South Plains Financial ((SPFI)) has held its Q3 earnings call. Read on for the main highlights of the call.
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South Plains Financial’s recent earnings call reflected a generally positive sentiment, underscored by strong financial performance and strategic initiatives. The company reported significant improvements in earnings growth, capital ratios, and asset quality. Despite facing challenges such as a decrease in loans held for investment and noninterest income, along with higher-than-normal loan paydowns, South Plains Financial’s strategic initiatives and successful expansion of their lending team position them well for future growth.
Strong Financial Position and Earnings Growth
South Plains Financial showcased robust earnings growth, driven by an expansion in net interest income and improved credit quality within their loan portfolio. The company’s return on assets saw a significant increase, highlighting a solid financial foundation that supports its ongoing operations and growth strategies.
Capital Ratios and Dividend Payout
As of September 30, 2025, South Plains Financial reported a consolidated common equity Tier 1 risk-based capital ratio of 14.41% and a Tier 1 leverage ratio of 12.37%. The announcement of a quarterly dividend of $0.16 per share, marking the 26th consecutive dividend, underscores the company’s commitment to returning value to shareholders.
Successful Lending Team Expansion
The company has successfully expanded its lending team by over 10%, with plans to increase it by up to 20% next year. This expansion includes adding lenders in key markets such as Houston and Midland, positioning South Plains Financial to capitalize on growth opportunities in these areas.
Improved Asset Quality and Reduced Classified Loans
South Plains Financial reported a decrease in classified loans by $21.1 million during the quarter, including the full collection of a $32 million multifamily property loan. This improvement in asset quality reflects the company’s effective risk management strategies.
Decrease in Loans Held for Investment
Loans held for investment decreased by $45.5 million to $3.05 billion in the third quarter, primarily due to a reduction in multifamily property loans. This decrease presents a challenge that the company aims to address through strategic growth initiatives.
Decrease in Noninterest Income
Noninterest income fell to $11.2 million from $12.2 million in the previous quarter, mainly due to a $1 million decrease in mortgage banking revenues. This decline highlights an area where the company may need to focus on stabilization and growth.
Higher-Than-Normal Loan Paydowns
The company experienced higher-than-normal loan paydowns, which have been a headwind to loan growth. However, this trend is expected to moderate in 2026, providing a more stable environment for loan growth.
Forward-Looking Guidance
During the earnings call, South Plains Financial provided forward-looking guidance that emphasized its strong financial position and strategic growth initiatives. The company plans to expand its lending team by up to 20% to drive loan growth and is focused on both organic growth and potential accretive M&A opportunities. The continuation of a $0.16 per share quarterly dividend and a share buyback program reflects the company’s strategy to balance growth with returning value to shareholders.
In conclusion, South Plains Financial’s earnings call conveyed a positive outlook, supported by strong financial performance and strategic initiatives. While challenges such as decreased loans held for investment and noninterest income exist, the company’s proactive measures and successful lending team expansion position it well for future growth. Investors can be optimistic about South Plains Financial’s ability to navigate these challenges and maintain a trajectory of growth.