South Plains Financial (SPFI) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $11.2 million ($0.66 per diluted share), unchanged from Q2 2024 but down from $13.5 million ($0.78 per share) in Q3 2023; return on average assets was 1.05%.

• The company remains well-capitalized, with tangible common equity to tangible assets at 9.77% and total risk-based capital ratio at 17.61%.

• Management is focused on credit discipline, liquidity, and expects easing deposit cost pressures to support margins.

• Optimism is rising among customers, with a strong new business pipeline and cautious optimism for loan growth ahead.

Financial highlights

• Net interest income for Q3 2024 was $37.3 million, up from $35.9 million in Q2 2024 and $35.7 million in Q3 2023; net interest margin was 3.65%.

• Noninterest income was $10.6 million, down from $12.7 million in Q2 2024 and $12.3 million in Q3 2023, mainly due to lower mortgage banking revenues.

• Noninterest expense was $33.1 million, up from $32.6 million in Q2 2024 and $31.5 million in Q3 2023, driven by higher IT, occupancy, and marketing costs.

• Provision for credit losses was $495 thousand, down from $1.8 million in Q2 2024 and up from a negative $700 thousand in Q3 2023.

• Deposits totaled $3.72 billion, up 2.6% from Q2 2024 and 2.7% year-over-year; loans held for investment were $3.04 billion, down 1.8% sequentially but up 1.5% year-over-year.

Outlook and guidance

• Management expects easing deposit cost pressures and continued deposit growth to support net interest margin.

• Cautious optimism for accelerating loan growth in coming quarters, with a strong business production pipeline.

• Loan growth expected to be flat in Q4 due to seasonal payoffs, but momentum is building for 2025.

• Margin projected to improve as rates decline, though short-term NIM pressure may occur due to excess liquidity.

• Uncertainty remains regarding economic conditions, inflation, and interest rates, which may impact credit quality and future provisions.