South Plains Financial, Inc. (NASDAQ: SPFI) (“South Plains” or the
“Company”), the parent company of City Bank, today reported its
results for the quarter ended June 30, 2019.
Second Quarter 2019 Highlights
- Net income for the second quarter of 2019 was $6.1 million,
compared to $4.8 million(1) in the first quarter of 2019.
- Diluted earnings per share were $0.37 for the second quarter of
2019, compared to $0.32 for the first quarter of 2019.
- Average cost of deposits for the second quarter remained
relatively stable at 108 basis points as compared to 105 basis
points for the first quarter of 2019.
- Return on average assets for the second quarter of 2019 was
0.89% annualized, compared to 0.71% in the first quarter of
2019.
- Book value per share(3) was $16.19 as of June 30, 2019,
compared to $14.80 per share as of March 31, 2019.
Subsequent Events
- On July 25, 2019, the Company announced the entry into a
definitive agreement to acquire West Texas State Bank (“WTSB”) for
$76.1 million in cash. The acquisition is expected to close
in the fourth quarter of 2019.
Curtis Griffith, South Plains’ Chairman and Chief Executive
Officer, commented, “I am pleased with our second quarter results
as we delivered strong earnings and book value growth from the
linked quarter as we execute on our strategy of expanding our
position as a premier bank. We achieved this growth by not
compromising on costs and will continue to be vigilant on expenses
as we work to scale the Bank, leverage our investment in
infrastructure, and improve our profitability. Another
highlight in the quarter was the Bank’s credit quality which
remains strong as we actively manage our portfolio to remediate any
potential challenges. Importantly, we will remain disciplined
on credit and not sacrifice our strict underwriting standards to
drive loan growth in a more competitive environment.”
Mr. Griffith continued, “Our decision to go public in May was
driven by the significant opportunity that we see to grow South
Plains through strategic and disciplined M&A given the
fragmented community bank market that exists in our core geographic
markets. In fact, there are more than 160 banks with total
assets between $250 million and $1 billion in Texas and New
Mexico. We believe that our longstanding presence in West
Texas, our culture of emphasizing employees as our most important
asset, and our financial commitment to helping and bettering our
communities will give us a significant advantage in making South
Plains an acquirer of choice. Proof of our strategy is
evident in our announcement this morning of our acquisition of WTSB
in a $76.1 million cash transaction. WTSB is a $429 million
asset bank located in Odessa, Texas which, upon closing, will
expand our geographic reach into the attractive Permian
Basin.”
Results of Operations, Quarter Ended June 30,
2019
Net Interest Income
Net interest income was $24.8 million for the second quarter of
2019, compared to $23.4 million for the second quarter of 2018 and
$24.5 million for the first quarter of 2019.
Interest income was $32.5 million for the second quarter of
2019, compared to $28.4 million for the second quarter of 2018 and
$32.0 million for the first quarter of 2019. Interest and
fees on loans increased by $3.0 million from the second quarter of
2018 due to organic growth of $46.9 million in average loans and an
increase of 48 basis points in interest rates. The increase
from the linked quarter was the result of $33.8 million more in
average interest-earnings assets during the second quarter of 2019,
offset by a 4 basis point decrease in the interest rates of those
assets.
Interest expense was $7.7 million for the second quarter of
2019, compared to $5.0 million for the second quarter of 2018 and
$7.5 million for the first quarter of 2019. The increase from
the second quarter of 2018 was due to an increase in the rate paid
on interest-bearing liabilities of 49 basis points and growth in
the deposit base. The increase from the linked quarter was
due to an increase in the rate paid on interest-bearing liabilities
of 5 basis points in the second quarter of 2019. The average
cost of deposits were 108 basis points for the second quarter of
2019, representing a 37 basis point increase from the second
quarter of 2018 and a 3 basis point increase from the linked
quarter.
The net interest margin was 3.88% for the second quarter of
2019, compared to 3.98% for the second quarter of 2018 and 3.93%
for the first quarter of 2019. The decreases from the second
quarter of 2018 and the linked quarter were due primarily to the
impact of higher interest-bearing liabilities costs, offset by
increases in the rates on interest-earning assets.
Noninterest Income and Noninterest Expense
Noninterest income was $13.7 million for the second quarter of
2019, compared to $13.0 million for the second quarter of 2018 and
$12.1 million for the first quarter of 2019. The increase in
noninterest income for the second quarter of 2019 compared to the
second quarter of 2018 was primarily the result of an increase of
$255,000 in mortgage banking activities revenue. The increase
from the linked quarter was primarily the result of an increase of
$1.8 million in mortgage banking activities revenue due to $22.2
million more in originations for the second quarter of
2019.
Noninterest expense was $29.9 million for the second quarter of
2019, compared to $28.4 million for the second quarter of 2018 and
$30.0 million for the first quarter of 2019. This increase in
noninterest expense for the second quarter of 2019 compared to the
second quarter of 2018 was primarily driven by $1.2 million in 2019
operating expenses related to the online mortgage and staff
acquisition, which closed on November 30, 2018. The decrease
in noninterest expense in second quarter of 2019 compared to the
linked quarter was due to a reduction in salaries and employee
benefits of $341,000 as we continued to work on operational
efficiencies.
Loan Portfolio and Composition
Loans held for investment were $1.94 billion as of June 30,
2019, compared to $1.92 billion as of March 31, 2019 and
$1.91 billion as of June 30, 2018. Loans held for
investment increased $20.5 million, or 4.3% annualized, during the
second quarter of 2019, compared to the linked quarter, primarily
as a result of an increase of $40.4 million in seasonal
agricultural production loan fundings. This growth was offset
by two commercial – general relationships, totaling $19.8 million,
that paid off during the quarter. As of June 30, 2019, loans
held for investment increased $21.8 million, or 1.1%, from June 30,
2018. The primary segments of our organic growth for this
period were $31.3 million in 1-4 family residential loans and $32.3
million in auto loans. This growth has been offset by a
decline in the commercial – general segment of $43.2 million.
The decline was primarily the result of the payoffs noted above as
well as an additional two relationships, totaling $16.0 million,
that paid off early in the first quarter of 2019.
Agricultural production loans were $147.7 million at June 30,
2019, compared to $107.3 million at March 31, 2019 and $148.1
million at June 30, 2018.
Deposits and Borrowings
Deposits totaled $2.28 billion as of June 30, 2019, compared to
$2.30 billion as of March 31, 2019 and $2.18 billion as of June 30,
2018. Deposits decreased $23.1 million in the second quarter
of 2019 primarily as the result of a planned reduction of $18.7
million in reciprocal deposits. Deposits increased $98.2
million from June 30, 2018 was the result of the Company’s organic
growth.
Noninterest-bearing deposits were $513.4 million as of June 30,
2019, compared to $497.6 million as of March 31, 2019 and $495.3
million as of June 30, 2018. Noninterest-bearing deposits
represented 22.5%, 21.6%, and 22.7% of total deposits as of June
30, 2019, March 31, 2019, and June 30, 2018,
respectively.
Asset Quality
The provision for loan losses recorded for the second quarter of
2019 was $875,000, compared to $1.5 million for the second quarter
of 2018 and $608,000 for the first quarter of 2019. The
allowance for loan losses to loans held for investment was 1.25% at
June 30, 2019, compared to 1.22% at March 31, 2019 and 1.13% at
June 30, 2018.
The nonperforming assets to total assets ratio as of June 30,
2019 was 0.37%, compared to 0.37% as of March 31, 2019 and 0.70% at
June 30, 2018.
Annualized net charge-offs were 0.02% for the second quarter of
2019, compared to 0.07% for the first quarter of 2019 and 0.38% for
the second quarter of 2018.
(1) The Company’s S Corporation revocation was effective May 31,
2018. Net income, return on average assets, return on average
shareholders’ equity and earnings per share for periods prior to
the revocation are presented herein as if we had converted to a C
Corporation as of January 1, 2018. The tax adjustment is
calculated by adding back its franchise S Corporation tax to net
income, and using tax rates for Federal income taxes of 21.0%.
This calculation reflects only the revocation of the
Company’s status as an S Corporation and does not give effect to
any other transaction.
(2) Net interest margin is calculated as the annual net interest
income, on a fully tax-equivalent basis, divided by average
interest-earning assets.
(3) Amounts are presented giving effect to the ESOP Repurchase
Right Termination. See Pro Forma Financial Information below
for further details.
Conference Call
As previously announced, South Plains will host a
conference call to discuss its second quarter 2019 results
today, July 25, 2019 at 9:00am (Eastern Time).
Investors and analysts interested in participating in the call are
invited to dial 1-877-407-9716 (international callers please dial
1-201-493-6779) approximately 10 minutes prior to the start of the
call. A live audio webcast of the conference call will be
available on the Company’s website at
https://www.spfi.bank/investor-relations.
A replay of the conference call will be available within two
hours of the conclusion of the call and can be accessed on the
investor section of the Company’s website as well as by dialing
1-844-512-2921 (international callers please dial
1-412-317-6671). The pin to access the telephone replay is
13692467. The replay will be available until August 8,
2019.
About South Plains Financial, Inc.
South Plains is the bank holding company for City Bank, a Texas
chartered bank headquartered in Lubbock, Texas. City Bank is
one of the largest independent banks in West Texas and has
additional banking operations in the Dallas and El Paso markets, as
well as in the Greater Houston, and College Station Texas markets,
and the Ruidoso and Eastern New Mexico markets. South Plains
provides a wide range of commercial and consumer financial services
to small and medium-sized businesses and individuals in its market
areas. Its principal business activities include commercial and
retail banking, along with insurance, investment, trust and
mortgage services. Please visit https://www.spfi.bank for
more information.
Pro Forma Financial Information
As a result of the revocation of the Company’s S corporation
election, the net income and earnings per share data presented
herein may not be comparable for all periods presented herein. As a
result, the Company is disclosing pro forma net income, income tax
expense, and earnings per share as if the Company’s conversion to a
C corporation had occurred as of January 1, 2018.
Additionally, prior to the listing of our common stock on the
NASDAQ, in accordance with applicable provisions of the Internal
Revenue Code of 1986, as amended,, the terms of the South Plains
Financial, Inc. Employee Stock Ownership Plan (“ESOP”) provided
that ESOP participants had the right, for a specified period of
time, to require the Company to repurchase shares of the Company’s
common stock that were distributed to them by the ESOP. The shares
of common stock held by the ESOP were reflected in the Company’s
consolidated balance sheets as a line item called ”ESOP owned
shares” appearing between total liabilities and shareholders’
equity. As a result, the ESOP-owned shares were deducted from
shareholders’ equity in the Company’s consolidated balance sheets.
This repurchase right terminated upon the listing of the
Company’s common stock on the NASDAQ, which we sometimes refer to
as the ESOP Repurchase Right Termination, whereupon our repurchase
liability was extinguished and thereafter the ESOP-owned shares are
included in shareholders’ equity.
Non-GAAP Financial Measures
Some of the financial measures included in this press release
are not measures of financial performance recognized in accordance
with generally accepted accounting principles in the United States
(“GAAP”). These non-GAAP financial measures
include Tangible Book Value Per Common Share and Tangible Common
Equity to Tangible Assets. The Company believes these
non-GAAP financial measures provide both management and investors a
more complete understanding of the Company’s financial position and
performance. These non-GAAP financial measures are supplemental and
are not a substitute for any analysis based on GAAP financial
measures. Not all companies use the same calculation of these
measures; therefore, this presentation may not be comparable to
other similarly titled measures as presented by other companies.
Reconciliation of non-GAAP financial measures, to GAAP financial
measures are provided at the end of this press release.
Forward Looking Statements
This press release contains forward-looking statements.
These forward-looking statements reflect South Plains’
current views with respect to, among other things, the completion
of its acquisition of WTSB and other future events. Any
statements about South Plains’ expectations, beliefs, plans,
predictions, forecasts, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking.
These statements are often, but not always, made through the
use of words or phrases such as “anticipate,” “believes,” “can,”
“could,” “may,” “predicts,” “potential,” “should,” “will,”
“estimate,” “plans,” “projects,” “continuing,” “ongoing,”
“expects,” “intends” and similar words or phrases. South
Plains cautions that the forward-looking statements in this press
release are based largely on South Plains’ expectations and are
subject to a number of known and unknown risks and uncertainties
that are subject to change based on factors which are, in many
instances, beyond South Plains’ control. Additional
information regarding these risks and uncertainties to which South
Plains’ business and future financial performance are subject is
contained in South Plains’ Prospectus filed with the U.S.
Securities and Exchange Commission (“SEC”), dated May 8, 2019
(“Prospectus”), and other documents South Plains files with the SEC
from time to time. South Plains urges readers of this press
release to review the Risk Factors section of that Prospectus and
the Risk Factors section of other documents South Plains files with
the SEC from time to time. Actual results, performance or
achievements could differ materially from those contemplated,
expressed, or implied by the forward-looking statements due to
additional risks and uncertainties of which South Plains is not
currently aware or which it does not currently view as, but in the
future may become, material to its business or operating results.
Due to these and other possible uncertainties and risks,
readers are cautioned not to place undue reliance on the
forward-looking statements contained in this press release.
Any forward-looking statements presented herein are made only
as of the date of this press release, and South Plains does not
undertake any obligation to update or revise any forward-looking
statements to reflect changes in assumptions, new information, the
occurrence of unanticipated events, or otherwise, except as
required by law.
Contact: |
Mikella Newsom, Chief Risk Officer and Secretary |
|
(866) 771-3347 |
|
investors@city.bank |
|
|
Source: South Plains Financial, Inc. |
South Plains Financial, Inc. |
Consolidated Financial Highlights -
(Unaudited) |
(Dollars
in thousands, except share data) |
|
As of and for the quarter ended |
|
June 30, 2019 |
March 31,2019 |
December 31,2018 |
September 30,2018 |
June 30,2018 |
Selected Income Statement Data: |
|
|
|
Interest income |
$ |
32,509 |
$ |
32,004 |
$ |
31,672 |
$ |
30,731 |
$ |
28,408 |
|
Interest expense |
|
7,672 |
|
7,458 |
|
7,005 |
|
5,943 |
|
4,969 |
|
Net interest income |
|
24,837 |
|
24,546 |
|
24,667 |
|
24,788 |
|
23,439 |
|
Provision for loan losses |
|
875 |
|
608 |
|
1,168 |
|
3,415 |
|
1,540 |
|
Noninterest income |
|
13,703 |
|
12,075 |
|
14,390 |
|
13,295 |
|
12,968 |
|
Noninterest expense |
|
29,930 |
|
30,036 |
|
30,498 |
|
28,646 |
|
28,422 |
|
Income tax expense |
|
1,655 |
|
1,204 |
|
1,528 |
|
1,109 |
|
(6,568 |
) |
Net income |
|
6,080 |
|
4,773 |
|
5,863 |
|
4,913 |
|
13,013 |
|
Net income - pro forma (2) |
|
6,080 |
|
4,773 |
|
5,863 |
|
4,913 |
|
5,333 |
|
Per Share Data (Common Stock): |
|
|
|
Net earnings, basic (1) (2) |
|
0.37 |
|
0.32 |
|
0.40 |
|
0.33 |
|
0.36 |
|
Net earnings, diluted (1) (2) |
|
0.37 |
|
0.32 |
|
0.40 |
|
0.33 |
|
0.36 |
|
Cash dividends declared and paid |
|
- |
|
- |
|
0.85 |
|
- |
|
1.04 |
|
Book value (1) |
|
16.19 |
|
14.80 |
|
14.40 |
|
14.63 |
|
14.43 |
|
Weighted average shares outstanding, basic |
|
16,459,366 |
|
14,771,520 |
|
14,771,520 |
|
14,771,520 |
|
14,771,520 |
|
Weighted average shares outstanding, dilutive |
|
16,563,543 |
|
14,771,558 |
|
14,771,520 |
|
14,771,520 |
|
14,771,520 |
|
Shares outstanding at end of period |
|
17,978,520 |
|
14,771,520 |
|
14,771,520 |
|
14,771,520 |
|
14,771,520 |
|
|
As of and for the quarter ended |
|
June 30,2019 |
March 31,2019 |
December 31,2018 |
September 30,2018 |
June 30,2018 |
Selected Period End Balance Sheet Data: |
|
|
|
|
|
Total assets |
|
2,777,170 |
|
|
2,745,997 |
|
|
2,712,745 |
|
|
2,687,610 |
|
|
2,616,647 |
|
Total loans held for investment |
|
1,935,653 |
|
|
1,915,183 |
|
|
1,957,197 |
|
|
1,968,085 |
|
|
1,913,884 |
|
Allowance for loan losses |
|
24,171 |
|
|
23,381 |
|
|
23,126 |
|
|
21,073 |
|
|
21,715 |
|
Investment securities |
|
263,564 |
|
|
339,051 |
|
|
338,196 |
|
|
398,475 |
|
|
254,517 |
|
Noninterest-bearing deposits |
|
513,383 |
|
|
497,566 |
|
|
510,067 |
|
|
517,000 |
|
|
495,293 |
|
Total deposits |
|
2,281,858 |
|
|
2,304,929 |
|
|
2,277,454 |
|
|
2,261,356 |
|
|
2,183,631 |
|
Total stockholders' equity |
|
291,113 |
|
|
218,565 |
|
|
212,775 |
|
|
216,169 |
|
|
213,096 |
|
Summary Performance Ratios: |
|
|
|
|
|
Return on average assets (1) (2) |
|
0.89 |
% |
|
0.71 |
% |
|
0.86 |
% |
|
0.74 |
% |
|
0.84 |
% |
Return on average equity (1) (2) |
|
9.57 |
% |
|
8.98 |
% |
|
10.85 |
% |
|
9.08 |
% |
|
9.98 |
% |
Net interest margin |
|
3.88 |
% |
|
3.93 |
% |
|
3.89 |
% |
|
4.02 |
% |
|
3.98 |
% |
Yield on loans |
|
5.90 |
% |
|
5.84 |
% |
|
5.67 |
% |
|
5.57 |
% |
|
5.42 |
% |
Cost of interest-bearing
deposits |
|
1.39 |
% |
|
1.34 |
% |
|
1.26 |
% |
|
1.09 |
% |
|
0.92 |
% |
Efficiency ratio |
|
77.46 |
% |
|
81.79 |
% |
|
77.88 |
% |
|
74.85 |
% |
|
77.39 |
% |
Summary Credit Quality Data: |
|
|
|
|
|
Nonperforming loans |
|
7,946 |
|
|
7,937 |
|
|
6,954 |
|
|
7,225 |
|
|
11,774 |
|
Nonperforming loans to total loans held for investment |
|
0.41 |
% |
|
0.41 |
% |
|
0.36 |
% |
|
0.37 |
% |
|
0.62 |
% |
Other real estate owned |
|
2,305 |
|
|
2,340 |
|
|
2,285 |
|
|
2,704 |
|
|
6,590 |
|
Nonperforming assets to total assets |
|
0.37 |
% |
|
0.37 |
% |
|
0.34 |
% |
|
0.37 |
% |
|
0.70 |
% |
Allowance for loan losses to total loans held for investment |
|
1.25 |
% |
|
1.22 |
% |
|
1.18 |
% |
|
1.07 |
% |
|
1.13 |
% |
Net charge-offs to average
loans outstanding (annualized) |
|
0.02 |
% |
|
0.07 |
% |
|
-0.18 |
% |
|
0.82 |
% |
|
0.38 |
% |
Capital Ratios: |
|
|
|
|
|
Total stockholders' equity to total assets |
|
10.48 |
% |
|
7.96 |
% |
|
7.84 |
% |
|
8.04 |
% |
|
8.14 |
% |
Tangible common equity to tangible assets |
|
10.48 |
% |
|
7.96 |
% |
|
7.84 |
% |
|
8.04 |
% |
|
8.14 |
% |
Tier 1 capital to average assets |
|
12.10 |
% |
|
9.70 |
% |
|
9.63 |
% |
|
10.09 |
% |
|
10.23 |
% |
Common equity tier 1 to risk-weighted assets |
|
13.31 |
% |
|
10.27 |
% |
|
9.91 |
% |
|
10.03 |
% |
|
10.35 |
% |
Total capital to risk-weighted assets |
|
17.75 |
% |
|
14.74 |
% |
|
14.28 |
% |
|
14.29 |
% |
|
14.54 |
% |
|
|
|
|
|
|
(1) - Reflects the ESOP Repurchase Right Termination. |
(2) - Assumes the Company's S Coporation revocation was effective
at the beginning of each period prior to May 31, 2018. The
Federal tax rate used was 35.0% for periods prior to January
1, 2018 and 21.0% for periods after January 1, 2018. |
|
South Plains Financial, Inc. |
Average Balances and Yields - (Unaudited) |
(Dollars
in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
|
|
|
Interest |
|
|
|
Average |
|
Income |
|
|
|
Average |
|
Income |
|
|
|
Balance |
|
Expense |
|
Yield |
|
Balance |
|
Expense |
|
Yield |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Loans (1) |
$ |
1,946,602 |
|
$ |
28,635 |
|
5.90 |
% |
|
$ |
1,899,744 |
|
$ |
25,674 |
|
5.42 |
% |
Debt securities - taxable |
|
248,915 |
|
|
1,754 |
|
2.83 |
% |
|
|
116,455 |
|
|
746 |
|
2.57 |
% |
Debt securities -
nontaxable |
|
31,387 |
|
|
275 |
|
3.51 |
% |
|
|
145,146 |
|
|
1,292 |
|
3.57 |
% |
Other interest-bearing
assets |
|
348,106 |
|
|
1,946 |
|
2.24 |
% |
|
|
231,191 |
|
|
1,014 |
|
1.76 |
% |
Total interest-earning
assets |
|
2,575,010 |
|
|
32,610 |
|
5.08 |
% |
|
|
2,392,536 |
|
|
28,726 |
|
4.82 |
% |
Noninterest-earning
assets |
|
174,944 |
|
|
|
|
|
|
166,913 |
|
|
|
|
Total
assets |
$ |
2,749,954 |
|
|
|
|
|
$ |
2,559,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities &
stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
NOW, Savings, MMA's |
$ |
1,449,169 |
|
|
4,696 |
|
1.30 |
% |
|
$ |
1,340,158 |
|
|
2,722 |
|
0.81 |
% |
Time deposits |
|
317,323 |
|
|
1,443 |
|
1.82 |
% |
|
|
310,404 |
|
|
1,074 |
|
1.39 |
% |
Short-term borrowings |
|
11,085 |
|
|
57 |
|
2.06 |
% |
|
|
16,174 |
|
|
54 |
|
1.34 |
% |
Notes payable & other
long-term borrowings |
|
95,000 |
|
|
561 |
|
2.37 |
% |
|
|
95,000 |
|
|
419 |
|
1.77 |
% |
Subordinated debt
securities |
|
26,472 |
|
|
403 |
|
6.11 |
% |
|
|
20,887 |
|
|
245 |
|
4.70 |
% |
Junior subordinated deferable
interest debentures |
|
46,393 |
|
|
512 |
|
4.43 |
% |
|
|
46,393 |
|
|
455 |
|
3.93 |
% |
Total interest-bearing
liabilities |
|
1,945,442 |
|
|
7,672 |
|
1.58 |
% |
|
|
1,829,016 |
|
|
4,969 |
|
1.09 |
% |
Demand deposits |
|
516,783 |
|
|
|
|
|
|
486,943 |
|
|
|
|
Other liabilities |
|
32,890 |
|
|
|
|
|
|
29,215 |
|
|
|
|
Stockholders' equity |
|
254,839 |
|
|
|
|
|
|
214,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities &
stockholders' equity |
$ |
2,749,954 |
|
|
|
|
|
$ |
2,559,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
24,938 |
|
|
|
|
|
$ |
23,757 |
|
|
Net interest margin (2) |
|
|
|
|
3.88 |
% |
|
|
|
|
|
3.98 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Average loan balances include nonaccrual loans and loans held
for sale. |
(2) Net interest margin is calculated as the annualized net income,
on a fully tax-equivalent basis, divided by average
interest-earning assets. |
South Plains Financial, Inc. |
Average Balances and Yields - (Unaudited) |
(Dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended |
|
June 30, 2019 |
|
June 30, 2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
|
|
|
Interest |
|
|
|
Average |
|
Income |
|
|
|
Average |
|
Income |
|
|
|
Balance |
|
Expense |
|
Yield |
|
Balance |
|
Expense |
|
Yield |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Loans (1) |
$ |
1,951,193 |
|
$ |
56,776 |
|
5.87 |
% |
|
$ |
1,863,068 |
|
$ |
49,832 |
|
5.39 |
% |
Debt securities - taxable |
|
279,293 |
|
|
3,863 |
|
2.79 |
% |
|
|
117,361 |
|
|
1,505 |
|
2.59 |
% |
Debt securities -
nontaxable |
|
31,780 |
|
|
561 |
|
3.56 |
% |
|
|
149,803 |
|
|
2,678 |
|
3.60 |
% |
Other interest-bearing
assets |
|
295,858 |
|
|
3,517 |
|
2.40 |
% |
|
|
275,588 |
|
|
2,334 |
|
1.71 |
% |
Total interest-earning
assets |
|
2,558,123 |
|
|
64,717 |
|
5.10 |
% |
|
|
2,405,819 |
|
|
56,349 |
|
4.72 |
% |
Noninterest-earning
assets |
|
175,691 |
|
|
|
|
|
|
169,902 |
|
|
|
|
Total
assets |
$ |
2,733,813 |
|
|
|
|
|
$ |
2,575,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities &
stockholders' equity |
|
|
|
|
|
|
|
|
|
|
|
NOW, Savings, MMA's |
$ |
1,459,684 |
|
|
9,230 |
|
1.28 |
% |
|
$ |
1,350,496 |
|
|
5,131 |
|
0.77 |
% |
Time deposits |
|
313,505 |
|
|
2,798 |
|
1.80 |
% |
|
|
317,259 |
|
|
2,158 |
|
1.37 |
% |
Short-term borrowings |
|
16,904 |
|
|
168 |
|
2.00 |
% |
|
|
20,804 |
|
|
126 |
|
1.22 |
% |
Notes payable & other
long-term borrowings |
|
95,000 |
|
|
1,100 |
|
2.33 |
% |
|
|
95,000 |
|
|
777 |
|
1.65 |
% |
Subordinated debt
securities |
|
27,100 |
|
|
809 |
|
6.02 |
% |
|
|
20,887 |
|
|
490 |
|
4.73 |
% |
Junior subordinated deferable
interest debentures |
|
46,393 |
|
|
1,025 |
|
4.46 |
% |
|
|
46,393 |
|
|
852 |
|
3.70 |
% |
Total interest-bearing
liabilities |
|
1,958,585 |
|
|
15,130 |
|
1.56 |
% |
|
|
1,850,838 |
|
|
9,534 |
|
1.04 |
% |
Demand deposits |
|
508,952 |
|
|
|
|
|
|
480,468 |
|
|
|
|
Other liabilities |
|
31,022 |
|
|
|
|
|
|
29,313 |
|
|
|
|
Stockholders' equity |
|
235,255 |
|
|
|
|
|
|
215,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities &
stockholders' equity |
$ |
2,733,813 |
|
|
|
|
|
$ |
2,575,721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
49,587 |
|
|
|
|
|
$ |
46,815 |
|
|
Net interest margin (2) |
|
|
|
|
3.91 |
% |
|
|
|
|
|
3.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Average loan balances include nonaccrual loans and loans held
for sale. |
(2) Net interest margin is calculated as the annualized net income,
on a fully tax-equivalent basis, divided by average
interest-earning assets. |
|
South Plains Financial, Inc. |
Consolidated Balance Sheets |
(Unaudited) |
(Dollars in thousands) |
|
As of |
|
June 30, 2019 |
|
December 31, 2018 |
|
|
Assets |
|
|
|
Cash and due from banks |
$ |
38,302 |
|
|
$ |
47,802 |
|
Interest-bearing deposits in banks |
|
367,064 |
|
|
|
198,187 |
|
Federal funds sold |
|
2,750 |
|
|
|
- |
|
Investment securities |
|
263,564 |
|
|
|
338,196 |
|
Loans held for sale |
|
38,932 |
|
|
|
38,382 |
|
Loans held for investment |
|
1,935,653 |
|
|
|
1,957,197 |
|
Less: Allowance for loan losses |
|
(24,171 |
) |
|
|
(23,126 |
) |
Net loans held for investment |
|
1,911,482 |
|
|
|
1,934,071 |
|
Premises and equipment, net |
|
59,705 |
|
|
|
59,787 |
|
Other assets |
|
95,371 |
|
|
|
96,320 |
|
Total assets |
$ |
2,777,170 |
|
|
$ |
2,712,745 |
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
Liabilities |
|
|
|
Noninterest bearing deposits |
$ |
513,383 |
|
|
$ |
510,067 |
|
Interest-bearing deposits |
|
1,768,475 |
|
|
|
1,767,387 |
|
Total deposits |
|
2,281,858 |
|
|
|
2,277,454 |
|
Other Borrowings |
|
106,116 |
|
|
|
112,705 |
|
Subordinated debt securities |
|
26,472 |
|
|
|
34,002 |
|
Trust preferred subordinated debentures |
|
46,393 |
|
|
|
46,393 |
|
Other liabilities |
|
25,218 |
|
|
|
29,416 |
|
Total liabilities |
|
2,486,057 |
|
|
|
2,499,970 |
|
Stockholders' Equity |
|
|
|
Common stock |
|
17,979 |
|
|
|
14,772 |
|
Additional paid-in capital |
|
140,189 |
|
|
|
80,412 |
|
Retained earnings |
|
129,408 |
|
|
|
119,835 |
|
Accumulated other comprehensive income (loss) |
|
3,537 |
|
|
|
(2,244 |
) |
Total stockholders' equity |
|
291,113 |
|
|
|
212,775 |
|
Total liabilities and stockholders' equity |
$ |
2,777,170 |
|
|
$ |
2,712,745 |
|
|
|
|
|
South Plains Financial, Inc. |
Consolidated Statements of Income |
(Unaudited) |
(Dollars in thousands) |
|
Three Months Ended |
|
Six Months Ended |
|
June 30,2019 |
|
June 30,2018 |
|
June 30,2019 |
|
June 30,2018 |
|
|
|
|
Interest
income: |
|
|
|
|
|
|
|
Loans, including fees |
$ |
28,592 |
|
$ |
25,627 |
|
|
$ |
56,690 |
|
$ |
49,736 |
|
Other |
|
3,917 |
|
|
2,781 |
|
|
|
7,823 |
|
|
5,955 |
|
Total Interest income |
|
32,509 |
|
|
28,408 |
|
|
|
64,513 |
|
|
55,691 |
|
Interest
expense: |
|
|
|
|
|
|
|
Deposits |
|
6,139 |
|
|
3,796 |
|
|
|
12,028 |
|
|
7,289 |
|
Subordinated debt securities |
|
403 |
|
|
245 |
|
|
|
809 |
|
|
490 |
|
Trust preferred subordinated debentures |
|
512 |
|
|
455 |
|
|
|
1,025 |
|
|
852 |
|
Other |
|
618 |
|
|
473 |
|
|
|
1,268 |
|
|
903 |
|
Total Interest expense |
|
7,672 |
|
|
4,969 |
|
|
|
15,130 |
|
|
9,534 |
|
Net interest income |
|
24,837 |
|
|
23,439 |
|
|
|
49,383 |
|
|
46,157 |
|
Provision for loan losses |
|
875 |
|
|
1,540 |
|
|
|
1,483 |
|
|
2,318 |
|
Net interest income after provision for loan losses |
|
23,962 |
|
|
21,899 |
|
|
|
47,900 |
|
|
43,839 |
|
Noninterest
income: |
|
|
|
|
|
|
|
Service charges on deposits |
|
1,979 |
|
|
1,861 |
|
|
|
3,884 |
|
|
3,778 |
|
Income from insurance activities |
|
1,210 |
|
|
1,135 |
|
|
|
2,960 |
|
|
2,530 |
|
Mortgage banking activities |
|
6,652 |
|
|
6,397 |
|
|
|
11,518 |
|
|
11,064 |
|
Bank card services and interchange fees |
|
2,071 |
|
|
2,051 |
|
|
|
4,081 |
|
|
4,009 |
|
Other |
|
1,791 |
|
|
1,524 |
|
|
|
3,335 |
|
|
3,055 |
|
Total Noninterest income |
|
13,703 |
|
|
12,968 |
|
|
|
25,778 |
|
|
24,436 |
|
Noninterest
expense: |
|
|
|
|
|
|
|
Salaries and employee benefits |
|
18,784 |
|
|
17,818 |
|
|
|
37,909 |
|
|
35,419 |
|
Net occupancy expense |
|
3,416 |
|
|
3,391 |
|
|
|
6,823 |
|
|
6,715 |
|
Professional services |
|
1,611 |
|
|
1,400 |
|
|
|
3,317 |
|
|
2,829 |
|
Marketing and development |
|
796 |
|
|
760 |
|
|
|
1,513 |
|
|
1,578 |
|
Other |
|
5,323 |
|
|
5,053 |
|
|
|
10,404 |
|
|
9,758 |
|
Total noninterest expense |
|
29,930 |
|
|
28,422 |
|
|
|
59,966 |
|
|
56,299 |
|
Income before income
taxes |
|
7,735 |
|
|
6,445 |
|
|
|
13,712 |
|
|
11,976 |
|
Income tax expense
(benefit) |
|
1,655 |
|
|
(6,568 |
) |
|
|
2,859 |
|
|
(6,538 |
) |
Net income |
$ |
6,080 |
|
$ |
13,013 |
|
|
$ |
10,853 |
|
$ |
18,514 |
|
|
|
|
|
|
|
|
|
Pro forma C corp income tax
adjustment |
|
- |
|
|
7,680 |
|
|
|
- |
|
|
8,533 |
|
Pro forma C corp net income |
$ |
6,080 |
|
$ |
5,333 |
|
|
$ |
10,853 |
|
$ |
9,981 |
|
|
|
|
|
|
|
|
|
South Plains Financial, Inc. |
Loan Composition |
(Unaudited) |
(Dollars in thousands) |
|
As of |
|
June 30, 2019 |
|
December 31, 2018 |
|
June 30, 2018 |
|
|
Loans: |
|
|
|
|
|
Commercial Real Estate |
$ |
533,680 |
|
$ |
538,037 |
|
$ |
533,941 |
Commercial - Specialized |
|
294,188 |
|
|
305,022 |
|
|
305,811 |
Commercial - General |
|
391,434 |
|
|
427,728 |
|
|
434,645 |
Consumer: |
|
|
|
|
|
1-4 Family Residential |
|
348,569 |
|
|
346,153 |
|
|
317,308 |
Auto Loans |
|
206,777 |
|
|
191,647 |
|
|
174,454 |
Other Consumer |
|
71,559 |
|
|
70,209 |
|
|
68,943 |
Construction |
|
89,446 |
|
|
78,401 |
|
|
78,782 |
Total loans
held for investment |
$ |
1,935,653 |
|
$ |
1,957,197 |
|
$ |
1,913,884 |
|
|
|
|
|
|
South Plains Financial, Inc. |
Deposit Composition |
(Unaudited) |
(Dollars in thousands) |
|
As of |
|
June 30, 2019 |
|
December 31, 2018 |
|
June 30, 2018 |
|
|
Deposits: |
|
|
|
|
|
Noninterest-bearing demand deposits |
$ |
513,383 |
|
$ |
510,067 |
|
$ |
495,293 |
NOW & other transaction
accounts |
|
259,111 |
|
|
368,806 |
|
|
283,591 |
MMDA & other savings |
|
1,193,619 |
|
|
1,087,044 |
|
|
1,098,836 |
Time deposits |
|
315,745 |
|
|
311,537 |
|
|
305,911 |
Total
deposits |
$ |
2,281,858 |
|
$ |
2,277,454 |
|
$ |
2,183,631 |
|
|
|
|
|
|
Non-GAAP Financial Measures
Our accounting and reporting policies conform to GAAP and the
prevailing practices in the banking industry. However, we
also evaluate our performance based on certain additional financial
measures discussed in this press release as being non-GAAP
financial measures. We classify a financial measure as being
a non-GAAP financial measure if that financial measure excludes or
includes amounts, or is subject to adjustments that have the effect
of excluding or including amounts, that are included or excluded,
as the case may be, in the most directly comparable measure
calculated and presented in accordance with GAAP as in effect from
time to time in the United States in our statements of income,
balance sheets or statements of cash flows. Non-GAAP
financial measures do not include operating and other statistical
measures or ratios or statistical measures calculated using
exclusively either financial measures calculated in accordance with
GAAP, operating measures or other measures that are not non-GAAP
financial measures or both.
The non-GAAP financial measures that we discuss in this press
release should not be considered in isolation or as a substitute
for the most directly comparable or other financial measures
calculated in accordance with GAAP. Moreover, the manner in
which we calculate the non-GAAP financial measures that we discuss
in this press release may differ from that of other companies
reporting measures with similar names. It is important to
understand how other banking organizations calculate their
financial measures with names similar to the non-GAAP financial
measures we have discussed in this press release when comparing
such non-GAAP financial measures.
Tangible Book Value Per Common Share. Tangible book value
per share is a non-GAAP measure generally used by investors,
financial analysts and investment bankers to evaluate financial
institutions. The most directly comparable GAAP financial
measure for tangible book value per common share is book value per
common share. We believe that the tangible book value per common
share measure is important to many investors in the marketplace who
are interested in changes from period to period in book value per
common share exclusive of changes in intangible assets.
Goodwill and other intangible assets have the effect of
increasing total book value while not increasing our tangible book
value.
As we did not have any goodwill or other intangible assets for
the periods presented, our tangible book value per common share for
such periods ended was the same as our respective book value per
common share.
Tangible Common Equity to Tangible Assets. Tangible common
equity to tangible assets is a non-GAAP measure generally used by
investors, financial analysts and investment bankers to evaluate
financial institutions. We calculate tangible common equity,
as described above, and tangible assets as total assets less
goodwill, core deposit intangibles and other intangible assets, net
of accumulated amortization. The most directly comparable
GAAP financial measure for tangible common equity to tangible
assets is total common shareholders’ equity to total assets.
We believe that this measure is important to many investors
in the marketplace who are interested in the relative changes from
period to period of tangible common equity to tangible assets, each
exclusive of changes in intangible assets. Goodwill and other
intangible assets have the effect of increasing both total
shareholders’ equity and assets while not increasing our tangible
common equity or tangible assets.
As we did not have any goodwill or other intangible assets for
the periods presented, our tangible common equity to tangible
assets for such periods ended was the same as our respective common
shareholders’ equity to total assets.
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