South Plains signals mid-single-digit 2026 loan growth while targeting ~85% loan-to-deposit ratio amid CEO transition

Earnings Call Insights: South Plains Financial (SPFI) Q3 2026

Management View

• "As I prepare to retire as Chief Executive Officer at the end of this year... I will remain involved as Chairman of both South Plains and City Bank." (Chairman & CEO Curtis Griffith)
• "The strong results we delivered during the third quarter, including near-record earnings per share, stable profitability, and solid organic loan growth, reinforced that confidence." (Chairman & CEO Curtis Griffith)
• "Net income increased to $20.8 million compared to $19 million in the second quarter." (Executive VP, COO & Director Cory Newsom)
• "We also delivered diluted earnings per share of $1.06 as compared to $0.96 in a linked quarter." (Executive VP, COO & Director Cory Newsom)
• "Loans held for investment increased by approximately $60 million... representing 6.3% annualized organic loan growth... and ended the period at $3.83 billion." (Executive VP, COO & Director Newsom)
• "We remain confident in delivering our full-year loan growth guidance in the mid-single digits." (Executive VP, COO & Director Newsom)
• "In Houston specifically, we continue to be pleased with our progress following the Bank of Houston acquisition... With those efforts now largely behind us, our Houston bankers are now able to focus more fully on business development." (Executive VP, COO & Director Newsom)
• "Non-interest income totaled $13.8 million... compared to $14.1 million in the second quarter... primarily driven by lower bank card services and interchange revenue" and "mortgage banking revenues totaled $4.9 million and benefited from a $1.6 million increase in the value of our mortgage servicing rights asset." (Executive VP, COO & Director Newsom)
• "For the third quarter, diluted earnings per share, $1.06 compared to $0.96 from the linked quarter" and "these results were achieved while absorbing approximately $875,000 of accrued expense associated with Curtis's retirement." (CFO & Treasurer Steven Crockett)

Outlook

• "Based on current production trends and pipeline activity, we remain confident in delivering our full-year loan growth guidance in the mid-single digits." (Executive VP, COO & Director Newsom)
• "Looking ahead, our focus remained on maintaining our NIM at current levels while growing our balance sheet." (CFO & Treasurer Crockett)
• "Loan-to-deposit ratio up to 85% or so is where we would like for it to be." (CFO & Treasurer Crockett)
• Compared with Q2, management’s loan-growth framing stayed consistent: "we remain confident in delivering our full year loan growth guidance in the mid-single digits." (Executive VP, COO & Director Newsom, Q2)

Financial Results

• "Net interest income was $51.5 million... up... from the linked quarter" and "Our net interest margin on a tax-equivalent basis remained stable at 4%." (CFO & Treasurer Crockett)
• "Deposits increased by $20 million from the linked quarter at $4.66 billion" and "Non-interest-bearing deposits increased to $1.18 billion and represented 25.3% of total deposits." (CFO & Treasurer Crockett)
• "Our cost of deposits improved slightly... declining 1 basis point to 207 basis points." (CFO & Treasurer Crockett)
• "We did experience a modest increase in non-performing loans... While non-performing loans increased to 40 basis points of total loans... subsequent to quarter end, we have already seen the largest of these credits return to performing status." (CFO & Treasurer Crockett)
• "Non-interest expense decreased by $1.8 million to $38.1 million" and "our efficiency ratio improved to 58.1%." (CFO & Treasurer Crockett)
• "Tangible common equity to tangible assets of 10.32%" and "a common equity tier 1 ratio of 14.2%." (CFO & Treasurer Crockett)

Q&A

• Brett Rabatin, StoneX Financial, Inc., Research Division: asked about NIM outlook, deposit “hot money” runoff, and new loan pricing; CFO Crockett said, "Just really want to try to keep the NIM in a fairly close range of where we're at," while Chief Credit Officer Brent Bates added, "typically seeing upper 6s on new loan origination volume."
• Brett Rabatin, StoneX Financial, Inc., Research Division: asked about expense run-rate, hires, and Bank of Houston savings; CFO Crockett said the retirement accrual "should be down" and on 2027, "those do start going up but percentage-wise, I wouldn't like to see non-interest expense percent increase," while Chief Banking Officer Tyler Haynes said, "we'll continue to do that... wait for it to be the right time for them to join your team."
• Joseph Yanchunis, Raymond James & Associates, Inc., Research Division: asked whether Q3 loan-growth momentum can extend into 2027; Bates said, "our pipeline over the second half of the year has been much stronger than the first" and "I feel very good about hitting our year projection for growth for sure."
• Joseph Yanchunis, Raymond James & Associates, Inc., Research Division: asked about future payoffs; Bates said, "we will have more likely in the fourth quarter" but added it is "baked... into our thought process" for meeting year-end goals.
• Joseph Yanchunis, Raymond James & Associates, Inc., Research Division: asked about the NPL uptick and whether it was acquired; Bates said, "those were acquired," adding "the largest of the two has already been resolved," while CFO Crockett noted, "They were already classified loans."
• Joseph Yanchunis, Raymond James & Associates, Inc., Research Division: asked about selling indirect auto loans; Newsom said, "No, not really," and CFO Crockett added, "the super-prime and prime portion of the portfolio is 90% roughly."
• Stephen Scouten, Piper Sandler & Co., Research Division: asked remaining Bank of Houston cost saves timing; CFO Crockett said, "Pretty much everything's in place now with them" and "the bulk of it was in Q2."
• Stephen Scouten, Piper Sandler & Co., Research Division: asked balance-sheet mix and loan-to-deposit target; CFO Crockett said, "loan-to-deposit ratio up to 85% or so is where we would like for it to be" and on securities, "Not looking to increase overall securities portfolio."
• Stephen Scouten, Piper Sandler & Co., Research Division: asked NIM sensitivity and spreads if rates rise; CFO Crockett said, "we're just pretty neutral overall" and "there's just not a whole lot of overall effect to us," while noting funding pressure: "CDs and money markets... now... in the 4s."

Sentiment Analysis

• Analysts: slightly positive, with supportive framing such as "good to see the margin stability" (Brett Rabatin, StoneX Financial, Inc., Research Division) and "The timeline you laid out is great" (Stephen Scouten, Piper Sandler & Co., Research Division), while still pressing on payoffs, NIM durability, and expense trajectory.
• Management: slightly positive and execution-focused, anchored by phrases including "remain confident" on loan growth (Executive VP, COO & Director Newsom) and "maintaining our NIM at current levels" (CFO & Treasurer Crockett), with measured caution on pricing math: "that math doesn't work real well in the short term" (CFO & Treasurer Crockett).
• Versus Q2: the tone remained steady, but Q3 placed more emphasis on integration being "largely behind us" (Executive VP, COO & Director Newsom) and on normalization of one-time items (CFO & Treasurer Crockett: retirement accrual "now largely behind us").

Quarter-over-Quarter Comparison

• Leadership transition remained central in both quarters, with Q3 reiterating, "the leadership transition... has been planned for many years" (Chairman & CEO Griffith) and Q2 spelling out timing: "Cory will then take over as CEO on January 1, 2027" (Chairman & CEO Griffith, Q2).
• Bank of Houston narrative shifted from integration completion in Q2 ("integration... has been largely completed" (Executive VP, COO & Director Newsom, Q2)) to Q3’s pivot toward growth ("our Houston bankers are now able to focus more fully on business development" (Executive VP, COO & Director Newsom)).
• Profitability metrics improved sequentially in Q3 (net income and diluted EPS up vs. Q2 as stated by Newsom), while Q2 messaging emphasized acquisition-driven balance sheet expansion ("$632 million in loans from our Bank of Houston acquisition" (Executive VP, COO & Director Newsom, Q2)).
• Analyst focus stayed consistent across quarters around NIM, Bank of Houston cost saves, loan growth/payoffs, and balance sheet targets; Q3 added more questioning on auto loan portfolio strategy.

Risks and Concerns

• "The market interest rate environment remains volatile" and the company highlighted an emphasis on "balancing prudent growth with profitability." (Executive VP, COO & Director Newsom)
• Funding costs remained a watch item as the company noted external pricing pressure: "deposit rates out there... now... backed up in the 4s" versus loan yields, which management said "doesn't work real well in the short term." (CFO & Treasurer Crockett)
• Credit migration in acquired loans was acknowledged: "We did experience a modest increase in non-performing loans... primarily related to Bank of Houston acquired loans." (CFO & Treasurer Crockett)

Final Takeaway

Management described Q3 as a quarter of higher sequential profitability, stable margin, and accelerating organic loan growth, while positioning the Bank of Houston integration as largely complete and shifting attention toward business development in Houston and banker recruiting across Texas. The company reiterated mid-single-digit full-year loan growth confidence, highlighted an ~85% loan-to-deposit target as a balance-sheet guidepost, and characterized the quarter’s uptick in non-performing loans as mainly tied to acquired credits that were already being worked, including one large credit returning to performing status after quarter-end.

Read the full Earnings Call Transcript

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