South Plains Financial Reports $49.7 Million Net Income for 2024, Down 20.8% from 2023

South Plains Financial, Inc. (SPFI) reported net income of $49.7 million, or $2.92 per diluted share, for the year ended December 31, 2024, a decrease of $12.9 million (20.8%) compared to the $62.7 million (or $3.62 per diluted share) reported in 2023. This decrease stemmed primarily from a $31.2 million (39.3%) decline in noninterest income, partially offset by a $7.4 million (5.3%) increase in net interest income and a $7.4 million (5.5%) decrease in noninterest expenses. Return on average assets fell to 1.17% from 1.54% in 2023, while return on average equity decreased to 11.75% from 16.58%.

The decrease in noninterest income was largely due to the sale of Windmark Insurance Agency, Inc. in April 2023, resulting in a $33.8 million pre-tax gain in 2023 that did not recur in 2024. Other contributing factors to the decrease included a decline in mortgage loan originations and a decrease in income from insurance activities. The increase in net interest income resulted from a 13.6% increase in interest income, primarily driven by loan growth and higher loan yields, partially offset by a 29.8% increase in interest expense due to higher interest-bearing liabilities and increased rates paid on deposits.

SPFI's total assets increased slightly to $4.23 billion at the end of 2024, while total deposits remained relatively stable at $3.62 billion. The company's loan portfolio grew by $40.9 million (1.4%) to $3.06 billion, with increases in commercial real estate, residential mortgage, and energy loans partially offset by decreases in consumer auto and residential construction loans. As of December 31, 2024, SPFI employed approximately 600 people, including 528 full-time employees. The company operates 25 full-service banking locations and 7 loan production offices across seven geographic markets in Texas and New Mexico.

SPFI's mortgage originations totaled $292.6 million in 2024, with servicing rights retained on approximately 31% of these mortgages. The company's trust department managed $423 million in assets, contributing $2.7 million in fee income, while investment services generated $1.7 million in gross revenue and managed $605.7 million in assets. The company's allowance for credit losses increased to $43.2 million at the end of 2024, reflecting a provision for credit losses of $4.3 million and net charge-offs of $3.5 million. Nonperforming assets increased to $24.0 million (0.79% of total loans) from $5.2 million (0.17%) at the end of 2023.

SPFI's 10-K filing highlights several risk factors, including interest rate risk, economic downturns, credit risk, cybersecurity threats, and regulatory changes. The company's ability to successfully execute its acquisition strategy and manage its growth, particularly in light of potential economic headwinds and increased competition, is also identified as a key area of focus. The company's outlook is contingent upon various factors, including prevailing economic conditions, interest rate fluctuations, and the successful execution of its strategic initiatives.