Executive Summary

Q4 2024 delivered a clean beat operationally: diluted EPS rose to $0.96 versus $0.66 in Q3 and $0.61 in Q4 2023, with NIM expanding 10 bps to 3.75% on lower deposit costs; net income increased to $16.5M, and efficiency improved to 57.5% .
Deposit cost relief and disciplined liquidity drove margin gains; average cost of deposits fell 18 bps sequentially to 229 bps, while loan yields held at 6.69% despite rate cuts and payoff mix shifting away from low-rate loans .
Credit metrics remained stable: ACL/Loans at 1.42%, NPA/Assets at 0.58%, and annualized NCOs at 0.11%; loans HFI grew $17.7M in the quarter as CRE owner-occupied growth offset payoffs .
Management guides to low–mid single-digit loan growth for FY2025 and expects NIM to stabilize with potential incremental improvement; near-term (Q1 2025) noninterest expense to normalize toward Q3 levels; dividend maintained at $0.15/share and buyback capacity in place .
Catalysts: continued deposit repricing, pipeline conversion in major metros (Dallas/Houston/El Paso), mortgage servicing rights fair value tailwinds (+$0.07 EPS in Q4), and potential selective M&A optionality given robust capital ratios (CET1 13.53%, TCE/TA 9.92%) .

What Went Well and What Went Wrong

What Went Well

Margin expansion and earnings leverage: NIM rose to 3.75% on lower deposit costs (2.29% total cost of deposits; 3.12% cost on interest-bearing), driving net interest income to $38.5M; “rate cuts in our case will likely help our NIM… we should still see minor improvements in the NIM” .
Pipeline strength and loan growth: loans HFI increased $17.7M q/q, with $9M growth in major metros to $1.06B; “underlying loan demand has been strong… pipeline at the highest levels since mid-2022” .
Noninterest income mix pivot: mortgage MSR fair value adjustment added ~$3.5M to mortgage revenues and ~$0.07 EPS after-tax; disciplined expense management improved efficiency to 57.5% .

What Went Wrong

Elevated payoffs constrained loan growth: Q4 growth was modest as several clients experienced liquidity events leading to asset sales and debt reduction; management expects payoffs may persist into Q1/Q2 .
Deposit balances declined: total deposits fell $94.8M q/q due to seasonal escrow declines (~$35M) and planned ~$50M sweep reductions, lowering NIB balances and NIB mix to 25.8% .
AOCI pressure and TBV per share: book value fell to $26.67 on AOCI declines from higher long-term rates; TBV per share decreased to $25.40 q/q despite stronger earnings .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Net Interest Income ($MM)	$35.162	$37.294	$38.548
Noninterest Income ($MM)	$9.146	$10.635	$13.319
Net Income ($MM)	$10.324	$11.212	$16.497
Diluted EPS ($)	$0.61	$0.66	$0.96
Net Interest Margin (%)	3.52%	3.65%	3.75%
ROAA (% annualized)	0.99%	1.05%	1.53%
Efficiency Ratio (%)	68.71%	68.80%	57.50%
Average Cost of Deposits (bps)	224	247	229
Yield on Loans (%)	6.29%	6.68%	6.69%
Cost of Interest-Bearing Deposits (%)	3.14%	3.36%	3.12%

Segment and balance sheet mix

Loans HFI ($MM)	12/31/2023	12/31/2024
Commercial Real Estate	$1,081.1	$1,119.1
Commercial – Specialized	$372.4	$389.0
Commercial – General	$517.4	$557.4
1–4 Family Residential	$534.7	$566.4
Auto Loans	$305.3	$254.5
Other Consumer	$74.2	$64.9
Construction	$129.2	$103.9
Total Loans HFI	$3,014.2	$3,055.1

KPIs

KPI	Q4 2023	Q3 2024	Q4 2024
Loans HFI ($MM)	$3,014.153	$3,037.375	$3,055.054
Deposits ($MM)	$3,626.153	$3,719.360	$3,620.876
Noninterest-Bearing Deposits ($MM)	$974.201	$998.480	$935.510
NPLs ($MM)	$5.178	$24.693	$24.023
NPA/Assets (%)	0.14%	0.59%	0.58%
ACL/Loans (%)	1.41%	1.41%	1.42%
Net Charge-Offs (annualized, %)	0.08%	0.11%	0.11%
Tangible Common Equity / Tangible Assets (%)	9.21%	9.77%	9.92%

Estimates vs. Actuals (S&P Global consensus)

Metric	Q4 2024 Consensus	Q4 2024 Actual
Diluted EPS ($)	N/A (consensus unavailable at time of report)	$0.96
Revenue (proxy: NII + Noninterest Income, $MM)	N/A (consensus unavailable at time of report)	NII $38.548; Noninterest $13.319

Note: Wall Street consensus data from S&P Global was unavailable at the time of retrieval due to vendor rate limits; therefore estimate comparisons are qualitative.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Loans HFI Growth	FY2025	Not previously quantified	Low to mid-single-digit growth	Initiated
Net Interest Margin	FY2025	Not previously quantified	Stabilize with potential incremental improvement	Constructive
Noninterest Expense	Q1 2025	Not previously quantified	“More in line with Q3” level	Raised vs Q4 low base
Deposit Costs	Q1 2025	Not previously quantified	“Will still come down just a little bit”	Lowering
Loan Growth Pace	Q1 2025	Not previously quantified	“Relatively flat” given seasonal ag paydowns and elevated payoffs	Cautious near-term
Dividend	Q1 2025 (paid Feb 18)	$0.14 (prior)	$0.15 per share	Increased/maintained trajectory
Share Repurchase Program	Through Feb 26, 2025	$10M program in place	Board to consider renewal; activity likely muted	Maintained optionality

Earnings Call Themes & Trends

Topic	Q2 2024 (Q-2)	Q3 2024 (Q-1)	Q4 2024 (Current)	Trend
NIM trajectory	NIM 3.63%; deposit competition easing	NIM 3.65%; cost pressures easing; supportive outlook	NIM 3.75%; expect stabilization/slight improvement	Improving
Deposit costs	243 bps avg cost	247 bps	229 bps; continued declines expected	Falling
Loan growth/pipeline	+$82.5M q/q; robust production	-$56.9M q/q on payoffs; pipeline strongest in 2 years	+$17.7M q/q; pipeline highest since mid-2022	Building, payoffs offsetting
Mortgage/MSR dynamics	MSR FV relatively flat, volumes down	MSR FV down; noninterest income lower	MSR FV +$3.5M; +$0.07 EPS	Positive in Q4
Indirect auto portfolio	Balances down; managed credit	Down $18M; balances ~$253.5M	Stabilized ~$236M; 30+ DPD 47 bps	Stabilizing
Credit quality	Multifamily nonaccrual emerged	Modified; improving metrics; NPA 0.59%	NPA 0.58%, ACL 1.42%; NOO CRE detailed	Stable
Capital & distributions	Strong ratios; TCE/TA up	CET1 13.25%	CET1 13.53%; dividend $0.15; buyback optionality	Robust
M&A posture	—	—	Expect more activity under new administration; disciplined, high hurdles	Monitoring

Management Commentary

“We will never sacrifice credit quality for loan growth, and I'm very pleased with the continued strong credit quality of our loan portfolio as we enter 2025.” — Curtis Griffith .
“I would hope we could keep [NIM] where it's at and hopefully incrementally improve… deposit costs will still come down just a little bit… loan yields may trend down slightly.” — Steven Crockett .
“Our pipeline is much better than it was this time last year… we feel optimistic about it.” — Brent Bates .
“Fourth quarter earnings were positively impacted by $0.07 per share, after tax, for the fair value adjustment of the mortgage servicing rights.” — Steven Crockett .
“We expect to deliver low to mid-single digit loan growth for the full year 2025.” — Curtis Griffith .

Q&A Highlights

NIM outlook: Management expects stabilization with potential incremental improvement as deposit costs continue to decline and liquidity positioning helps avoid “overpricing on the cost side” .
Loan yields dynamics: New originations coming on around ~7%, while fixed-rate loans rolling off were often in high-4s to 5s, helping average yields hold; some higher-yield payoffs also occurred .
Payoffs and pipeline: Elevated payoffs tied to client liquidity events may persist into Q1/Q2, but production is expected to outpace paydowns; pipeline notably stronger versus last year .
Credit update: Previously highlighted multifamily nonaccrual is paying and progressing per plan; credit outlook remains constructive .
Capital allocation/M&A: Dividend maintained; buyback optionality remains but activity likely muted; more M&A opportunities anticipated, but high hurdle for deals with minimal dilution and solid earn-back .

Estimates Context

S&P Global consensus estimates were unavailable at the time of retrieval due to vendor rate limits; therefore, numeric comparisons to Street EPS/revenue were not possible. Actual Q4 metrics indicate a directional beat versus typical seasonal patterns given NIM expansion, cost discipline, and MSR FV tailwinds .
Expect estimate revisions to reflect improved margin trajectory, noninterest income contributions from MSR, and cautious near-term loan growth (flat in Q1, building thereafter) .

Key Takeaways for Investors

Margin tailwind intact: sequential NIM expansion to 3.75% on falling deposit costs, with management positioned for stabilization/slight improvement — supportive for NII and EPS trajectory .
Loan growth visibility: FY2025 guide to low–mid single-digit growth with a strong pipeline in major metros; watch near-term headwinds from elevated payoffs in Q1 .
Credit steady amid cycle: ACL/Loans at 1.42%, NPA/Assets 0.58%; NOO CRE exposures have low estimated LTVs (income-producing ~53%; office ~56%), supporting resilience .
Earnings quality: Efficiency ratio improved to 57.5% due to lower personnel and mortgage commissions; MSR FV added $0.07 EPS — monitor sustainability as rates evolve .
Capital and distributions: CET1 13.53%, TCE/TA 9.92%; $0.15 dividend continues; buyback optionality provides flexibility in volatile markets .
Tactical focus: Expect deposit repricing benefits to persist into Q1; watch NIB mix and deposit trends as liquidity is added to match loan growth .
Medium-term thesis: Community bank with disciplined underwriting, improving margin profile, balanced revenue mix, and optionality for selective M&A — set up for EPS compounding as loan growth converts and cost of funds drifts lower .

References: Q4 earnings press release and 8‑K materials , 8‑K with exhibits and dividend , Q4 earnings call transcripts – –, prior quarter releases for trend analysis – –.

SOUTH PLAINS FINANCIAL, INC. (SPFI)·Q4 2024 Earnings Summary