GlobeNewswire Inc | Jan 27, 2021 04:10PM EST

January 27, 2021

LUBBOCK, Texas, Jan. 27, 2021 (GLOBE NEWSWIRE) -- South Plains Financial, Inc. (NASDAQ:SPFI) (South Plains or the Company), the parent company of City Bank (City Bank or the Bank), today reported its financial results for the quarter and year ended December 31, 2020.

Fourth Quarter 2020 Highlights

-- Net income for the fourth quarter of 2020 was $15.9 million, compared to $16.7 million for the third quarter of 2020 and $10.1 million for the fourth quarter of 2019. -- Diluted earnings per share for the fourth quarter of 2020 was $0.87, compared to $0.92 for the third quarter of 2020 and $0.55 for the fourth quarter of 2019. -- Pre-tax, pre-provision income (non-GAAP) for the fourth quarter of 2020 was $20.0 million, compared to $26.9 million for the third quarter of 2020 and $13.7 million for the fourth quarter of 2019. -- Average cost of deposits for the fourth quarter of 2020 decreased to 31 basis points, compared to 34 basis points for the third quarter of 2020 and 76 basis points for the fourth quarter of 2019. -- The provision for loan losses for the fourth quarter of 2020 was $141,000, compared to $6.1 million for the third quarter of 2020 and $896,000 for the fourth quarter of 2019. -- Nonperforming assets to total assets were 0.45% at December 31, 2020, compared to 0.46% at September 30, 2020 and 0.24% at December 31, 2019. -- Return on average assets for the fourth quarter of 2020 was 1.76% annualized, compared to 1.88% annualized for the third quarter of 2020 and 1.32% annualized for the fourth quarter of 2019.

Full Year 2020 Highlights

-- $3.6 billion in total assets at December 31, 2020, compared to $3.2 billion at December 31, 2019. -- Full year net income of $45.4 million in 2020, compared to $29.2 million in 2019. -- Diluted earnings per share of $2.47 in 2020, compared to $1.71 in 2019. -- Efficiency ratio of 63.0% in 2020, compared to 75.3% in 2019. -- Tangible book value (non-GAAP) per share of $18.97 at December 31, 2020, compared to $15.46 at December 31, 2019. -- Return on average assets of 1.31% for the full year 2020, compared to 1.04% for 2019. -- Issued $50 million of subordinated notes in September 2020.

Curtis Griffith, South Plains Chairman and Chief Executive Officer, commented, While this past year presented our Company with unprecedented challenges as a result of the global COVID-19 pandemic, I could not be more pleased with the performance of our employees and their commitment to both the Bank and our customers. Our strong financial results for the fourth quarter and full year 2020 would not have been possible without their tireless efforts. We continue to weather the economic storm caused by the ongoing COVID-19 pandemic and ended the year in a strong financial position highlighted by our well-capitalized balance sheet and the improving credit metrics of our loan portfolio. This can be seen in our active loan modifications, which were 2.9% of our total portfolio at December 31, 2020, which is a decline from 5.4% at September 30, 2020. We believe our proactive approach to managing our credit combined with our Enterprise Risk Management system has enabled our team to effectively manage a difficult environment and positioned the Company to take advantage of opportunities in the year ahead as we strive to grow the Bank both organically and through strategic acquisitions.

Mr. Griffith continued, Looking at our results in more detail, we delivered pre-tax, pre-provision income of $20.0 million in the fourth quarter of 2020, representing 46% growth as compared to $13.7 million in the fourth quarter of 2019. We also grew book value per share to $20.47 at December 31, 2020, a rise of 21% as compared to book value per share of $16.98 at December 31, 2019. Importantly, we are delivering this growth while maintaining a strict discipline on expenses as can be seen in our efficiency ratio, which was 64.2% in the fourth quarter of 2020 as compared to 69.7% in the fourth quarter of 2019. Additionally, our annualized return on average assets increased to 1.76% in the fourth quarter of 2020 as compared to 1.32% in the fourth quarter of 2019. A clear focus of our team has been to scale the Bank while delivering returns in line or better to our peer group over time. While we have more work to do in order to achieve our goal, I am very pleased with the progress that our team achieved this past year.

Results of Operations, Quarter Ended December 31, 2020

Net Interest Income

Net interest income was $30.4 million for the fourth quarter of 2020, compared to $28.6 million for the fourth quarter of 2019 and $31.3 million for the third quarter of 2020.

Interest income was $34.0 million for the fourth quarter of 2020, compared to $34.8 million for the fourth quarter of 2019 and $34.5 million for the third quarter of 2020. Interest and fees on loans decreased by $429,000 from the fourth quarter of 2019 due to a decrease of 68 basis points in loan rates as a result of the decline in the interest rate environment experienced in the first quarter of 2020, partially offset by growth of $256.7 million in average loans, primarily from the Small Business Administration (SBA) Paycheck Protection Program (PPP) loans that were originated largely in the second quarter of 2020. Interest income decreased slightly in the fourth quarter of 2020 from the third quarter of 2020 due to a decline of 17 basis points in non-PPP loan rates and a decline of $55.9 million in average loans, partially offset by the additional interest and fees on PPP loans. The PPP loans yielded 5.02% during the fourth quarter of 2020, which includes accretion of the related SBA lender fees for processing PPP loans during the quarter. As of December 31, 2020, the Company has originated approximately 2,100 PPP loans, totaling $218 million, and has received $7.8 million in PPP related SBA fees. These fees are deferred and then accreted into interest income over the life of the applicable loans. During the fourth quarter of 2020, the Company recognized $2.0 million in PPP related SBA fees. The Company expects that the majority of PPP loans will be forgiven over the next several quarters. At December 31, 2020, there was $4.1 million of deferred fees that have not been accreted to income.

Interest expense was $3.6 million for the fourth quarter of 2020, compared to $6.1 million for the fourth quarter of 2019 and $3.2 million for the third quarter of 2020. The decrease from the fourth quarter of 2019 was primarily due to a decrease in the interest rate paid on interest-bearing liabilities of 58 basis points, partially offset by an increase of $262.2 million in average interest-bearing liabilities. The increase in average interest-bearing liabilities was largely due to growth in deposits from PPP loan funding and other government stimulus payments and programs as well as organic growth and the issuance of $50.0 million in subordinated notes on September 29, 2020. Additionally, the decrease in the rate paid on interest-bearing liabilities was the result of the decline in the overall rate environment experienced in the first quarter of 2020. The increase in interest expense from the third quarter of 2020 was primarily due to the interest expense on the $50.0 million in subordinated notes issued on September 29, 2020, partially offset by a decrease in the interest rate paid on interest-bearing deposits.

The average cost of deposits was 31 basis points for the fourth quarter of 2020, representing a 45 basis point decrease from the fourth quarter of 2019 and a three basis point decrease from the third quarter of 2020.

The net interest margin was 3.64% for the fourth quarter of 2020, compared to 4.03% for the fourth quarter of 2019 and 3.82% for the third quarter of 2020.

Noninterest Income and Noninterest Expense

Noninterest income was $26.2 million for the fourth quarter of 2020, compared to $16.7 million for the fourth quarter of 2019 and $31.7 million for the third quarter of 2020. The increase in noninterest income for the fourth quarter of 2020 as compared to the fourth quarter of 2019 was primarily due to growth of $10.3 million in mortgage banking activities revenue as a result of an additional $271.6 million in mortgage loan originations. Additionally, there was a decrease in income from insurance activities of $782,000 in the fourth quarter of 2020 related to the effect of adoption of the revenue recognition standard for quarterly reporting in 2020, with a higher amount of income now being recognized in the third quarter compared to being recognized in the fourth quarter in previous years. The decrease from the third quarter of 2020 was primarily due to a reduction of $4.5 million in mortgage banking activities revenue as a result of lower interest rate lock commitments in the fourth quarter and a decrease of $1.1 million in income from insurance activities.

Noninterest expense was $36.5 million for the fourth quarter of 2020, compared to $31.7 million for the fourth quarter of 2019 and $36.0 million for the third quarter of 2020. The increase in noninterest expense as compared to the fourth quarter of 2019 was primarily driven by a $3.8 million increase in personnel expense. This increase was predominantly related to an additional $3.7 million in commissions paid on the higher volume of mortgage loan originations. Appraisal expenses, principally for the Companys mortgage operations, increased $517,000 related to the growth in mortgage production. Net occupancy expenses increased $499,000 primarily from the completion of the Companys acquisition of West Texas State Bank in the middle of the fourth quarter of 2019 as well as additional locations for mortgage operations. The increase from the third quarter of 2020 was primarily the result of a recovery of $303,000 of legal expenses from the previously disclosed settlement of a lawsuit in September 2020. Additionally, there was increased marketing and business development in the Companys Permian Basin branches in the fourth quarter of 2020.

Loan Portfolio and Composition

Loans held for investment were $2.22 billion as of December 31, 2020, compared to $2.29 billion as of September 30, 2020 and $2.14 billion as of December 31, 2019. The $66.7 million decrease during the fourth quarter of 2020 as compared to the third quarter of 2020 was primarily the result of $41.8 million in forgiveness and paydowns on PPP loans, seasonal paydowns of $28.0 million in agricultural operating loans, and the early payoff of a $16.0 million state and municipality loan, offset by organic loan growth. As of December 31, 2020, loans held for investment increased $78.0 million from December 31, 2019, largely attributable to the PPP loans primarily funded in the second quarter of 2020, partially offset by the slower loan demand and accelerated paydowns experienced during 2020.

The Economic Aid Act, signed into law on December 27, 2020, authorized an additional $284.5 billion in new PPP funding and extends the authority of lenders to make PPP loans through March 31, 2021. The Company intends to participate in the new round of the PPP.

Agricultural production loans were $105.9 million as of December 31, 2020, compared to $133.9 million as of September 30, 2020 and $131.2 million as of December 31, 2019. The Company did not experience the typical historical increase in seasonal fundings on these agricultural production loans during the third quarter of 2020, primarily as a result of drought conditions or damaged crops and where the borrower received crop insurance proceeds to pay down the loans.

Deposits and Borrowings

Deposits totaled $2.97 billion as of December 31, 2020, compared to $2.94 billion as of September 30, 2020 and $2.70 billion as of December 31, 2019. Deposits increased $30.5 million, or 1.0%, in the fourth quarter of 2020 from September 30, 2020. As of December 31, 2020, deposits increased $277.5 million, or 10.3%, from December 31, 2019. The increase in deposits since December 31, 2019 is primarily a result of organic growth as well as existing customers increasing their balances.

Noninterest-bearing deposits were $917.3 million as of December 31, 2020, compared to $906.1 million as of September 30, 2020 and $790.9 million as of December 31, 2019. Noninterest-bearing deposits represented 30.8% of total deposits as of December 31, 2020. The increase in noninterest-bearing deposit balances at December 31, 2020 compared to September 30, 2020 was $11.3 million, or 1.2%. The increase in noninterest-bearing deposit balances at December 31, 2020 compared to December 31, 2019 was $126.4 million, or 16.0%, and is primarily a result of organic growth as well as existing customers increasing their balances.

The Bank has utilized its lines of credit with the Federal Home Loan Bank of Dallas (the FHLB) and the Federal Reserve Bank of Dallas to supplement funding for origination of PPP loans as needed. This included borrowing $75.0 million from the FHLB for a three month term. This borrowing matured in July 2020 and was repaid in full.

On September 29, the Company issued $50.0 million in fixed-to-floating rate subordinated notes due in 2030. These notes bear interest at a fixed rate of 4.50% for the first five years, and the interest rate will reset quarterly thereafter to the then current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York, plus 438 basis points.

Asset Quality

As part of the Banks efforts to support its customers and protect the Bank as a result of the COVID-19 pandemic, the Bank has provided borrowers relief by offering varying forms of loan modifications including 90-day payment deferrals, 6-month interest only terms, or in certain select cases periods of longer than 6 months of interest only. As of December 31, 2020, total active loan modifications attributed to COVID-19 were $64.1 million, or 2.9% of the Companys loan portfolio, down from $124.0 million, or 5.4% of the Companys loan portfolio, at September 30, 2020. Approximately 95% of the active modified loans at December 31, 2020 are interest only periods longer than 6 months, primarily in the hotel portfolio.

The provision for loan losses recorded for the fourth quarter of 2020 was $141,000 compared to $896,000 for the fourth quarter of 2019 and $6.1 million for the third quarter of 2020. The decrease from the third quarter of 2020 is a result of a modest improvement in the economy, a decline in the amount of loans that are actively under a modification, and a decrease in outstanding loan balances. There is continued uncertainty from the ongoing COVID-19 pandemic and the full extent of the impact on the economy and the Banks customers remains unknown at this time. Accordingly, additional provisions for loan losses may be necessary in future periods.

The allowance for loan losses to loans held for investment was 2.05% as of December 31, 2020, compared to 2.01% as of September 30, 2020 and 1.13% as of December 31, 2019. The allowance for loan losses to non-PPP loans held for investment was 2.22% as of December 31, 2020.

The nonperforming assets to total assets ratio as of December 31, 2020 was 0.45%, compared to 0.46% as of September 30, 2020 and 0.24% at December 31, 2019.

Annualized net charge-offs were 0.11% for the fourth quarter of 2020, compared to 0.10% for the third quarter of 2020 and 0.17% for the fourth quarter of 2019.

Conference Call

South Plains will host a conference call to discuss its fourth quarter and year-end 2020 financial results today, January 27, 2021 at 5:00 p.m., 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 and conference materials will be available on the Companys website at https://www.spfi.bank/news-events/events.

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 Companys 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 13714991. The replay will be available until February 10, 2021.

About South Plains Financial, Inc.

South Plains is the bank holding company for City Bank, a Texas state-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, El Paso, Greater Houston, the Permian Basin, 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.

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, Tangible Common Equity to Tangible Assets, Adjusted Efficiency Ratio, and Pre-Tax, Pre-Provision Income. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Companys financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on 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. 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.

A reconciliation of non-GAAP financial measures to GAAP financial measures is provided at the end of this press release.

Available Information

The Company routinely posts important information for investors on its web site (under www.spfi.bank and, more specifically, under the News & Events tab at www.spfi.bank/news-events/press-releases). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD (Fair Disclosure) promulgated by the U.S. Securities and Exchange Commission (the SEC). Accordingly, investors should monitor the Companys web site, in addition to following the Companys press releases, SEC filings, public conference calls, presentations and webcasts.

The information contained on, or that may be accessed through, the Companys web site is not incorporated by reference into, and is not a part of, this document.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect South Plains current views with respect to, among other things, the ongoing COVID-19 pandemic 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. Factors that could cause such changes include, but are not limited to, general economic conditions, the extent of the impact of the COVID-19 pandemic on our customers, changes in interest rates, regulatory considerations, competition and market expansion opportunities, changes in non-interest expenditures or in the anticipated benefits of such expenditures, and changes in applicable laws and regulations. Additional information regarding these risks and uncertainties to which South Plains business and future financial performance are subject is contained in South Plains most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, 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 our most recent Annual Report on Form 10-K Quarterly Reports on Form 10-Q, as well as the Risk Factors section of other documents South Plains files or furnishes with the SEC from time to time, which are available on the SECs website, www.sec.gov. 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. All forward-looking statements, express or implied, included in the press release are qualified in their entirety by this cautionary statement.

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 December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019Selected Income Statement Data:Interest income $ 33,984 $ 34,503 $ 34,007 $ 35,737 $ 34,764 Interest expense 3,619 3,230 3,559 5,538 6,140 Net interest income 30,365 31,273 30,448 30,199 28,624 Provision for loan 141 6,062 13,133 6,234 896 lossesNoninterest income 26,172 31,660 24,896 18,875 16,740 Noninterest expense 36,504 35,993 35,207 34,011 31,714 Income tax expense 3,968 4,147 1,389 1,746 2,645 Net income 15,924 16,731 5,615 7,083 10,109 Per Share Data (Common Stock):Net earnings, basic 0.88 0.93 0.31 0.39 0.56 Net earnings, 0.87 0.92 0.31 0.38 0.55 dilutedCash dividends 0.05 0.03 0.03 0.03 0.03 declared and paidBook value 20.47 19.52 18.64 18.10 16.98 Tangible book value 18.97 18.00 17.06 16.54 15.46 Weighted averageshares outstanding, 18,053,467 18,059,174 18,061,705 18,043,105 18,010,065 basicWeighted averageshares outstanding, 18,366,129 18,256,161 18,224,630 18,461,922 18,415,656 dilutiveShares outstanding 18,076,364 18,059,174 18,059,174 18,056,014 18,036,115 at end of periodSelected Period End Balance Sheet Data:Cash and cash 300,307 290,885 256,101 136,062 158,099 equivalentsInvestment 803,087 726,329 730,674 734,791 707,650 securitiesTotal loans held 2,221,583 2,288,234 2,331,716 2,108,805 2,143,623 for investmentAllowance for loan 45,553 46,076 40,635 29,074 24,197 lossesTotal assets 3,599,160 3,542,666 3,584,532 3,216,563 3,237,167 Interest-bearing 2,057,029 2,037,743 2,006,984 1,924,902 1,905,936 depositsNoninterest-bearing 917,322 906,059 940,853 740,946 790,921 depositsTotal deposits 2,974,351 2,943,802 2,947,837 2,665,848 2,696,857 Borrowings 223,532 204,704 252,430 185,265 205,030 Total stockholders? 370,048 352,568 336,534 326,890 306,182 equitySummary Performance Ratios:Return on average 1.76 % 1.88 % 0.64 % 0.89 % 1.32 %assetsReturn on average 17.53 % 19.32 % 6.81 % 9.00 % 13.25 %equityNet interest margin 3.64 % 3.82 % 3.79 % 4.13 % 4.03 %^(1)Yield on loans 5.10 % 5.08 % 5.06 % 5.76 % 5.79 %Cost ofinterest-bearing 0.45 % 0.50 % 0.56 % 0.91 % 1.06 %depositsEfficiency ratio 64.19 % 56.90 % 63.28 % 69.10 % 69.71 %Summary Credit Quality Data:Nonperforming loans 14,965 15,006 10,472 7,112 6,045 Nonperforming loansto total loans held 0.67 % 0.66 % 0.45 % 0.34 % 0.28 %for investmentOther real estate 1,353 1,336 1,335 1,944 1,883 ownedNonperformingassets to total 0.45 % 0.46 % 0.33 % 0.28 % 0.24 %assetsAllowance for loanlosses to total 2.05 % 2.01 % 1.74 % 1.38 % 1.13 %loans held forinvestmentNet charge-offs toaverage loans 0.11 % 0.10 % 0.27 % 0.25 % 0.17 %outstanding(annualized)

As of and for the quarter ended December September June 30, March 31, December 31 30, 2020 2020 31, 2020 2020 2019Capital Ratios: Total stockholders?equity to total 10.28 % 9.95 % 9.39 % 10.16 % 9.46 %assetsTangible commonequity to tangible 9.60 % 9.25 % 8.66 % 9.37 % 8.69 %assetsCommon equity tier 1to risk-weighted 12.96 % 12.49 % 10.47 % 11.24 % 11.06 %assetsTier 1 capital to 10.24 % 10.01 % 9.60 % 10.34 % 10.74 %average assetsTotal capital to 19.08 % 18.67 % 14.32 % 15.23 % 14.88 %risk-weighted assets

(1) Net interest margin is calculated as the annual net interest 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 Three Months Ended December 31, 2020 December 31, 2019 Average Interest Average Interest Balance Income Yield Balance Income Yield Expense ExpenseAssets Loans, excluding PPP $ 2,157,510 $ 27,712 5.11 % $ 2,095,238 $ 30,602 5.79 %^(1)Loans - PPP 194,413 2,452 5.02 % - - 0.00 %Debt securities - 554,480 2,567 1.84 % 426,074 2,789 2.60 %taxableDebt securities - 207,453 1,452 2.78 % 52,376 442 3.35 %nontaxableOtherinterest-bearing 242,241 137 0.22 % 259,829 1,064 1.62 %assets Totalinterest-earning 3,356,097 34,320 4.07 % 2,833,517 34,897 4.89 %assetsNoninterest-earning 252,574 199,350 assets Total assets $ 3,608,671 $ 3,032,867 Liabilities & stockholders? equityNOW, Savings, MMA?s $ 1,720,778 1,138 0.26 % $ 1,474,185 3,149 0.85 %Time deposits 323,921 1,196 1.47 % 336,859 1,687 1.99 %Short-term 18,344 2 0.04 % 18,650 64 1.36 %borrowingsNotes payable &other long-term 75,000 40 0.21 % 95,217 401 1.67 %borrowingsSubordinated debt 75,572 1,013 5.33 % 26,472 403 6.04 %securitiesJunior subordinateddeferrable interest 46,393 230 1.97 % 46,393 436 3.73 %debentures Totalinterest-bearing 2,260,008 3,619 0.64 % 1,997,776 6,140 1.22 %liabilitiesDemand deposits 942,799 708,308 Other liabilities 44,556 24,178 Stockholders? equity 361,308 302,605 Total liabilities & $ 3,608,671 $ 3,032,867 stockholders? equity Net interest income $ 30,701 $ 28,757 Net interest margin 3.64 % 4.03 %^(2)

(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 Twelve Months Ended December 31, 2020 December 31, 2019 Average Interest Average Interest Balance Income Yield Balance Income Yield Expense ExpenseAssets Loans, excluding $ 2,181,118 $ 116,753 5.35 % $ 1,997,783 $ 117,074 5.86 %PPP ^(1)Loans - PPP 144,514 5,130 3.55 % - - 0.00 %Debt securities - 547,107 11,852 2.17 % 317,947 8,608 2.71 %taxableDebt securities - 158,482 4,489 2.83 % 37,232 1,289 3.46 %nontaxableOtherinterest-bearing 184,262 1,100 0.60 % 284,031 6,412 2.26 %assets Totalinterest-earning 3,215,483 139,324 4.33 % 2,636,993 133,383 5.06 %assetsNoninterest-earning 249,536 182,967 assets Total assets $ 3,465,019 $ 2,819,960 Liabilities &stockholders? equityNOW, Savings, MMA?s $ 1,653,088 6,337 0.38 % $ 1,448,320 16,436 1.13 %Time deposits 331,623 5,557 1.68 % 319,811 6,055 1.89 %Short-term 19,404 104 0.54 % 16,231 290 1.79 %borrowingsNotes payable &other long-term 107,045 558 0.52 % 95,054 2,024 2.13 %borrowingsSubordinated debt 38,747 2,223 5.74 % 26,786 1,616 6.03 %securitiesJunior subordinateddeferrable interest 46,393 1,167 2.52 % 46,393 1,946 4.19 %debentures Totalinterest-bearing 2,196,300 15,946 0.73 % 1,952,595 28,367 1.45 %liabilitiesDemand deposits 888,653 570,428 Other liabilities 41,573 29,891 Stockholders? 338,493 267,046 equity Total liabilities &stockholders? $ 3,465,019 $ 2,819,960 equity Net interest income $ 123,378 $ 105,016 Net interest margin 3.84 % 3.98 %^(2)

(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 December 31, December 31, 2020 2019 Assets Cash and due from banks $ 76,146 $ 56,246 Interest-bearing deposits in banks 224,161 101,853 Federal funds sold - ? Investment securities 803,087 707,650 Loans held for sale 111,477 49,035 Loans held for investment 2,221,583 2,143,623 Less: Allowance for loan losses (45,553 ) (24,197 )Net loans held for investment 2,176,030 2,119,426 Premises and equipment, net 60,331 61,873 Goodwill 19,508 18,757 Intangible assets 7,562 8,632 Other assets 120,858 113,695 Total assets $ 3,599,160 $ 3,237,167 Liabilities and Stockholders? Equity Liabilities Noninterest bearing deposits $ 917,322 $ 790,921 Interest-bearing deposits 2,057,029 1,905,936 Total deposits 2,974,351 2,696,857 Other borrowings 101,550 132,165 Subordinated debt securities 75,589 26,472 Trust preferred subordinated debentures 46,393 46,393 Other liabilities 31,229 29,098 Total liabilities 3,229,112 2,930,985 Stockholders? Equity Common stock 18,076 18,036 Additional paid-in capital 141,112 140,492 Retained earnings 189,521 146,696 Accumulated other comprehensive income (loss) 21,339 958 Total stockholders? equity 370,048 306,182 Total liabilities and stockholders? equity $ 3,599,160 $ 3,237,167

South Plains Financial, Inc.Consolidated Statements of Income(Unaudited)(Dollars in thousands)

Three Months Ended Twelve Months Ended December December December December 31, 31, 31, 31, 2020 2019 2020 2019 Interest income: Loans, including fees $ 30,133 $ 30,562 $ 121,733 $ 116,904Other 3,851 4,202 16,498 16,038Total Interest income 33,984 34,764 138,231 132,942Interest expense: Deposits 2,334 4,836 11,894 22,491Subordinated debt securities 1,013 403 2,223 1,616Trust preferred subordinated 230 436 1,167 1,946debenturesOther 42 465 662 2,314Total Interest expense 3,619 6,140 15,946 28,367Net interest income 30,365 28,624 122,285 104,575Provision for loan losses 141 896 25,570 2,799Net interest income after 30,224 27,728 96,715 101,776provision for loan lossesNoninterest income: Service charges on deposits 1,861 2,144 7,032 8,129Income from insurance 2,160 2,942 7,644 7,016activitiesMortgage banking activities 16,925 6,617 65,042 25,126Bank card services and 2,845 2,419 10,035 8,692interchange feesOther 2,381 2,618 9,532 7,670Total Noninterest income 26,172 16,740 101,603 56,633Noninterest expense: Salaries and employee 23,117 19,348 89,220 75,392benefitsNet occupancy expense 3,762 3,263 14,658 13,572Professional services 1,612 2,165 6,322 7,334Marketing and development 899 742 3,088 3,017Other 7,114 6,196 28,427 22,393Total noninterest expense 36,504 31,714 141,715 121,708Income before income taxes 19,892 12,754 56,603 36,701Income tax expense (benefit) 3,968 2,645 11,250 7,481Net income $ 15,924 $ 10,109 $ 45,353 $ 29,220

South Plains Financial, Inc.Loan Composition(Unaudited)(Dollars in thousands)

As of December 31, December 31, 2020 2019 Loans: Commercial Real Estate $ 663,344 $ 658,195Commercial - Specialized 311,686 309,505Commercial - General 518,309 441,398Consumer: 1-4 Family Residential 360,315 362,796Auto Loans 205,840 215,209Other Consumer 67,595 74,000Construction 94,494 82,520Total loans held for investment $ 2,221,583 $ 2,143,623

South Plains Financial, Inc.Deposit Composition(Unaudited)(Dollars in thousands)

As of December 31, December 31, 2020 2019 Deposits: Noninterest-bearing demand deposits $ 917,322 $ 790,921NOW & other transaction accounts 332,829 318,379MMDA & other savings 1,398,699 1,231,534Time deposits 325,501 356,023Total deposits $ 2,974,351 $ 2,696,857

South Plains Financial, Inc.Reconciliation of Non-GAAP Financial Measures (Unaudited)(Dollars in thousands)

As of and for the quarter ended December 31, September June 30, March 31, December 31, 2020 30, 2020 2020 2019 2020Efficiency ratioNoninterest $ 36,504 $ 35,993 $ 35,207 $ 34,011 $ 31,714 expense Net interest $ 30,365 $ 31,273 $ 30,448 $ 30,199 $ 28,624 incomeTaxequivalent 336 322 290 145 133 yieldadjustmentNoninterest 26,172 31,660 24,896 18,875 16,740 incomeTotal income $ 56,873 $ 63,255 $ 55,634 $ 49,219 $ 45,497 Efficiency 64.19 % 56.90 % 63.28 % 69.10 % 69.71 %ratio Noninterest $ 36,504 $ 35,993 $ 35,207 $ 34,011 $ 31,714 expenseLess: netloss on sale - - - - (27 )of securitiesAdjustednoninterest $ 36,504 $ 35,993 $ 35,207 $ 34,011 $ 31,687 expense Total income $ 56,873 $ 63,255 $ 55,634 $ 49,219 $ 45,497 Less: netgain on sale - - - (2,318 ) - of securitiesAdjusted $ 56,873 $ 63,255 $ 55,634 $ 46,901 $ 45,497 total income Adjustedefficiency 64.19 % 56.90 % 63.28 % 72.52 % 69.65 %ratio Pre-tax,pre-provision incomeNet income $ 15,924 $ 16,731 $ 5,615 $ 7,083 $ 10,109 Income tax 3,968 4,147 1,389 1,746 2,645 expenseProvision for 141 6,062 13,133 6,234 896 loan losses Pre-tax,pre-provision $ 20,033 $ 26,940 $ 20,137 $ 15,063 $ 13,650 income

South Plains Financial, Inc.Reconciliation of Non-GAAP Financial Measures (Unaudited)(Dollars in thousands)

As of December 31, December 31, 2020 2019Tangible common equity Total common stockholders? equity $ 370,048 $ 306,182 Less: goodwill and other intangibles (27,070 ) (27,389 ) Tangible common equity $ 342,978 $ 278,793 Tangible assets Total assets $ 3,599,160 $ 3,237,167 Less: goodwill and other intangibles (27,070 ) (27,389 ) Tangible assets $ 3,572,090 $ 3,209,778 Shares outstanding 18,076,364 18,036,115 Total stockholders? equity to total assets 10.28 % 9.46 %Tangible common equity to tangible assets 9.60 % 8.69 %Book value per share $ 20.47 $ 16.98 Tangible book value per share $ 18.97 $ 15.46