South Plains Financial targets mid- to high single-digit loan growth for 2026 while advancing Houston market expansion

Earnings Call Insights: South Plains Financial (SPFI) Q4 2025

MANAGEMENT VIEW

* Curtis Griffith, Chairman & CEO, highlighted a 17.8% increase in diluted earnings per share for the full year, loan growth in line with guidance, 33 basis points of net interest margin (NIM) expansion to 4% for the quarter, and tangible book value per share growth of more than 14% to $29.05. Griffith emphasized the definitive agreement to acquire BOH Holdings and its banking subsidiary, Bank of Houston, stating, "we expect it to be approximately 11% accretive to our earnings in 2027 with an attractive tangible book value earn back of less than 3 years." He also noted, "we expect our loan growth to accelerate to a mid- to high single-digit growth rate in 2026 which should also drive a nice acceleration to the earning power of South Plains."
* Griffith announced, "our Board of Directors authorized a $0.17 per share quarterly dividend which will be our 27th consecutive dividend."
* Cory Newsom, President & Director, stated, "Our loans held for investment increased by $91 million to $3.14 billion in the fourth quarter as compared to the linked quarter... primarily due to organic loan growth in multifamily property loans, direct energy loans and other commercial loans." Newsom also explained, "We ended the year having completed about 50% of our expected hiring occurring across our Dallas, Houston and Midland markets."
* Steven Crockett, CFO & Treasurer, reported, "For the fourth quarter, diluted earnings per share were $0.90 compared to $0.96 from the linked quarter. This decrease was primarily a result of a larger provision for credit losses as we experienced strong loan growth in the quarter, though the majority of those new loans funded later in December, coupled with the onetime interest income items in the linked quarter."

OUTLOOK

* Griffith stated the company expects "loan growth to accelerate to a mid- to high single-digit growth rate in 2026."
* Newsom indicated, "we do still expect some headwinds in the first quarter of 2026 from several expected payoffs in our multifamily property portfolio."
* Management expects the pending BOH merger to close "early in the second quarter of 2026."

FINANCIAL RESULTS

* Crockett reported, "Net interest income was $43 million for the fourth quarter, in line with the third quarter's results. Our net interest margin calculated on a tax equivalent basis was 4% in the fourth quarter as compared to 4.05% in the linked quarter."
* Deposits at quarter end were $3.87 billion, with noninterest-bearing deposits at 26.4% of total deposits. The cost of deposits decreased by 9 basis points to 2.01% compared to the linked quarter.
* The ratio of allowance for credit losses to total loans held for investment was 1.44% at December 31, 2025. The provision for credit losses was $1.8 million in the quarter, up from $500,000 in the linked quarter.
* Noninterest expense was $33 million in the fourth quarter, unchanged from the linked quarter. There was an increase of $1.1 million in professional service expenses, primarily related to $500,000 in acquisition-related expenses and consulting, offset by a $1 million decrease in personnel expense.
* Tangible book value per share rose to $29.05 as of December 31, 2025.

Q&A

* Wood Lay, KBW, asked about NIM outlook. Crockett responded, "We're going to do our best to keep NIM in a similar place to where it is today... But I mean, you could see a little bit of compression." Newsom added, "there's definitely going to be some exposure to some compression."
* Lay inquired about deposit growth and BOH's jumbo CDs. Griffith stated, "we do believe that over time, we can reduce their deposit -- effectively the deposit cost of their deposit base as we kind of bring them into higher structure."
* Lay asked about additional M&A. Newsom responded, "we're not out trying to be a serial acquirer... We're trying to be very thoughtful and very methodical. Would we be afraid of something being announced in there? No, we wouldn't be afraid."
* Brett Rabatin, Hovde Group, asked about loan payoffs. Brent Bates, Chief Credit Officer, said, "the fourth quarter was lighter on early payments than the prior 3 quarters... we do think there are a few more that timing is uncertain but we think they're going to see long-term fixed-rate financing."
* Rabatin inquired about indirect auto credit migration. Bates answered, "Oftentimes, it might have been a mispayment, it might have been even some small medical collection that really drove their score down... overall, we feel really good about the quality."
* Rabatin asked about mortgage banking and hiring. Newsom said, "We're trying to hire producers right now because it's all about the volume that's there."
* Joseph Yanchunis, Raymond James, asked about BOH revenue synergies. Crockett replied, "there's some additional products that we can help bring to them... But as far as any of the modeling we did, that's not necessarily built into any of our numbers but we will certainly try to push for bringing those type products to them."
* Stephen Scouten, Piper Sandler, asked about expense trajectory. Crockett responded, "I would expect noninterest expense to trend modestly higher."

SENTIMENT ANALYSIS

* Analysts were neutral to slightly positive, focusing on NIM stability, deposit growth, M&A strategy, and credit quality, while expressing some concerns about NIM compression and credit migration in indirect auto.
* Management maintained a confident tone in prepared remarks, using phrases such as "we expect our loan growth to accelerate" and "I look forward to officially welcoming the Bank of Houston team," but was more cautious in Q&A, noting "you could see a little bit of compression" and "we've got to see if we can be as good at managing the cost of deposits as we have been."
* Compared to the previous quarter, management's tone remained confident in strategic direction but acknowledged near-term pressures on NIM and expense growth.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter featured the announcement of the BOH Holdings acquisition, with clear expectations of earnings accretion and market expansion in Houston, compared to the previous quarter's broader focus on organic growth and potential M&A.
* Guidance shifted from general optimism about growth to a specific target of mid- to high single-digit loan growth for 2026.
* Noninterest expense remained flat quarter-over-quarter, but management warned of a modest increase ahead.
* Analysts continued to focus on NIM, loan growth, and credit quality, with new questions emerging about integration and synergy from the BOH acquisition.
* Management's sentiment was consistent, though slightly more explicit about near-term headwinds from payoffs and NIM compression.

RISKS AND CONCERNS

* Management acknowledged headwinds in Q1 2026 from expected payoffs in the multifamily property portfolio.
* There was recognition of potential NIM compression due to market competition and deposit repricing challenges.
* Analysts probed the risk of credit migration in the indirect auto portfolio, but management cited strong credit quality metrics and ongoing portfolio management.
* Integration of BOH Holdings was discussed as a risk, but leadership expressed confidence in cultural alignment and operational fit.

FINAL TAKEAWAY

South Plains Financial concluded the year with expanding earnings, disciplined cost control, and the announcement of the BOH Holdings acquisition, which is expected to be 11% accretive to 2027 earnings. Management targets mid- to high single-digit loan growth for 2026, supported by new lender hires and a growing presence in high-growth Texas markets, especially Houston. The company remains focused on managing NIM, integrating the new acquisition, and maintaining credit quality while navigating anticipated near-term pressures from loan payoffs and market competition.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/spfi/earnings/transcripts]

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* South Plains Financial, Inc. 2025 Q4 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4862757-south-plains-financial-inc-2025-q4-results-earnings-call-presentation]
* South Plains Financial, Inc. (SPFI) Q4 2025 Earnings Call Transcript [https://seekingalpha.com/article/4862749-south-plains-financial-inc-spfi-q4-2025-earnings-call-transcript]
* South Plains Financial to buy BOH Holdings in $105.9M all-stock deal [https://seekingalpha.com/news/4527362-south-plains-financial-to-buy-boh-holdings-in-1059m-all-stock-deal]
* Seeking Alpha’s Quant Rating on South Plains Financial [https://seekingalpha.com/symbol/SPFI/ratings/quant-ratings]
* Historical earnings data for South Plains Financial [https://seekingalpha.com/symbol/SPFI/earnings]