South Plains Financial (SPFI) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $11.1M ($0.66 per diluted share), up from $10.9M in Q1 2024 but down from $29.7M in Q2 2023, which included a $33.5M pre-tax gain from the sale of Windmark Insurance Agency.

• Diluted EPS rose to $0.66 from $0.64 in Q1 2024, driven by robust organic loan growth and margin expansion.

• Tangible book value per share increased to $24.15 at June 30, 2024, from $23.56 at March 31, 2024.

• Forbes ranked City Bank 12th in 2024 Best Banks in America; S&P Global ranked 28th among U.S. community banks with $3–$10B assets.

• Return on average assets was 1.07% for Q2 2024.

Financial highlights

• Net interest income was $35.9M, up from $35.4M in Q1 2024 and $34.6M in Q2 2023; net interest margin expanded to 3.63% from 3.56% in Q1.

• Noninterest income was $12.7M, up from $11.4M in Q1 2024 but down from $47.1M in Q2 2023 due to the prior year's Windmark sale.

• Noninterest expense increased to $32.6M from $31.9M in Q1 2024, mainly due to higher mortgage commission expense.

• Efficiency ratio improved to 66.7% from 67.9% sequentially.

• Provision for credit losses was $1.8M, up from $830K in Q1 2024 and down from $3.7M in Q2 2023.

Outlook and guidance

• Management expects NIM expansion to moderate in the second half as deposit costs rise and loan growth normalizes.

• Project low to mid-single-digit loan growth for full year 2024, with potential upside if payoffs are lower than anticipated.

• Anticipate modest rise in non-interest expense in Q3.

• Strategic initiatives are in place to stabilize noninterest-bearing deposits and grow core deposits.

• Management remains focused on credit quality and maintaining capital levels well above regulatory minimums.