26.0 compared to $18.8 million in 2Q’22 was primarily a result of $2.1 million of income $23.7 $24.0 from legal settlements and $3.3 million of $22.9 seasonal insurance a
Slide 12: Diversified Revenue Stream
Diversified Revenue Stream Nine Months Ended September 30, 2022 Total Revenues Noninterest Income $165.6 million $63.5 million Other, 14% Investment Services, 2% Trust, 3% Net Interest Income, 62% Mortgage, 45% Insurance, 13% Noninterest Income, 38% Service Charges on Deposits, 8% Interchange Fees,
Slide 13: Net Interest Income and Margin
Net Interest Income and Margin Net Interest Income & Margin 3Q'22 Highlights $ in Millions ✓ Net interest income (“NII”) of $35.1 million, compared to $37.1 million in 2Q’22. Of $37.1 note, 2Q’22 benefited from $4.4 million of $35.1 large recoveries and prepayment penalties $31.2 $31.4 $29.9 ✓ 3Q'22
Slide 14: Deposit Portfolio
Deposit Portfolio Total Deposits 3Q'22 Highlights $ in Millions ✓ Total deposits of $3.46 billion at 3Q'22, an increase of $34.7 million from 2Q’22 $3,450 $3,426 $3,460 $3,341 $3,212 o Increase was entirely organic growth based upon fundamental community bank relationships and competitive advantage
Slide 15: Credit Quality
Credit Quality Credit Quality Ratios 3Q'22 Highlights ✓ The Company recorded a negative provision for loan losses in 3Q’22 of $782 thousand, compared 0.49% to no provision for loan losses in 2Q’22 0.45% 0.43% 0.33% o Loan loss recovery of $822 thousand of a 0.32% 0.30% 0.31% 0.29% direct energy cred
Slide 16: Investment Securities
Investment Securities Securities & Cash 3Q'22 Highlights $ in Millions ✓ Investment Securities totaled $711.4 million $529 at 9/30/2022, a decrease of $52.5 million $328 $487 $376 $330 from 6/30/22 o Includes an increase of $39.1 million in $753 $725 $793 $764 $711 the unrealized loss on available f
Slide 17: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency Noninterest Expense 3Q'22 Highlights $40 .0 $ in Millions $38.1 $37.9 ✓ Noninterest expense for 3Q’22 increased $37.4 $1.4 million from 2Q’22 primarily due to: $38 .0 92.0% $36.1 $36.0 $36 .0 o Increase of $937 thousand in insurance $34 .0 82.0% commission expense
Slide 18: Balance Sheet Growth and Development
Balance Sheet Growth and Development Balance Sheet Highlights Tangible Book Value Per Share $ in Millions $3,993 $3,774 $3,461 $3,212 $21.51 $20.90 $2,690 $20.49 $2,429 $19.50 $18.61 $398 $342 Total Assets Total Loans Total Total 3Q21 4Q21 1Q22 2Q22 3Q22 HFI Deposits Stockholders' Equity 30-Sep-21 3
Slide 19: Strong Capital Base
Strong Capital Base Tangible Common Equity to Tangible Assets Ratio Common Equity Tier 1 Ratio 9.94% 9.85% 9.11% 8.60% 12.91% 12.86% 8.00% 12.68% 12.24% 11.67% 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21 1Q22 2Q22 3Q22 Tier 1 Capital to Average Assets Ratio Total Capital to Risk-Weighted Assets Ratio 10.95%
Slide 20: 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 21: Appendix
South Plains Financial, Inc. Appendix
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures As of and for the quarter ended September 30, June 30, March 31, December 31, September 30, 2022 2022 2022 2021 2021 Pre-tax, pre-provision income Net income $ 15,458 $ 15,883 $ 14,278 $ 14,614 $ 15,190 Income tax expense 3,962 4,001 3,527 3,631 3,716 Provision for loan l
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