SOUTH PLAINS FINANCIAL, INC.

SOUTH PLAINS FINANCIAL, INC. (SPFI) Annual Review: A Deep Dive for Investors

SOUTH PLAINS FINANCIAL, INC. (SPFI), parent company of City Bank and one of West Texas's largest independent banks, has released its annual report for the fiscal year ended December 31, 2025. This summary offers investors a comprehensive look at SPFI's operations, financial health, strategic direction, and key considerations.

1. Business Overview

SPFI provides a full range of financial services, including retail and commercial banking, investment, trust, and mortgage services, for individuals and small to medium-sized businesses. The company boasts a rich history of growth, starting as a small community bank in 1941 with just $1 million in assets. It has since expanded significantly through organic growth and strategic acquisitions, such as the 2019 purchase of West Texas State Bank. Today, SPFI operates 24 full-service bank branches and 7 mortgage loan offices across key markets in Texas (Lubbock, Dallas, El Paso, Houston, Permian Basin, College Station) and Ruidoso, New Mexico.

2. Financial Performance

As of June 30, 2025, the market value of common stock held by non-affiliates stood at approximately $442.0 million. The company reported 16,331,422 shares of common stock outstanding as of March 3, 2026.

3. Risk Factors

Investors should consider several factors that could influence SPFI's performance:

• Acquisition & Integration Risks: Successfully integrating BOH Holdings, Inc. presents inherent risks, including potential delays, operational challenges, customer retention issues, and regulatory approval hurdles.
• Economic Sensitivity: As a regional bank, SPFI remains susceptible to economic downturns, inflation, and rising interest rates. Its focus on specific Texas and New Mexico markets, with a significant portion of loans in real estate and agriculture, makes it particularly vulnerable to local economic conditions, weather patterns, and commodity price changes.
• Interest Rate Fluctuations: Changes in interest rates can affect both the cost of borrowing and the returns on assets, impacting the net interest margin (the difference between interest earned and interest paid).
• Operational & Cybersecurity Risks: The company faces continuous challenges from cybersecurity threats, the need for ongoing technological upgrades, potential operational errors, and fraud.
• Regulatory & Competitive Landscape: Evolving banking regulations (e.g., Dodd-Frank, CECL methodology), increased capital requirements, and intense competition from national banks, credit unions, and financial technology companies could impact profitability and operational flexibility.
• External Events: Natural disasters, severe weather, or broader geopolitical instability could also affect operations and its customer base.

4. Management Discussion and Analysis (MD&A) Highlights

Acquisition of BOH Holdings, Inc. SPFI announced a significant planned acquisition of BOH Holdings, Inc. and its subsidiary, Bank of Houston, on December 1, 2025. This strategic move, expected to close in the second quarter of 2026, will significantly expand SPFI's presence, especially in the dynamic Houston market. This acquisition highlights SPFI's commitment to growth through consolidation.

Correction of Financial Statements The company disclosed a "correction of an error to previously issued financial statements." Investors should carefully review the full 10-K filing to understand how this correction affects historical financial reporting and comparative analysis.

5. Financial Health (Debt, Cash, Liquidity)

As of December 31, 2025, SPFI reported a strong financial position:

• Total Assets: $4.48 billion
• Loans: $3.14 billion
• Customer Deposits: $3.87 billion
• Shareholder Equity: $493.8 million

6. Future Outlook

SPFI's strategy focuses on building strong, long-term customer relationships and capitalizing on opportunities across its diverse Texas and New Mexico markets. The planned acquisition of BOH Holdings, Inc. and Bank of Houston represents a key strategic initiative. This acquisition is expected to drive future growth and market expansion, particularly in the Houston market.

7. Competitive Position

SPFI positions itself as a leading independent community bank in West Texas, operating within a highly competitive environment. Its strategy aims to make it the "community bank of choice" by leveraging strong local relationships and offering a broad range of services. This approach helps differentiate SPFI from larger national institutions and emerging financial technology companies.

Conclusion:

SOUTH PLAINS FINANCIAL, INC. (SPFI) shows a clear growth strategy, anchored by its planned acquisition of Bank of Houston, and maintains a solid balance sheet. SPFI's strategic direction and established market presence in growing regions of Texas and New Mexico offer a compelling narrative for those seeking exposure to the regional banking sector.