On July 18, 2024, South Plains Financial Inc (SPFI, Financial) released its 8-K filing reporting financial results for the quarter ended June 30, 2024. South Plains Financial Inc operates as a bank holding company, providing a wide range of commercial and consumer financial services to small and medium-sized businesses and individuals. The company’s principal business activities include commercial and retail banking, insurance, investment, trust, and mortgage services.
Performance Overview
South Plains Financial Inc (SPFI, Financial) reported net income of $11.1 million for Q2 2024, translating to earnings per share (EPS) of $0.68, surpassing the analyst estimate of $0.59. However, the company’s revenue of $47.6 million fell short of the estimated $46.53 million.
Net Interest Income and Margin
Net interest income for the quarter was $35.9 million, up from $35.4 million in Q1 2024 and $34.6 million in Q2 2023. The net interest margin expanded to 3.63%, compared to 3.56% in the previous quarter and 3.65% in the same quarter last year. The average yield on loans increased to 6.60% from 6.53% in Q1 2024 and 5.94% in Q2 2023.
Noninterest Income and Expense
Noninterest income was $12.7 million, up from $11.4 million in Q1 2024 but significantly lower than $47.1 million in Q2 2023, which included a $33.5 million gain on the sale of Windmark. Noninterest expense increased to $32.6 million from $31.9 million in Q1 2024 but decreased from $40.5 million in Q2 2023.
Loan Portfolio and Deposits
Loans held for investment grew to $3.09 billion as of June 30, 2024, up from $3.01 billion as of March 31, 2024. Deposits totaled $3.62 billion, a slight decrease from $3.64 billion in the previous quarter but up from $3.57 billion in Q2 2023. Noninterest-bearing deposits were $951.6 million, down from $974.2 million in Q1 2024 and $1.10 billion in Q2 2023.
Asset Quality and Capital
The provision for credit losses was $1.8 million, up from $830 thousand in Q1 2024 but down from $3.7 million in Q2 2023. The ratio of nonperforming assets to total assets increased to 0.57% from 0.10% in Q1 2024 and 0.51% in Q2 2023. Book value per share rose to $25.45 from $24.87 in the previous quarter.
Commentary
Curtis Griffith, South Plains’ Chairman and Chief Executive Officer, commented, “Our second quarter results demonstrate our successful efforts to drive profitability and returns as we continue to strive to be a high performing bank. Strength in the quarter came from robust loan growth which lifted the yield on our loan portfolio and contributed to our net interest margin expansion. We also continued to closely manage our liquidity with a focus on maximizing the profitability and returns of the Bank.”
Financial Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Interest Income | $35.9 million | $35.4 million | $34.6 million |
| Net Interest Margin | 3.63% | 3.56% | 3.65% |
| Noninterest Income | $12.7 million | $11.4 million | $47.1 million |
| Noninterest Expense | $32.6 million | $31.9 million | $40.5 million |
| Net Income | $11.1 million | $10.9 million | $29.7 million |
| EPS | $0.68 | $0.66 | $1.74 |
Analysis
South Plains Financial Inc (SPFI, Financial) demonstrated strong loan growth and effective management of net interest margins, which are crucial for maintaining profitability in the banking sector. The increase in net interest income and margin expansion highlights the company’s ability to navigate a challenging interest rate environment. However, the decline in noninterest income compared to the previous year, primarily due to the absence of one-time gains, underscores the importance of sustainable revenue streams.
Overall, South Plains Financial Inc (SPFI, Financial) has shown resilience and strategic growth, positioning itself well for future opportunities despite facing competitive pressures and economic uncertainties.
Explore the complete 8-K earnings release (here) from South Plains Financial Inc for further details.
