South Plains Financial (NASDAQ:SPFI) executives highlighted full-year earnings growth, net interest margin (NIM) expansion, and progress on strategic initiatives during the company’s fourth-quarter 2025 earnings call, while also outlining expectations for accelerating loan growth in 2026 and discussing the pending acquisition of BOH Holdings and its banking subsidiary, Bank of Houston.
2025 performance and quarterly results
Chairman and CEO Curtis Griffith said management was “very pleased” with results for both the quarter and the full year, crediting employee efforts and the company’s relationship-driven culture. For full-year 2025, Griffith pointed to several accomplishments, including a 17.8% increase in diluted earnings per share, loan growth “in line with guidance,” 33 basis points of NIM expansion, and tangible book value per share growth of more than 14% to $29.05. The company’s NIM was 4.00% in the fourth quarter.
Crockett noted that NIM in the third and second quarters included one-time items related to credit workouts and interest recoveries. The third quarter included a 6 basis point impact (about $640,000), and the second quarter included a 17 basis point impact (about $1.7 million). Excluding those items, Crockett said the company delivered “steady NIM expansion” over the past year, though the pace slowed in the fourth quarter.
Loan growth, yields, and 2026 outlook
President Cory Newsom reported that loans held for investment increased $91 million to $3.14 billion in the fourth quarter, driven by organic growth in multifamily property loans, direct energy loans, and other commercial loans. Newsom said average loan balances were “down slightly” in the quarter because most of the growth came late in December, which he said should lift net interest income in the first quarter of 2026.
Loan yields were 6.79% in the fourth quarter, compared with 6.92% in the linked quarter. Newsom emphasized that prior quarters were boosted by one-time items: $640,000 of interest and fees related to credit workout resolutions in the third quarter and a $1.7 million interest recovery tied to the full repayment of a previously non-accrual loan in the second quarter. Excluding those gains, he described loan yields as relatively steady over the past nine months, while adding that management expects yields to moderate in coming quarters as the impact of Federal Reserve rate cuts filters through.
Management reiterated an expectation for mid- to high-single-digit loan growth in 2026, supported by continued hiring of experienced lenders and the pending acquisition of Bank of Houston. Newsom said the company had completed about 50% of its expected lender hiring across Dallas, Houston, and Midland, and reported loan growth momentum in major metropolitan markets including Dallas, Houston, and El Paso, where loans increased by $15 million (or 5.8% annualized) to $1.03 billion.
However, Newsom also cautioned that the first quarter of 2026 could face headwinds from expected payoffs in the multifamily portfolio. In the Q&A portion of the call, Chief Credit Officer Brent Bates said early payoffs were lighter in the fourth quarter than in the prior three quarters, which helped net growth, and that some potential payoffs are expected as borrowers seek long-term fixed-rate financing.
Net interest margin and deposit dynamics
Executives discussed the balance between loan growth and NIM stability in 2026. Crockett said management will “do our best to keep NIM in a similar place to where it is today,” but acknowledged the moving pieces across loan repricing, deposit competition, and market behavior could lead to some compression. Griffith and Crockett both indicated deposit cost management remains central to protecting margin.
Deposits ended the quarter at $3.87 billion, steady from the linked quarter. Crockett said deposits rose $253 million, or 7%, from year-end 2024. Non-interest-bearing deposits declined $26 million in the quarter, bringing the non-interest-bearing deposit ratio to 26.4%, though the company grew non-interest-bearing deposits by $88 million for the full year.
The company’s cost of deposits decreased 9 basis points to 2.01%, which Crockett attributed to deposit repricing following the Fed’s rate reductions from September through December. Looking ahead, he said management expects a modest decline in cost of funds in the first quarter of 2026 given the most recent cut in December.
Bank of Houston acquisition and strategic positioning
Griffith and Newsom emphasized strategic and cultural alignment as key drivers behind the company’s planned acquisition of BOH Holdings/Bank of Houston. Griffith said Bank of Houston would complement South Plains’ existing Houston team and add “meaningful scale and deeply entrenched customer relationships” in a fast-growing market. He also said Bank of Houston’s CEO, Jim Stein, is expected to continue leading his team after closing and will join the boards of South Plains and City Bank.
Management said the combined company is projected to have more than $1 billion in loans in the Houston region and that both institutions share a focus on commercial real estate lending and disciplined underwriting. Financially, Griffith said the merger is expected to be approximately 11% accretive to earnings in 2027, with a tangible book value earnback period of less than three years. The company expects the merger to close early in the second quarter of 2026.
Newsom cited Bank of Houston’s size as of September 30, 2025—about $772 million in assets, $633 million in loans, and $629 million in deposits—as providing a “substantially expanded platform” in Houston. During Q&A, executives said revenue synergies such as expanding product offerings (including treasury management and other services) represent potential opportunities, but indicated such benefits were not being quantified in the modeling discussed on the call.
Griffith said South Plains believes it has the capacity to pursue additional acquisitions and will continue to evaluate opportunities, while emphasizing the bank is not seeking to be a “serial acquirer.”
Credit, expenses, capital, and shareholder returns
On credit, Crockett said the allowance for credit losses was 1.44% of total loans held for investment at December 31, 2025, stable from the prior quarter. The company recorded a $1.8 million provision for credit losses in the fourth quarter, up from $500,000 in the linked quarter, largely tied to loan growth.
Newsom provided updated disclosure on the indirect auto portfolio, which totaled $241 million at quarter-end. He said the bank has been managing the portfolio to maintain credit quality, with balances down $55 million since the third quarter of 2023. Newsom said 30-plus days past due loans were about $464,000, improving 5 basis points to 19 basis points in the fourth quarter. Net charge-offs for all consumer autos were about $382,000 for the quarter, compared with $160,000 in the third quarter.
Non-interest income was $10.9 million in the fourth quarter, compared with $11.2 million in the linked quarter, with the decline primarily due to lower mortgage banking revenue tied to seasonal volume patterns. Non-interest income represented 20% of bank revenues in the quarter.
Non-interest expense was $33 million, unchanged from the linked quarter. Crockett cited higher professional services costs—including about $500,000 of acquisition-related expenses and consulting for technology projects—offset by lower personnel expense. Management indicated expenses may trend modestly higher in the first quarter as hiring and project work continue.
On capital and returns, Crockett said tangible common equity to tangible assets increased to 10.61% at quarter-end. Griffith also noted the board authorized a $0.17 per share quarterly dividend, which he said will be the company’s 27th consecutive dividend, and reiterated that the company intends to maintain its share repurchase program.
About South Plains Financial (NASDAQ:SPFI)
South Plains Financial, Inc is the bank holding company for South Plains Bank, a community-oriented financial institution headquartered in Lubbock, Texas. The company operates as a full-service commercial bank, providing a broad spectrum of banking solutions to individuals, small businesses and agricultural clients. Its principal subsidiary, South Plains Bank, holds state and national banking charters and is subject to regulatory oversight by the Federal Reserve and various state banking authorities.
The company’s product offerings include traditional deposit accounts such as checking, savings and money market accounts, as well as time deposits.
