GlobeNewswire Inc | Jul 27, 2021 04:10PM EDT

July 27, 2021

LUBBOCK, Texas, July 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 ended June 30, 2021.

Second Quarter 2021 Highlights

-- Net income for the second quarter of 2021 was $13.7 million, compared to $15.2 million for the first quarter of 2021 and $5.6 million for the second quarter of 2020. -- Diluted earnings per share for the second quarter of 2021 was $0.74, compared to $0.82 for the first quarter of 2021 and $0.31 for the second quarter of 2020. -- Pre-tax, pre-provision income (non-GAAP) for the second quarter of 2021 was $15.1 million, compared to $19.0 million for the first quarter of 2021 and $20.1 million for the second quarter of 2020. -- Average cost of deposits for the second quarter of 2021 decreased to 27 basis points, compared to 29 basis points for the first quarter of 2021 and 39 basis points for the second quarter of 2020. -- The Company had a negative provision for loan losses in the second quarter of 2021 of $2.0 million, compared to provisions for loan losses of $89,000 for the first quarter of 2021 and $13.1 million for the second quarter of 2020. -- Nonperforming assets to total assets were 0.37% at June 30, 2021, compared to 0.42% at March 31, 2021 and 0.33% at June 30, 2020. -- Return on average assets for the second quarter of 2021 was 1.46% annualized, compared to 1.66% annualized for the first quarter of 2021 and 0.64% annualized for the second quarter of 2020. -- Tangible book value (non-GAAP) per share was $20.43 as of June 30, 2021, compared to $19.28 per share as of March 31, 2021 and $17.06 per share as of June 30, 2020.

Curtis Griffith, South Plains Chairman and Chief Executive Officer, commented, Economic activity continued to accelerate across Texas through the second quarter of 2021 as can be seen in our improved loan growth of 2.7% as compared to the first quarter of 2021 as well as our loan pipeline which ended the second quarter at a three year high. While demand is improving, we also see an opportunity to expand our loan portfolio and have implemented an initiative to grow our banking team by more than 30% over the next two years with a focus on our major metropolitan markets of Dallas and Houston. We believe we have significant earnings power sitting on our balance sheet given our low cost of funds combined with our excess liquidity as our loan to deposit ratio was 73% at June 30, 2021. As we execute on our plan and redeploy our excess liquidity into attractive, higher yielding loans, we believe our margins will begin to expand and our earnings growth will accelerate. That said, we will not sacrifice credit quality for growth and will maintain our conservative credit culture as we expand our loan portfolio. I am also pleased that the credit quality of our loan portfolio continued to improve through the second quarter of 2021, allowing us to begin to release reserve for loan losses. Given our strong fundamentals, improving loan growth outlook, and strong credit quality of our loan portfolio, we continued repurchasing shares of our common stock in the second quarter of 2021 given the attractive value that we see.

Results of Operations, Quarter Ended June 30, 2021

Net Interest Income

Net interest income was $29.6 million for the second quarter of 2021, compared to $29.5 million for the first quarter of 2021 and $30.4 million for the second quarter of 2020. Net interest margin was 3.42% for the second quarter of 2021, compared to 3.52% for the first quarter of 2021 and 3.79% for the second quarter of 2020. The average yield on loans was 4.97% for the second quarter of 2021, compared to 5.07% for the first quarter of 2021 and 5.06% for the second quarter of 2020. The average cost of deposits was 27 basis points for the second quarter of 2021, representing a two basis point decrease from the first quarter of 2021 and a 12 basis point decrease from the second quarter of 2020.

Interest income was $33.0 million for the second quarter of 2021, compared to $33.0 million for the first quarter of 2021 and $34.0 million for the second quarter of 2020. Although interest income was flat in the second quarter of 2021 compared to the first quarter of 2021, there was a change in the mix of loan interest income. In the second quarter of 2021, interest and fees on Small Business Administration (SBA) Paycheck Protection Program (PPP) loans declined $721 thousand compared to the first quarter of 2021, as the average balance of PPP loans decreased $22.5 million during the second quarter of 2021, offset by an increase in interest income on non-PPP loans of $801 thousand, due to growth of $48.7 million in average non-PPP loans during the second quarter of 2021. Interest income decreased by $1.0 million in the second quarter of 2021 compared to the second quarter of 2020 primarily due to lower interest rates on loans, securities, and other interest-earning assets, partially offset by growth in average securities and other interest-earning assets. During the second quarter of 2021, the Company recognized $1.9 million in PPP-related fees. At June 30, 2021, the Company had $4.6 million of deferred PPP fees that have not been accreted to income, the majority of which are expected to be recognized as PPP loans continue to be forgiven by the SBA over the next several quarters.

Interest expense was $3.4 million for the second quarter of 2021, compared to $3.4 million for the first quarter of 2021 and $3.6 million for the second quarter of 2020. Interest expense and the cost of interest-bearing liabilities were both consistent as compared to the first quarter of 2021. The decrease from the second quarter of 2020 was primarily due to lower interest rates paid on interest-bearing liabilities, partially offset by growth in average interest-bearing liabilities. The increase of $105.2 million in average interest-bearing liabilities was largely due to growth in deposits.

Noninterest Income and Noninterest Expense

Noninterest income was $22.3 million for the second quarter of 2021, compared to $26.5 million for the first quarter of 2021 and $24.9 million for the second quarter of 2020. The decrease from the first quarter of 2021 was primarily due to a decline of $5.1 million in mortgage banking activities revenue. This is reflective of a decrease of $56.9 million in mortgage loan originations and a decrease of $1.6 million in the fair value adjustment to the Companys mortgage servicing rights. The decrease in noninterest income for the second quarter of 2021 as compared to the second quarter of 2020 was primarily due to a decline of $4.2 million in mortgage banking activities revenue as a result of $61 million less in interest rate lock commitments and a decline in gain on sale margins. This decrease was partially offset by growth in bank card services and interchange revenue and other noninterest income items.

Noninterest expense was $36.8 million for the second quarter of 2021, compared to $37.1 million for the first quarter of 2021 and $35.2 million for the second quarter of 2020. The decrease from the first quarter of 2021 was primarily the result of a decrease of $940 thousand in personnel expense related to a decline in mortgage production and lower health insurance costs, after having been elevated in the first quarter of 2021. This decrease was partially offset by increases in marketing and business development expenses, bank card expenses, and other noninterest expenses. The increase in noninterest expense for the second quarter of 2021 as compared to the second quarter of 2020 was primarily driven by a $1.8 million increase in personnel expense. This increase was predominantly related to $1.4 million in higher commissions paid on mortgage loan originations and a rise in salary and other personnel expenses to support mortgage activities.

As part of the Banks information technology roadmap, management is implementing a process to begin transitioning the Companys computing and data storage to the cloud. This is expected to deliver increased security, more seamless maintenance, and lower costs. The Bank is also refocusing its advertising to digital media to improve new customer lead generation. The Banks technology initiatives are expected to modestly add to noninterest expense starting in the second half of 2021.

Loan Portfolio and Composition

Loans held for investment were $2.30 billion as of June 30, 2021, compared to $2.24 billion as of March 31, 2021 and $2.33 billion as of June 30, 2020. The $60.8 million, or 2.7%, increase during the second quarter of 2021 as compared to the first quarter of 2021 was primarily the result of organic net loan growth of $120.1 million, partially offset by a net decrease of $59.3 million in PPP loans as the Company funded $13.9 million in new PPP loans and received repayments of $73.1 million on PPP loans, during the second quarter of 2021. The organic loan growth occurred in a majority of loan segments, with the largest volume growth in residential construction, multifamily properties, and agricultural production loans. As of June 30, 2021, loans held for investment decreased $28.3 million from June 30, 2020, largely attributable to net payments on PPP loans of $99.7 million as of June 30, 2021, partially offset by organic loan growth experienced in the first and second quarters of 2021 after slower loan demand and accelerated repayments by customers on non-PPP loans noted in 2020.

Agricultural production loans were $96.2 million as of June 30, 2021, compared to $80.5 million as of March 31, 2021 and $131.5 million as of June 30, 2020. The increase from the first quarter of 2021 is due to typical seasonal funding on these agricultural production loans. The decrease from the second quarter of 2020 is primarily due to the loss of several large customers.

Deposits and Borrowings

Deposits totaled $3.16 billion as of June 30, 2021, compared to $3.16 billion as of March 31, 2021 and $2.95 billion as of June 30, 2020. Deposits slightly increased by $2.9 million, or 0.1%, in the second quarter of 2021 from March 31, 2021. As of June 30, 2021, deposits increased $277.5 million, or 10.3%, from June 30, 2020. The increase in deposits since June 30, 2020 is primarily a result of organic growth as well as existing customers depositing funds received from PPP loan advances, stimulus checks, and generally maintaining higher liquidity in response to the ongoing COVID-19 pandemic. This growth was partially offset by a decrease of $15.9 million in downstream correspondent bank deposits during the second quarter of 2021. This decrease is a result of City Bank no longer offering cash letter and courier services to these banks.

Noninterest-bearing deposits were $998.9 million as of June 30, 2021, compared to $962.2 million as of March 31, 2021 and $940.9 million as of June 30, 2020. Noninterest-bearing deposits represented 31.6% of total deposits as of June 30, 2021. The change in noninterest-bearing deposit balances at June 30, 2021 compared to March 31, 2021 was an increase of $36.7 million, or 3.8%. The change in noninterest-bearing deposit balances at June 30, 2021 compared to June 30, 2020 was an increase of $58.1 million, or 6.2%. The changes from both compared periods is primarily a result of organic growth as well as existing customers increasing their balances.

City Bank prepaid $50.0 million and $25.0 million of advances from the Federal Home Loan Bank of Dallas in March 2021 and April 2021, respectively, with no related prepayment fee. Additionally, fed funds purchased from downstream correspondent banks decreased $13.6 million during the second quarter of 2021.

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 impacted by the COVID-19 pandemic with 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 June 30, 2021, total active loan modifications attributed to COVID-19 were $36.6 million, or 1.6% of the Companys loan portfolio, down from $46.9 million, or 2.1% of the Companys loan portfolio, at March 31, 2021. Approximately 96% of these active modified loans at June 30, 2021 are in the hotel portfolio. We expect that these remaining loans on deferral will return to full payment status at the end of their respective deferral period.

The Company recorded a negative provision for loan losses in the second quarter of 2021 of $2.0 million compared to provisions for loan losses of $89 thousand for the first quarter of 2021 and $13.1 million for the second quarter of 2020. The reversal of provision in the second quarter of 2021 is primarily due to the general improvement in the economy, a decline in the amount of loans that are actively under a modification, and a decrease in nonperforming loans. 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 1.87% as of June 30, 2021, compared to 2.01% as of March 31, 2021 and 1.74% as of June 30, 2020. The allowance for loan losses to non-PPP loans held for investment was 1.96% as of June 30, 2021.

The nonperforming assets to total assets ratio as of June 30, 2021 was 0.37%, compared to 0.42% as of March 31, 2021 and 0.33% at June 30, 2020. Annualized net charge-offs were 0.01% for the second quarter of 2021, compared to 0.11% for the first quarter of 2021 and 0.27% for the second quarter of 2020.

Conference Call

South Plains will host a conference call to discuss its second quarter 2021 financial results today, July 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 13720800. The replay will be available until August 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, New Mexico market. 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.bankfor 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.bankand, 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 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, 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 June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020Selected Income Statement Data:Interest income $ 33,016 $ 32,982 $ 33,984 $ 34,503 $ 34,007 Interest expense 3,423 3,438 3,619 3,230 3,559 Net interest income 29,593 29,544 30,365 31,273 30,448 Provision for loan (2,007) 89 141 6,062 13,133 lossesNoninterest income 22,250 26,500 26,172 31,660 24,896 Noninterest expense 36,778 37,057 36,504 35,993 35,207 Income tax expense 3,422 3,738 3,968 4,147 1,389 Net income 13,650 15,160 15,924 16,731 5,615 Per Share Data (Common Stock):Net earnings, basic 0.76 0.84 0.88 0.93 0.31 Net earnings, 0.74 0.82 0.87 0.92 0.31 dilutedCash dividends 0.07 0.05 0.05 0.03 0.03 declared and paidBook value 21.89 20.75 20.47 19.52 18.64 Tangible book value 20.43 19.28 18.97 18.00 17.06 Weighted averageshares outstanding, 18,039,553 18,069,186 18,053,467 18,059,174 18,061,705 basicWeighted averageshares outstanding, 18,553,050 18,511,120 18,366,129 18,256,161 18,224,630 dilutiveShares outstanding 18,014,398 18,053,229 18,076,364 18,059,174 18,059,174 at end of periodSelected Period End Balance Sheet Data:Cash and cash 383,949 413,406 300,307 290,885 256,101 equivalentsInvestment 777,613 777,208 803,087 726,329 730,674 securitiesTotal loans held 2,303,462 2,242,676 2,221,583 2,288,234 2,331,716 for investmentAllowance for loan 42,963 45,019 45,553 46,076 40,635 lossesTotal assets 3,714,354 3,732,894 3,599,160 3,542,666 3,584,532 Interest-bearing 2,159,554 2,193,427 2,057,029 2,037,743 2,006,984 depositsNoninterest-bearing 998,941 962,205 917,322 906,059 940,853 depositsTotal deposits 3,158,495 3,155,632 2,974,351 2,943,802 2,947,837 Borrowings 125,965 164,553 223,532 204,704 252,430 Total stockholders? 394,254 374,671 370,048 352,568 336,534 equitySummary Performance Ratios:Return on average 1.46% 1.66% 1.76% 1.88% 0.64% assetsReturn on average 14.23% 16.51% 17.53% 19.32% 6.81% equityNet interest margin 3.42% 3.52% 3.64% 3.82% 3.79% ^(1)Yield on loans 4.97% 5.07% 5.10% 5.08% 5.06% Cost ofinterest-bearing 0.40% 0.41% 0.45% 0.50% 0.56% depositsEfficiency ratio 70.52% 65.76% 64.19% 56.90% 63.28% Summary Credit Quality Data:Nonperforming loans 12,538 14,316 14,964 15,006 10,472 Nonperforming loansto total loans held 0.54% 0.64% 0.67% 0.66% 0.45% for investmentOther real estate 1,146 1,377 1,353 1,336 1,335 ownedNonperformingassets to total 0.37% 0.42% 0.45% 0.46% 0.33% assetsAllowance for loanlosses to total 1.87% 2.01% 2.05% 2.01% 1.74% loans held forinvestmentNet charge-offs toaverage loans 0.01% 0.11% 0.11% 0.10% 0.27% outstanding(annualized)

As of and for the quarter ended June 30 March 31, December September June 30, 2021 2021 31, 30, 2020 2020 2020Capital Ratios: Totalstockholders? 10.61% 10.04% 10.28% 9.95% 9.39% equity to totalassetsTangible commonequity to 9.98% 9.39% 9.60% 9.25% 8.66% tangible assetsCommon equitytier 1 to 13.12% 13.23% 12.96% 12.49% 10.47% risk-weightedassetsTier 1 capitalto average 10.54% 10.35% 10.24% 10.01% 9.60% assetsTotal capital torisk-weighted 18.92% 19.24% 19.08% 18.67% 14.32% 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 June 30, 2021 June 30, 2020 Average Interest Average Interest Balance Income Yield Balance Income Yield Expense ExpenseAssets Loans, excluding PPP $ 2,211,825 $ 27,084 4.91 % $ 2,204,441 $ 28,825 5.26 %^(1)Loans - PPP 156,977 2,277 5.82 % 171,304 1,076 2.53 %Debt securities - 543,527 2,377 1.75 % 547,971 3,080 2.26 %taxableDebt securities - 220,006 1,465 2.67 % 160,142 1,192 2.99 %nontaxableOtherinterest-bearing 370,634 122 0.13 % 174,753 124 0.29 %assets Totalinterest-earning 3,502,969 33,325 3.82 % 3,258,611 34,297 4.23 %assetsNoninterest-earning 255,093 247,571 assets Total assets $ 3,758,062 $ 3,506,182 Liabilities & stockholders? equityNOW, Savings, MMA?s $ 1,873,699 1,150 0.25 % $ 1,650,159 1,330 0.32 %Time deposits 326,043 1,036 1.27 % 326,561 1,430 1.76 %Short-term 6,429 1 0.06 % 16,449 6 0.15 %borrowingsNotes payable &other long-term 4,121 3 0.29 % 161,099 96 0.24 %borrowingsSubordinated debt 75,682 1,012 5.36 % 26,472 403 6.12 %securitiesJunior subordinateddeferrable interest 46,393 221 1.91 % 46,393 294 2.55 %debentures Totalinterest-bearing 2,332,367 3,423 0.59 % 2,227,133 3,559 0.64 %liabilitiesDemand deposits 1,002,737 901,761 Other liabilities 38,315 45,576 Stockholders? equity 384,643 331,712 Total liabilities & $ 3,758,062 $ 3,506,182 stockholders? equity Net interest income $ 29,902 $ 30,738 Net interest margin 3.42 % 3.79 %^(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 Six Months Ended June 30, 2021 June 30, 2020 Average Interest Average Interest Balance Income Yield Balance Income Yield Expense ExpenseAssets Loans, excluding PPP $ 2,187,470 $ 53,367 4.92 % $ 2,185,728 $ 59,879 5.51 %^(1)Loans - PPP 168,238 5,275 6.32 % 85,652 1,076 2.53 %Debt securities - 544,761 4,809 1.78 % 554,324 6,672 2.42 %taxableDebt securities - 218,351 2,946 2.72 % 119,538 1,694 2.85 %nontaxableOtherinterest-bearing 350,434 222 0.13 % 162,944 858 1.06 %assets Totalinterest-earning 3,469,253 66,619 3.87 % 3,108,186 70,179 4.54 %assetsNoninterest-earning 262,351 249,114 assets Total assets $ 3,731,604 $ 3,357,300 Liabilities & stockholders? equityNOW, Savings, MMA?s $ 1,840,831 2,254 0.25 % $ 1,598,048 3,986 0.50 %Time deposits 325,213 2,089 1.30 % 340,016 3,057 1.81 %Short-term 15,726 5 0.06 % 23,597 99 0.84 %borrowingsNotes payable &other long-term 39,283 38 0.20 % 128,654 453 0.71 %borrowingsSubordinated debt 75,659 2,031 5.41 % 26,472 807 6.13 %securitiesJunior subordinateddeferrable interest 46,393 444 1.93 % 46,393 695 3.01 %debentures Totalinterest-bearing 2,343,105 6,861 0.59 % 2,163,180 9,097 0.85 %liabilitiesDemand deposits 969,040 833,699 Other liabilities 40,958 36,364 Stockholders? equity 378,501 324,057 Total liabilities & $ 3,731,604 $ 3,357,300 stockholders? equity Net interest income $ 59,758 $ 61,082 Net interest margin 3.47 % 3.95 %^(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 June 30, December 31, 2021 2020 Assets Cash and due from banks $ 67,915 $ 76,146 Interest-bearing deposits in banks 316,034 224,161 Federal funds sold ? ? Investment securities 777,613 803,087 Loans held for sale 79,938 111,477 Loans held for investment 2,303,462 2,221,583 Less: Allowance for loan losses (42,963) (45,553) Net loans held for investment 2,260,499 2,176,030 Premises and equipment, net 59,127 60,331 Goodwill 19,508 19,508 Intangible assets 6,718 7,562 Other assets 127,002 120,858 Total assets $ 3,714,354 $ 3,599,160 Liabilities and Stockholders? Equity Liabilities Noninterest bearing deposits $ 998,941 $ 917,322 Interest-bearing deposits 2,159,554 2,057,029 Total deposits 3,158,495 2,974,351 Other borrowings 3,890 101,550 Subordinated debt securities 75,682 75,589 Trust preferred subordinated debentures 46,393 46,393 Other liabilities 35,640 31,229 Total liabilities 3,320,100 3,229,112 Stockholders? Equity Common stock 18,014 18,076 Additional paid-in capital 140,212 141,112 Retained earnings 216,164 189,521 Accumulated other comprehensive income (loss) 19,864 21,339 Total stockholders? equity 394,254 370,048 Total liabilities and stockholders? equity $ 3,714,354 $ 3,599,160

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

Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Interest income: Loans, including fees $ 29,360 $ 29,861 $ 58,640 $ 60,876Other 3,656 4,146 7,358 8,868Total Interest income 33,016 34,007 65,998 69,744Interest expense: Deposits 2,186 2,760 4,343 7,043Subordinated debt 1,012 403 2,031 807securitiesTrust preferredsubordinated 221 294 444 695debenturesOther 4 102 43 552Total Interest expense 3,423 3,559 6,861 9,097Net interest income 29,593 30,448 59,137 60,647Provision for loan (2,007) 13,133 (1,918) 19,367lossesNet interest incomeafter provision for 31,600 17,315 61,055 41,280loan lossesNoninterest income: Service charges on 1,599 1,439 3,172 3,422depositsIncome from insurance 1,240 1,022 2,352 2,181activitiesMortgage banking 13,711 17,955 32,527 26,708activitiesBank card services and 3,073 2,344 5,715 4,582interchange feesOther 2,627 2,136 4,984 4,560Total Noninterest 22,250 24,896 48,750 43,771incomeNoninterest expense: Salaries and employee 23,377 21,621 47,695 42,431benefitsNet occupancy expense 3,499 3,586 7,064 7,186Professional services 1,522 1,961 3,095 3,533Marketing and 812 806 1,380 1,574developmentOther 7,568 7,233 14,601 14,494Total noninterest 36,778 35,207 73,835 69,218expenseIncome before income 17,072 7,004 35,970 15,833taxesIncome tax expense 3,422 1,389 7,160 3,135(benefit)Net income $ 13,650 $ 5,615 $ 28,810 $ 12,698

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

As of June 30, December 31, 2021 2020 Loans: Commercial Real Estate $ 682,017 $ 663,344Commercial - Specialized 323,576 311,686Commercial - General 492,314 518,309Consumer: 1-4 Family Residential 375,302 360,315Auto Loans 230,570 205,840Other Consumer 68,098 67,595Construction 131,585 94,494Total loans held for investment $ 2,303,462 $ 2,221,583

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

As of June 30, December 31, 2021 2020 Deposits: Noninterest-bearing demand deposits $ 998,941 $ 917,322NOW & other transaction accounts 361,616 332,829MMDA & other savings 1,470,525 1,398,699Time deposits 327,413 325,501Total deposits $ 3,158,495 $ 2,974,351

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

As of and for the quarter ended June 30, March 31, December 31, September June 30, 2021 2021 2020 30, 2020 2020Efficiency ratioNoninterest $ 36,778 $ 37,057 $ 36,504 $ 35,993 $ 35,207 expense Net interest $ 29,593 $ 29,544 $ 30,365 $ 31,273 $ 30,448 incomeTaxequivalent 309 312 336 322 290 yieldadjustmentNoninterest 22,250 26,500 26,172 31,660 24,896 incomeTotal income $ 52,152 $ 56,356 $ 56,873 $ 63,255 $ 55,634 Efficiency 70.52% 65.76% 64.19% 56.90% 63.28% ratio Noninterest $ 36,778 $ 37,057 $ 36,504 $ 35,993 $ 35,207 expenseLess: netloss on sale - - - - - of securitiesAdjustednoninterest $ 36,778 $ 37,057 $ 36,504 $ 35,993 $ 35,207 expense Total income $ 52,152 $ 56,356 $ 56,873 $ 63,255 $ 55,634 Less: netgain on sale - - - - - of securitiesAdjusted $ 52,152 $ 56,356 $ 56,873 $ 63,255 $ 55,634 total income Adjustedefficiency 70.52% 65.76% 64.19% 56.90% 63.28% ratio Pre-tax,pre-provision incomeNet income $ 13,650 $ 15,160 $ 15,924 $ 16,731 $ 5,615 Income tax 3,422 3,738 3,968 4,147 1,389 expenseProvision for (2,007) 89 141 6,062 13,133 loan losses Pre-tax,pre-provision $ 15,065 $ 18,987 $ 20,033 $ 26,940 $ 20,137 income

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

As of June 30, March 31, December 31, September 30, June 30, 2021 2021 2020 2020 2020Tangible common equityTotal commonstockholders? $ 394,254 $ 374,671 $ 370,048 $ 352,568 $ 336,534 equityLess:goodwill and (26,226) (26,648) (27,070) (27,502) (28,414) otherintangibles Tangible $ 368,028 $ 348,023 $ 342,978 $ 325,066 $ 308,120 common equity Tangible assetsTotal assets $ 3,714,354 $ 3,732,894 $ 3,599,160 $ 3,542,666 $ 3,584,532 Less:goodwill and (26,226) (26,648) (27,070) (27,502) (28,414) otherintangibles Tangible $ 3,688,128 $ 3,706,246 $ 3,572,090 $ 3,515,164 $ 3,556,118 assets Shares 18,014,398 18,053,229 18,076,364 18,059,174 18,059,174 outstanding Totalstockholders? 10.61% 10.04% 10.28% 9.95% 9.39% equity tototal assetsTangiblecommon equity 9.98% 9.39% 9.60% 9.25% 8.66% to tangibleassetsBook value $ 21.89 $ 20.75 $ 20.47 $ 19.52 $ 18.64 per shareTangible bookvalue per $ 20.43 $ 19.28 $ 18.97 $ 18.00 $ 17.06 share