Executive Summary

Q3 2025 delivered stronger profitability: diluted EPS $0.96 and net income $16.3M, with NIM of 4.05% and ROAA of 1.47%; management highlighted underlying NIM of 3.99% ex one-time items and continued deposit cost tailwinds .
Versus S&P Global consensus, EPS was a clear beat (0.96 vs 0.855*), while revenue was ~in line to slightly below ($53.68M actual vs $54.07M*); print quality aided by lower provision ($0.5M) and steady NII growth despite MSR headwinds .
Credit trends improved: NPA/Assets 0.26% (from 0.25% in Q2; 0.59% prior-year) and ACL/Loans 1.45%; classified loans fell $21.1M; a $32M multifamily credit was fully collected; indirect auto performance remained stable with low delinquencies .
Deposits grew 3.8% QoQ to $3.88B with noninterest-bearing mix at 27.0%; management redeemed $50M of sub debt at the call window (would have floated to ~8%), supporting forward NIM resilience and capital (CET1 14.41%) .
Catalysts: continued expense discipline (efficiency 60.7%), deposit repricing leverage, hiring plan (up to +20% lenders) to reaccelerate loan growth, and optionality from accretive M&A; near-term NIM may wobble +/- a couple bps as rate cuts work through deposits .

What Went Well and What Went Wrong

What Went Well
- EPS beat on disciplined provisioning and NII growth: EPS $0.96 vs 0.855* consensus; provision fell to $0.5M from $2.5M; NII rose to $43.0M .
- Deposit growth and funding costs: total deposits +$142.2M QoQ to $3.88B; average cost of deposits declined to 2.10% (down 4 bps QoQ) and cost of interest-bearing deposits to 2.87% .
- Asset quality and capital: NPA/Assets 0.26%; full repayment of a $32M multifamily loan; CET1 14.41%, TCE/TA 10.25%; sub debt redemption reduces future funding cost risk .
What Went Wrong
- Noninterest income softness: mortgage banking revenues declined $1.0M QoQ driven by a larger MSR fair value write-down ($925K vs $156K in Q2) as rates fell, weighing on total revenues .
- Loan balances dipped QoQ: Loans HFI fell $45.5M, largely from $39.6M payoffs in multifamily; management cited elevated paydowns as a growth headwind (expects moderating into 2026) .
- One-time NIM items: underlying NIM improvement masked by timing of workout-related interest ($640K in Q3 vs $1.7M recovery in Q2); ex-items NIM rose to 3.99% but headline NIM dipped 2 bps QoQ .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Net Interest Income ($M)	$37.294	$42.503	$43.019
Noninterest Income ($M)	$10.635	$12.165	$11.165
Net Income ($M)	$11.212	$14.605	$16.318
Diluted EPS ($)	$0.66	$0.86	$0.96
NIM (tax-equivalent, %)	3.65%	4.07%	4.05%
NIM ex. one-time items (%)	—	3.90%	3.99%
ROAA (%)	1.05%	1.34%	1.47%
Efficiency Ratio (%)	68.80%	61.11%	60.69%
Provision for Credit Losses ($M)	$0.495	$2.500	$0.500

KPIs (as of period-end unless noted)

KPI	Q3 2024	Q2 2025	Q3 2025
Loans HFI ($B)	$3.037	$3.099	$3.054
Deposits ($B)	$3.719	$3.739	$3.881
Noninterest-bearing Deposits ($B)	$0.998	$0.999	$1.050
NPL/Loans (%)	0.81%	0.34%	0.32%
NPA/Assets (%)	0.59%	0.25%	0.26%
ACL/Loans (%)	1.41%	1.45%	1.45%
Net Charge-offs (annualized, %)	0.11%	0.06%	0.16%
Avg Loan Yield (%, quarterly)	6.68%	6.99%	6.92%
Cost of Int.-bearing Deposits (%)	3.36%	2.91%	2.87%
Average Cost of Deposits (%)	2.47%	2.14%	2.10%

Segment/Portfolio Snapshots

Loan Composition ($M, Q3 2025): CRE $1,035.9; Commercial – Specialized $377.8; Commercial – General $629.3; 1–4 Family $592.6; Auto $256.3; Other Consumer $63.7; Construction $97.9; Total $3,053.5 .
Deposit Composition ($M, Q3 2025): NIB $1,049.5; NOW/Other $1,291.8; MMDA/Other Savings $1,114.9; Time $424.9; Total $3,881.1 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
NIM near-term trajectory	Q4 2025	—	“May see slight decline or +/- a couple of bps near term as rate cuts flow through; deposit repricing to follow”	New commentary
Lending team expansion	Through 2026	—	Plan to increase lending team by up to 20%; already >10% achieved in 2025	New/expanded
Loan growth outlook	FY 2026	—	Gradual acceleration toward mid-to-high single-digit growth through 2026 as hiring ramps; payoffs expected to moderate	New
Capital actions	Q3 2025	—	Redeemed $50M sub debt at call; avoided float to ~8% (no call expense)	Executed action
Dividend	Q4 2025	$0.15 (Q2)	$0.16 declared for Nov 10, 2025	Raised prior quarter

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
NIM & deposit costs	NIM up to 3.81% in Q1; avg deposit cost 2.19%; NIM 4.07% in Q2, ex-recovery 3.90%; avg deposit cost 2.14% .	NIM 4.05% headline; 3.99% ex one-time; avg deposit cost 2.10% .	Underlying expansion ex one-time, funding costs easing.
Loan growth/payoffs	Q1 modest growth, higher paydowns noted; Q2 loans +$23.1M but multifamily payoffs of $49.1M .	Loans -$45.5M QoQ on $39.6M multifamily payoffs; expects moderation in payoffs into 2026 .	Payoffs still a headwind near term; hiring to offset.
Hiring & growth strategy	Adding lenders to drive expansion; recruited in Dallas in Q2 .	Plan to add up to +20% lenders; already >10% achieved; focus Permian, Houston, Dallas .	Accelerating.
M&A stance	Exploring opportunities; disciplined on culture/returns .	Continues dialogues; will only do culturally aligned, accretive deals; sees more activity in market .	Optionality rising.
Mortgage/MSR	Q1 MSR FV -$1.6M weighed on fees; Q2 MSR FV -$156K rebound .	MSR FV -$925K on rate declines; mortgage banking down $1.0M QoQ .	Volatile with rates.
CRE exposure	NOO CRE 40.0% in Q1 → 38.3% in Q2 .	NOO CRE 37.1% of loans; office 4.7%, W.A. LTV 58% .	Mix declining; conservative stance.
Credit quality	NPA/Assets fell to 0.16% in Q1; increased in Q2 to 0.25% on downgrades .	NPA/Assets 0.26%; classified down $21.1M; full collection of $32M multifamily .	Stabilizing/improving.

Management Commentary

“We delivered strong third quarter results highlighted by solid earnings growth as we continued to experience net interest income expansion supported by our low cost, community-based deposit franchise… I believe the Bank is firmly positioned to accelerate our asset growth through both organic expansion and accretive M&A opportunities.” – CEO Curtis Griffith .
“Excluding these one-time items in both periods, our third quarter NIM increased by nine basis points to 3.99% from the linked quarter.” – CFO Steve Crockett .
“Our goal is to grow our lending platform by up to 20%, and we are more than halfway there, having added lenders in Houston and Midland since our last call.” – President Cory Newsom .
“On September 30, 2025, we redeemed $50 million in subordinated debt… we made the decision to repay the debt given the higher rates combined with our view that we can readily access the fixed income market if and when a need arises.” – CFO Steve Crockett .

Q&A Highlights

Hiring cadence and expense impact: base of ~40 lenders; plan +20% with >10% achieved; focus markets Permian, Houston, Dallas; non-interest expense to “modestly increase” as hires stagger in; incentive comp payout timing pushes cash costs into next year .
Sub debt redemption economics: previous fixed 4.5% would have reset near 8%; redemption executed within call period with no incremental P&L charge .
NIM outlook: starting point ~3.99% ex one-time; near-term could be +/- a couple of bps with deposit indices lagging and loan repricing mix; slight decline possible before deposit repricing catches up .
Indirect auto: portfolio stable with 30+ DPD down to 24 bps; credit score “migration” in deck reflects updated scores, not at-origination; subprime+deep subprime exposure <~$20M and non-auto <2% .
CRE/multifamily: ~$100M decline over three quarters; exits included two large credits without loss; unwilling to lower standards to retain low-rate loans; payoffs expected to continue near-term but many were below-market-rate assets .

Estimates Context

EPS vs. Consensus (S&P Global)

Metric	Q2 2025	Q3 2025	Q4 2025 (next)
Primary EPS Consensus Mean ($)*	0.77*	0.855*	0.875*
Diluted EPS Actual ($)	0.86	0.96	—
Outcome	Beat	Beat	—

Revenue vs. Consensus (S&P Global)

Metric	Q2 2025	Q3 2025	Q4 2025 (next)
Revenue Consensus Mean ($) (Total)*	52.018M*	54.071M*	54.114M*
Revenue Actual ($)	52.168M [functions.GetEstimates]	53.684M [functions.GetEstimates/log]	—
Outcome	Beat/Inline	Slight Miss	—

*Values retrieved from S&P Global.

Context: The EPS beat was driven by lower provisioning ($0.5M vs $2.5M in Q2), steady NII, and deposit cost improvement; revenue softness reflected lower mortgage banking/MSR marks .

Key Takeaways for Investors

Quality beat on EPS with underlying NIM improvement ex one-time items; deposit costs continue to decline, supporting core margin durability into a rate-cutting environment .
Funding strength: deposits +3.8% QoQ; NIB mix at 27% and cost of interest-bearing deposits down to 2.87% – a competitive funding position vs. peers .
Asset quality improving and de-risking ongoing: full collection of a $32M multifamily loan; classified loans down $21.1M; NPA/Assets ~0.26% .
Capital and liability optimization: $50M sub debt redeemed ahead of a reset to ~8%, reducing future funding cost pressure; CET1 14.41%, TCE/TA 10.25% provides optionality (buybacks/M&A/growth) .
Growth algorithm: near-term loan paydowns remain a headwind, but lender hiring (+20% plan) and market dislocation in Texas should reaccelerate loan growth to mid-to-high single digits through 2026, adding operating leverage .
Watch list: MSR fair value remains a swing factor with rate moves; management expects mortgage volumes to recover as rates ease, but quarter-to-quarter noise likely persists .
Near-term NIM: management guides to slight +/- variability as deposit indices catch up; expect gradual stabilization as repricing flows through – focus on core NIM (ex one-offs) trajectory .

Guidance Changes (Expanded Notes)

Dividend raised to $0.16 per share for November 10, 2025, signaling confidence in earnings and capital .
No formal quantitative revenue or expense guidance issued; qualitative color indicates disciplined OpEx, modest increases tied to hiring, and continued focus on efficiency .

Additional Detail: Drivers and “Why”

EPS beat vs. consensus stems from: (i) $2.0M+ sequential swing in provision ($2.5M → $0.5M), (ii) +$0.5M QoQ NII gain, and (iii) deposit cost declines; partially offset by a ~$1.0M drop in mortgage banking/MSR .
NIM dynamics: headline -2 bps QoQ reflects timing of workout items ($640K in Q3 vs $1.7M in Q2); ex one-time, core NIM +9 bps QoQ to 3.99%, aided by lower funding costs and stable earning asset yields .
Credit narrative: provision normalization on improved specific reserves and lower balances; NPLs to loans down YoY to 0.32% and NPAs to assets 0.26%, supporting lower through-the-cycle loss content .

SOUTH PLAINS FINANCIAL, INC. (SPFI)·Q3 2025 Earnings Summary