Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to the South Plains Financial, Inc.

First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Mr. Steve Crockett, Chief Financial Officer and Treasurer of South Plains Financial. sir. ahead, go Please

Steve Crockett

our Chief and first everyone. call. quarter Brent XXXX. are on Chairman of the here available Credit Officer. website operator, Newsom, call participation conclusion of within With appreciate in today and our Griffith, our X XXXX Curtis until our this Bates, Officer; A good will you, Cory We afternoon, your XX, call me President; Chief and Executive the May Thank be earnings our replay hours conference of

slide deck on a website, section presentation Additionally, discussion to is the of complement available www.spfi.bank. Events today's News & our

could on we deck such statements forward-looking actual presented materially differ duty those and remind statements on to as release do Before date, forward-looking variety we in results everyone anticipated contain subject from Please issued see press earnings future are statement call that that to harbor afternoon, Any Slide harbor a may made was available and me are our statements. call by during this update except those any X All slide cause not and safe subject let herein to and of presentation our made today's uncertainties undertake safe of to that begin, risks, forward-looking results. comments as this factors our statements, today's of only the required are website. law. other

slide found GAAP earnings measures measures, can certain presentation. and most we in be A the in discuss Additionally, are may of Slide of our X release non-GAAP which reconciliation to during call, our measures the on non-GAAP today's we deck comparable also performance. evaluating believe these useful

over turn I'll the point, Curtis. to this At call

Curtis Griffith

as highlights and was for afternoon. have investments which I'll the previously On of believe Steve the in then business, one we loan franchise, results. lending results, quarter shareholders. Steve, Cory upon of deposit announced portfolio gathering builds will a well that today's as expanding review our you, and which the conclude more our transaction we the very call, making platform. Thank we discuss of detailed bank our first Windmark sale quarter our our achieved that our XXXX review our and are a briefly good success with will good the

there start, that To I you and key call. from are take our hope six away points today's will results

their of failures created Valley the widespread industry and banking Silicon Bank the First, following concern Signature collapse. Bank in the across days

developed customer to bank strength Our we that results have in of years, growth. this which our can be soundness also relationships speak financial quarter over and as well the quarter directly many the the as deposit first seen

we the our with ended deposits uncollateralized, improvement which of at XX% uninsured is year quarter XX% an Second, end or XXXX. from

our of capital first slowing Tier Fifth, we of profile stable as posted the annualized quarter our strong from to at X Federal Fourth, available window and Term capacity Third, we we which billion liquidity position quarter utilizing. none very a Home we of are in lastly, fourth was average And ratio the this of portfolio and X.X% markets loan with as capital Bank Bank growth Federal Funding further are end the XX.X%. borrowing from earnings, Loan assets the currently credit in $X.XX though strong healthy, our remained quarter build through the Reserve's loan remained discount our and XXXX. quarter. Program,

income of or diluted of $X.XX $X.XX or share quarter. of on XXXX, earnings in income our per loan to million in to net We quarter. loan to in results losses $XX.X per $XXX,XXX the a This the fourth million compared first $XX.X share, more delivered or for of $X.X million in Slide fourth $X quarter quarter in organic recorded Turning common as the share to X of provision the ago presentation. of due our We compares growth the mainly XXXX. per The was million provision for detail compared provision first diluted of our common of $X.XX XXXX. net year a quarter to as

reserved believe, Looking an uncertain we we for forward, are economic well environment.

economy given of that quarters low throughout in While which continues could strong is negatively the to impact Texas U.S. the the the Texas and and slowing, grow, ahead. the is in-migration contracting, growth availability economy unemployment, credit broadly

As be additional necessary periods. a may for loan in losses provisions result, future

loan healthy compared While economic XXXX. the activity to as quarter did moderating, annualized we of is fourth growth X.X% experience of

Cory more our was growth for as touch the loan as gains markets rest moment. in metropolitan the on as by markets. will this a driven outlook of well both year major detail in as well Our in our community our

XX% to annualized as of We XX, grew to quarter the billion or $XXX compared at XXXX, XXXX. March $X.XX million deposits fourth

Our remains and which was high as growth funds public through from quarter deposit a on for focused liquidity the largely we our team. first priority

of maintain outside While deposits normal of relationships, we did utilize we did time to get not business. rates deposit with competitive course the more interest

while we pressure out Signature the XX% especially estimate beginning the year. our SVB to of original through which sign, April, on funds is through through and quarter, remain can below on our Bank, believe failures and of rates we Additionally, deposit did rise of deposits beta flatten interest-bearing a we the believe cost an the now encouraging around is

end, X, were liquidity The markets position our our quarter XX% with seen strong in can be in our rural markets. South At only that deposits the and holds. Slide on further stability highlights also metropolitan which XX% position of major franchise our Plains deposit of competitive

deposits XX% and only average approximately estimated of our uncollateralized. Additionally, deposit account is or balance our are uninsured $XX,XXX an

billion the untapped first with of strong capacity. liquidity $X.XX a position in quarter borrowing ended also We

million $XXX from Federal the Dallas, availability Bank discount Term the Home Loan Program. of Reserve's window, have We of of the Federal million Reserve's $XXX million from from Federal capacity $XXX availability of Funding Bank and

a opportunities strong are as to capital take they of We ample advantage themselves. with in present position growth

agency by transaction $XX.X owned Insurance for to well wholly of a with crop knew its earnouts. acting grow for where variety in to we was and City sale as independent us inception had significant insurance products business divesting. we business no Nebraska of general capital Texas, said, a the as Bank's Windmark and the Alliant terrific offers all-cash Turning in we we in XX either since additional the subsidiary Services were Windmark, for through to point or Colorado, offices and to an in commence states. that completed the XXXX. as at to Nebraska look That sustain resources agents million

their to in with the we was Windmark, and year, their customers. to given with retain Plains. to business We last the not our insurance potential Ultimately, a ability Alliant commitment exploring invest strategies combined is began fit for core given South believe Windmark crop people good

the as provides our further the our Directors forward, Board to core uses base. while augmenting business flexibility of Looking invest reviewing for this the in optimal our is transaction capital capital

banking patient this Given the environment, will dislocation in broad the review the capital. determine sector, be we to combined with range a uses and options best for of economic uncertain the

repurchase utilized Board $X.XX dividend shareholders for steady consecutive our share has fourth on Returning as our authorized years our XXth XXXX, our announced to week. going will a authorization our remaining shareholders lines, been four X, be per Along and dividend share in capital XX, of a XXXX. of repurchases XXXX. quarter quarterly through ago. share on those This Directors the buyback, May dividend stream to quarterly since a of regards public capacity last focus quarterly our of paid record on May the we be In to share almost

economic the repurchase Board current in another of is environment. currently share weighing of light program Our Directors of the merits

value. management Our that both shares team trading and their currently board are below believe intrinsic our well

are navigating liquidity environment believe and franchise, challenging of we quality have well portfolio. credit remain what a an positioned conclude, strong we core a and economy. confident We in ample for our believe we successfully are is To deposit uncertain the that

we Importantly, that in take of that opportunities may we the ahead, to are good any come a way now to time positioned year but in market not acquisitions. the is advantage pursue believe our

me let the call to Now Cory. turn over

Cory Newsom

good market XXXX our fourth sectors. annualized economic slow increased first the held and the the or compared Starting of on for $XX.X quarter afternoon, million in X.X% and loans Curtis, X, combined remained everyone. to be quarter estate healthy primarily Demand interest being that slower you, beginning despite Overall, continued of real with the to residential by Slide mortgage higher investment growth XXXX. during first to commercial rates quarter loan activity. the seasonally are Thank

touch to Our quarter fourth proactively was on to costs margin to deposit contributing We is a which funding first efforts X.XX% are are growth quarter, mitigate new of moment. price which focused yields XXXX. rising the to market funding the and our loan the loan in higher environment, yield X.XX% I beginning loan pressure, which loans in for to interest will that believe account compares to our costs. reflect on in rise yields our continues managing peak and in The to rate

the our We markets their Paso compared new have portfolio to lenders loan by to and X. X% million in that bank. of to to Skipping El customer Slide $XX metropolitan in continue fourth The major commercial we Houston bringing the annualized of loan our as relationships Dallas, markets XXXX. quarter added grew these or portfolios grow by

more back a beginning equity. new competitors focus return focused as That on the of we occurred. also good see has high-quality and structure given loans our we pull and risk are dislocation said, are with across that to funding markets are requiring loans We profiles, the on

never credit for than quality sacrifice ever. will We now so more growth,

this add to will strategic that for and look experienced our approach we Given lenders be MSA to we to to team. continue markets, to will cautious selective growth, as more backdrop our we and our more recruit

loan that economy manage we base we full if We trend the year, is to are we'll our Texas Texas avoids single-digit growth believe economy recession. are achievable experience slowing also the Overall, beginning low accordingly. watching expense the the given that for closely and

Skipping Slide ahead to XX.

portfolio. in at $XXX portfolio of exposure of our our real end, estate We loan have XX% total million represented which commercial quarter

total Our XX.X% CRE portfolio our of of office and represented our XXXX. of X.X% loan the of at portfolio the quarter end first exposure

strategy. enhancing on will commercial We and our retail focus funding

products we go-to-market strategy. are that working products that I the While are verticals we of understand many have the have that we into to the ensure today, and selling need right the ensure we correctly.

better. to and success this in we area, also improve had much we CFOs. can do Treasurers sell Corporate products but We've we know We to need how our

will initiative as markets franchise We this for further our focus believe build are and hiring professionals we deposit core the our long-term. on experienced relationships across

specialize under can bank We initiative our lending and smaller take not and base would deposit income do to our can I expansion said, in will this over run meaningful where fee expense industries, as medium-term. initiative will be well we where than this share. note that we commercial identifying also scope can sectors as be That have lesser on believe a a core we our our expect impact to rate. a impact the meaningful degree,

to XX. Slide Turning

loan quarter in indirect approximately increased million of Our by $XXX $X of XXXX as to compared the auto XXXX. portfolio million quarter first the fourth to

approach XXX growth underwriting sector, a super is of auto score was modest which or credit maintaining prime. was loan is to we're in with of there While a portfolio to XXX, of which XXX the originated this a indirect was And with credit originated a disciplined portfolio better, XX% of the score XX% prime.

for due cycles, basis in positions seen our in to the XX-plus of across This portfolio points portfolio also has as days which loans the of the be points basis can first 'XX improved strong percentage our the quarter. XX profile from at XX quarter economic credit delinquencies varying fourth resilience

area comprised is economy where than if less portfolio a Additionally, recessionary this of we more environment. an severe believe experience occur recreational the challenges of does vehicles, could X%

This Slide quarter million primarily million in $XX.X due in non-interest compared of to $X.X from activities insurance to of XXXX, decline quarter was income decline the first XXXX. the decrease of banking in of revenues. mortgage generated fourth of and to a $XX.X XX. Turning $XXX,XXX million income We seasonal in

million originations $XXX higher loan $XX as the compared XXXX, to interest mortgage quarter, million rates. in impact seasonality of first the of fourth During to quarter given and the declined

and at of fair portfolio due Additionally, March mortgage first during mortgage rates easing servicing to there quarter, was value million this rights the the primarily noted in of our a was $X write-down XX. some

mortgage secondary Our servicing division, activities, less lost which in origination excludes one. $XXX,XXX quarter mortgage than

business in Looking as through incremental forward, drives as we business sense the will cross-selling. it mortgage remain long makes and

quarter For the XX% of non-interest quarter was to fourth XX% the bank XXXX. revenues compared income XXXX, first in as of of

as conclude, To results strength am quarter resiliency they first Bank. our very and City the demonstrate I of of proud

successfully in our well grow positioned designed current are portfolio initiatives commercial We for environment loan to the and deposit executing our franchise. our both

turn I to would call Steve. now like to the over

Steve Crockett

by $XX.X first The expense rates, securities income due interest primarily Thank of Starting a for decrease result increase balances partially million loan XXXX, in as you, assets. rise for income XX. quarter of interest $XX.X Slide compared the million Net increased of to income XXXX. higher in Cory. due the short-term of and million other million on offset interest average a to was interest the quarter was to interest $X.X on interest-earning and $X.X fourth

Our equivalent in in tax net the as XXXX. fourth quarter of basis a of interest margin was calculated the on X.XX% first compared to X.XX% XXXX, quarter

of This in interest corresponding our points as basis XX cost point with margin by loan increase fourth first XXXX, a compared our in quarter the compared of XXXX. offset partially growth, was impacted net in quarter by loan was quarter Our of basis deposits to to of XX increase the of XXXX. yields the as organic fourth the our combined

first XXXX, from quarter was of cost the in quarter basis average XXXX. Our XX of the points in fourth basis increase points an of XXX deposits

certain we competitive discussed, interest in relationships through first raised of Cory to rates quarter our maintain environment. deposit an have As deposit the increasingly

costs uncertainty created quarter. flattened and given rise, Signature to are deposit normalize out have SVB While second by believe beginning in the and did the failures since, we they through weeks the the Bank, of

core to result $XXX.X Turning Majority was in billion of XXXX. occurred the focus $X.XX opportunities franchise our to through public outlined. deposit initiatives, we a first deposits further the increased compared the growth to treasury pleased deposit to Overall, in which Cory of growth predominantly first and quarter with build see our quarter million deposits our Total deposits. fourth Slide liquidity on increased of management the in our and quarter and our through are liquidity we as which XX. fund that the

see modest decreased in XX.X% did as XXXX. Given deposits the in to quarter compared XXXX, of XX.X% of first of quarter total noninterest-bearing we deposits shift total landscape, the a the mix of competitive fourth as deposits to

Slide to Turning XX.

total believe at for as credit X.XX% allowance We that losses XXXX. portfolio loans appropriately remains continue to December XXXX, at March XX, X.XX% loan to to our our as reserved was compared XX,

recorded for increase fourth the for to of XXXX, quarter to on, in first largely touched organic million of a the growth loan credit quarter. due we in which credit Curtis in a This of of our losses compares As provision $XXX,XXX $X.X was losses the quarter provision XXXX.

rate to be points quarter ratio, assets seen in our Overall, XXXX. our that loan we necessary additional economic future to businesses conditions XXXX of as XX continue in XX environment, the United consumers to impacting dislocations credit banking Nevertheless, rising persistent stable non-performing credit in basis the periods. sector, recent inflation portfolio losses may and first in basis from to provision assets the metrics experience the levels in in are remain which total can the the which of make improved States uncertain and points due future in fourth quarter for

fourth million marketing increase was personnel of second expense expense. million first professional occupancy expenses, our related in offset in to record expenses compared Skipping Windmark $XXX,XXX primarily we Slide $XX.X as the the quarter, by and to and the of to approximately The decrease the transaction the decline There of first an $XXX,XXX was was XX, in partially due will in $XXX,XXX additional quarter. sale related the in expenses ahead in XXXX, a of of quarter services, to non-interest quarter to $XX.X in XXXX.

current personnel to personnel across to Importantly, allowed bank continue manage taken we implementing adapt closely efficiencies market. reduce has the inflation to which wage us by as the together and expense manage our overhead, we to managing mortgage

from lost expect earnings. of Windmark modestly at to expense we XXXX non-interest decline while the core quarter's replace looking year first the Looking also level, to quarter and second the ahead,

tax. income well Slide book other which of of share value a end net increase tangible $X.X the fourth increase We attributable fair rise during of with ahead after to the the by assets common tangible to from remain dividends our an Moving equity quarter driven first accumulated XXXX, capitalized securities per X.XX% paid by increase first net of at to available-for-sale XXXX. value XXXX. the fair comprehensive value The of and of of to million $X.X by quarter of $XX.XX the end $X.XX of was and XX. the at the Tangible increased quarter in hedges, in million related was X.XX% income,

Curtis the concluding I back will now remarks. to turn for call

Curtis Griffith

Thank you, Steve. our To results first conclude, the I'm of proud quarter year. very of through the

of growth, We are loan can strong and our navigating deposit profile as seen stable ample by credit a successfully challenging industry environment, portfolio. be our liquidity

provides, use value ahead. like employees will and Additionally, and in to through of year their our to hard shareholders quarter. our I will work capital again the commitment once customers it sale create for beneficial with first incremental the Windmark thank the communities, to be the we for which would that our

your Operator, for you for open the time today. Thank questions. any line please again

Operator

Brad Our [Operator Milsaps Instructions] first question from comes Sandler. with Piper

Brad Milsaps

questions. a of taking disposition. I to further pretty that kind maybe expenses related the wanted make the more operating with you of drop that I being that the understood fall any see to kind I the those kind maybe just insurance to for charges But just quarter of in expenses expenses, what it's reinvested. terms parts might my if on trajectory looking run would X. of sure I the expenses. little revenue could straightforward maybe you think you are you're color I rate. make give you of mean, me I of on appreciate to sort around out sure excluding was level. moving I hang Steve, wanted said thinking first the But will

Steve Crockett

there Windmark. see in transaction non-interest in we were piece QX. the has about our that a will million, some full year, Once for definitely will to Sure. last that average $X.X Yes. through expense. expenses expense three for million that we years up We work non-interest of additional had $X.X been -- some show of expenses QX, related

So the but see each will that annual that's will additional of run kind back, quarter, think that moderate Yes, what items non-interest away, come some be we'll the -- that should expense part fluctuates core number we there throughout has side. go will been. I that on but rate see

Brad Milsaps

I growth to be said can then to And guide think better with I growth single-digits, your soft imply guess, maybe I from mean, in see is you off think just bar this I high you're just low any at a mean conservative? know be just the modest -- on just do in maybe more you typically a I back guidance, you Great. But here. point you got are there seasonally ag. that putting guess than Cory, guys coming? it XQ. would Or would that being start -- lot payoffs Okay. I loan of for of a kind function pretty of books a is time? loan your really you've you

Cory Newsom

I to some high yes, though. bar, good they're that -- going customers do example, and working payoffs, give see You're we with. but really an you a we've mean, I'll got have

take look you our the [$XX.XX of so that's to pipeline, it If at a end you XX% up higher if was year. $X.XX,] at we're the -- than

we're But of focused books. on you, some really So and I'm our got turning ground good with that with lot comfortable on clientele, good relationships type we've problem putting are of gaining stuff stuff -- we how we're no a still down, in but some a have dealing so we that opportunities. telling

that's Brent thing think we're I mean I liquidity, not can we we're here the single-digits the do you... it. realistic. afraid money it's is more Brent, for it. with -- hitting is But mean, trying do ask to into coming to we ask that And for us, not

Brent Bates

agree. I

tailwind see the we're first payoffs up, I that'll funding of of we be also will year. think probably think through the the half anticipating back some that half, were the to half second that. unfunded But bit a we've some got -- through of I commitments a second year,

to about low good low we single-digits. -- So maybe our feel mid

Cory Newsom

to proud you're a towards. come going bit that's little kind We're payoff it's that of of worked that little There's how design the by we've of see about. a

said, I So that's have might that's -- more about design that felt. much like

Brad Milsaps

sure. historically. the Yes, kind no, have seemed feel No, single what I done conservative I'll some in of the low just some kind just other of and queue you But like hop back guys color. questions. folks were based let I appreciate the fairly ask on

Operator

Joe comes Raymond question next Our with Yanchunis James. from

Joe Yanchunis

quarter? with So growth. just Do loan you stick kind that have know And handy? were hoping in I to offs of payoffs. kind pay first What I that of was number discussed you the

Brent Bates

our mean, I payoffs...

Joe Yanchunis

the the of half in for of remainder the the For year. year the magnitude back or

Brent Bates

Brent. Yes. This is

quarter what as were -- are the Our not specific was about that normal see larger that But some rate. think payoff from run the any in sense, I strategic abnormal I that we payoff, that abnormal. credits rate we're first -- talking maybe think payoffs are run if makes a

Cory Newsom

to Go is. problem talked to always what earlier. a identify back it our approach about Yes. We've trying of

be. so was And we wanted a there there we've bit wouldn't we like of -- looking the felt probably to little economy, the in that a downturn where into couple

going And to locked true so of we just there were early right to into pretty we that that It's think is think and to be we've much point. arms strategy we want -- an downturn. started there a don't don't any don't we way exit But -- exposure. kind working think

about not a mean, down. lot of than payoffs. Other we're talking -- of little we're a stuff the a the that's So that, bit pay out of ordinary seeing I

Curtis Griffith

Joe, this Curtis. is

levels little move I those stability. know, fair our of we're many of of as paydowns, -- is projects going of a think construction. expected you after traditionally, what we slowing a they would environment to on reach any secondary bit rate amount this normal market, a in And into financing initial interest regular see because do

there's we in in rate would we'll I'll than rates think books good -- those pretty Now more way. that keep it with lower say a of chance, some a our are, environment, have on we a where longer

us, the approved indicating, and We've been got those But the we draws projects money are from now, you those books right owner priced on some the move at our on haven't our start all grown of money first much we first, and as will all as year. been and think And the using they're but they're books, moving. pretty have hit seeing we've well. investor those through

So in to I to think do to increases for we're built-in But be year. us don't conservative. somewhere some there. single-digit that have going low mid increase I is I around want very basically And overly think yes, doable this

Cory Newsom

Joe, I'll color more though. little a add just to bit that,

If higher rate little we've you though at with at even stuff we've pricing these significant think that that in any that the it lower penalties away away stuff -- that us we're going look the moving out all done in some will at the bit rates of not had job that go today refi may books if help start amount. that think pretty stuff that a we good rates got and as we've just a from fast. stuff We in

we from but where really So be. to two at on years care to we've today, not tried much, taking of exactly look looking today so want out

Joe Yanchunis

where be then you are in starting in could see there, to just from addition Okay. and follow-up at or cracks And problems. there into then And time? quality. asset were out? any these Are sectors deeper to the kind call just that, geographies of payoffs of -- dig these the little kind this to There then coming potential portfolio that? Where are a a potential any

Brent Bates

and we're seeing really speak there. mean stable I Well, our -- good the can ACL mirrors doing know it I I mean, trends. to what quality. we're portfolio we

unrelated our Corey some auto one area. flat related any you've of think give geography. auto up when And to But little growth more bit we we which we've background necessarily have quarter-over-quarter, of -- got of not bit auto, portfolio, a had credit. credits. kind payoffs as of as and one that in you think different portfolio about to out far tightened indirect of one the on a payoffs, or got a mentioned on factors, that As are in specific is you being credits number pricing kind They're the -- -- business about more were industry but pruning of do, that,

has not short portfolio on off replaced. it automatically it's if and a runs that frame So time

pull keeping now, up on but activity. the right that to the homebuilder are pulling industry that we're a in Those choose here good builders have in So back may back primarily with some. on lowing we we Likewise, business that, market. new

we paying off that builder much don't activity see that did year. -- portfolio doesn't as maybe houses as and as sell that do -- So those we though as they last

So that's a little in kind we'll we portfolio when got in color will bit We year. get how it that the think on think still other up the position, growth of projects through wind of equity, -- the to second that in been unfunded the far of commitment commitments have of year makes the our sense. the funding course half out unfunded of we expect fund if thus that over that

Cory Newsom

And we But we're a direction the with are about management one by not And the -- satisfied Joe, that that. that forward. by we to it's for coming can we're -- taking separate the to just on the getting -- it's comment. and little not we're movable wait. And that and take, try not still it We make we bit talk that mean move sure position we'll that taking that reporting back. kind of to payoffs afraid of we're design, while just about some going is about more

do conservative side. it from And we so, that run

Joe Yanchunis

gears. were of to month yields of NIM understand then here kind trajectory from What kind and the Just here? trying on And me of the loan March? for the Understood. switching for the lastly

Curtis Griffith

that. got you Steve,

Steve Crockett

basis XX made fairly the at They out -- along they it the March We was say increasing. are probably are that are have higher Each were reprice that was yield. I yes, have do loans gone not average by do a being in March. I what would month, do up. they higher new points broken points, with than have January. Overall, that basis loans XX

Joe Yanchunis

loan that's And it. for yields, Got right?

Steve Crockett

That's yields, yes. loan

Operator

question Brady from next Instructions] Gailey comes [Operator with Our KBW.

Brady Gailey

were think was that costs Windmark quarter. from heard say first there What of the Steve some I number? in I one-time transaction the sale

Steve Crockett

some personnel and in It's mostly other $XXX,XXX, be and would line, the but legal about cost.

Brady Gailey

reduction from expense the sale All in is the also the most that of line? insurance, the right. And personnel of

Steve Crockett

There's of other That is in the piece that expense, non-interest just yes. the the will where is part in will be, of it be bulk personnel. biggest but -- other

Brady Gailey

And margin. think you of in forward? margin be could compression margin then X.XX%, some the like the going deposit right? is go All down right. there costs, how about -- will how Any on that compress? XQ much to could given it Do the feels it think Or further idea higher

Steve Crockett

compress. good start, a I'll that but it's probability it will that believe I

the see are in the have -- increased a didn't cost. on bit as but can first able think at -- definitely more on yields, putting putting deposits higher we control -- compression. again, we hopefully, quarter. We, But Fortunately, little loans much I of to as see in we as keep limit amount the we'll under compression. and might the But that keep we're have

Cory Newsom

Yes.

stuff other struck not I we've on is, deposit We've think ourselves the short. thing keep to costs in very that very, out on kept mind long-term.

So to seeing rate that. if start get and some response when we some we're movement, immediate downward going from

Curtis Griffith

with do I agree Steve. in. chime I'll

to get I but a compression, more going think little I see very much. don't we may think you're

market on have intentionally categories We interest any rates. not in the been leading

on as that and CDs. other loan specials. right some rates those CD from very stay the moving accounts not putting down, books soon any some can quickly, we we out Fed we're get as if now. rates back change As benefit competitive. start We rates Cory to We're not on adjust our running those does hopefully the of way and -- long-term transaction trying we're push And to said, the we just

think compression, So -- to going very it I be but be don't it's not would -- will surprised slight to much. see I additional a do I

Brady Gailey

to deposit I Okay. which XX%, then growth relatively your peers. to wanted me, I match for you about just is some that? do forecast the of deposit finally the deposit hope ask growth. Or mean ratio And versus have loan your for low is growth? for outlook still what's right. loan to But All

Cory Newsom

deposit money side it the the got markets look -- go spend in loan I to I And of presentation. I I mean going there's right can't got now the chasing kind hardcore match we're I and we that money we've spending of -- in when making it don't this. talk places, going that good right adding done mean, way demand. trying gathering the drive about I -- sure the think we And to about we've we're it's address, side side focused we -- we're lenders, spend deposits any on the the not all is relationships. mean, mean, it, it's in building I of I the I we've actually this. are the on things deposit of all representation it. way to But talked that while focused mean,

Curtis Griffith

Brady, that advantage one can the you of things we've and our numbers. an course, on, look at got of

of in a having our is relationship with some part others. us. the from number markets. very and continuing that got we're and opportunities. out deposits point, relationships put to are banks ownership it biggest and with substantial a here one of are Our banks focus And success that's recent while I the to a some depositors after to of And lot the can't far, changes obviously, acquired. And markets, by talking long of we over in that. our We're great go pretty time some larger their good of moved our at this those deposit some the on move hard rural more over Lubbock getting in of We've those

Operator

next Piper question the Brad Milsaps Our with follow-up is Sandler. from

Brad Milsaps

the ask regard. it banks Would it's in to quarter, that lot know -- close out gain I something expect curious I be on than X% just the down think X%. like of that if of margin banking. wanted kind a that settle sale a should you you less watermark? historically? we should there Or do environment been good of quarters maybe kind where guys you I that loan this work in of the of? about to else to guys such Just take write-down have had maintain look mortgage quickly anything If you aware is MSR can be had

Steve Crockett

down quarter, market in a I'll the Part that talking range just the been would with of end you're say, mark-to-market of rates expect at lot to settle back I and of about. the still and to start. and there's kind I that volatility would of things. our the is

settle higher little more? there little expect while bit down it really shown of a in may we bit a have back to So kind QX, that

Cory Newsom

think our it we're lot in up be we the to guess expenses to up probably at the slight without end We to quarter mean, proud even knew be was did as -- We point that -- we overhead better loss, quarter, think ought we the first volume are that well. we then lower. of a from I we going fact it it, a pretty XX% to though XX%, soon. mortgage but I with was just anticipating second side going of seasonality of compare following advantaging this first And be we kind of in

So think think that that we're in well. it the overhead we mortgage, I -- managing pretty still

Brad Milsaps

a Steve. clarity overhead, Good. on of point And the just

$X.X out You doesn't said costs the million it fall sort sound out in insurance expect second from of million divestiture. like But $X the of you will quarter. to drop

that, some think like other that Is will savings. up I raises, merit You've that eat should it? those some how about things got of

Steve Crockett

QX, for some again, guys, the me excuse have, just costs. transaction So we'll of

Brady Gailey

Yes, excluding those.

not exclude about -- just let's those. I those, those. think even Let's not include

Steve Crockett

Yes.

basis. we looking take should So other its be core yes, just down won't be down, But should a items some on because run core we're excluding down at will place. we full if expenses, be that, amount, rate that we

Cory Newsom

in stuffs The loan there. and are already that of rates

Operator

Curtis I remarks. session. Mr. over question-and-answer our turn back concludes to the conference for any like This Griffith would closing to

Curtis Griffith

feel pleased got participating we we be pretty thought call ago. everybody in challenging little appreciate a months like few we more today. We are. We're might operator. the it Well, than is we've All liquidity. with strong you, things obviously, Thank banking considered, where a

capital We have very high levels.

excellent we on the make right are before, in announcement of mention believe balance the that I that it. year. decent We And we to market very we I mentioned have an did throughout well, closely. portfolio as think any monitoring have forward, can't not an obviously, work. M&A And the we do loan can we now, moving profitability that we probably were

the right at. now, been for one find that levels pressed And that stock buy than be at we've we'd to hard own our better a reason is,

us So ahead going And show to numbers look and everybody kind of you're gives opportunities as what we've an We're sale to very see of quarter some utilize go roll opportunity real forward. to and think of out shareholders. done, benefits clearly, some we those proud second uses those for we multiple the us. we that we've concluded getting having the think got forward in Windmark to

everybody, for participation South Plains in continued and your thanks, for So again, their faith Financial.

Operator

The conference concluded. today's you presentation. Thank has for now attending

now may You disconnect.

South Plains Financial (SPFI) 27 Apr 232023 Q1 Earnings call transcript