UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-38895

South Plains Financial, Inc.

(Exact name of registrant as specified in its charter)

Texas		75-2453320
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5219 City Bank Parkway Lubbock, Texas		79407
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (806) 792-7101

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value per share	SPFI	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 3, 2025, the registrant had 16,247,839 shares of common stock, par value $1.00 per share, outstanding.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II.	OTHER INFORMATION	50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
Signatures		52

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PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	September 30, 2025			December 31, 2024
	(Unaudited)
ASSETS
Cash and due from banks	$	56,071		$	54,114
Interest-bearing deposits in banks		578,975			304,968
Cash and cash equivalents		635,046			359,082
Securities available for sale		571,138			577,240
Loans held for sale ($9,912 and $13,791 at fair value at September 30, 2025 and December 31, 2024, respectively)		13,046			20,542
Loans held for investment		3,053,503			3,055,054
Allowance for credit losses on loans		(44,125	)		(43,237	)
Loans held for investment, net		3,009,378			3,011,817
Accrued interest receivable		18,012			21,687
Premises and equipment, net		51,809			52,951
Bank-owned life insurance		77,274			76,054
Goodwill		19,315			19,315
Intangible assets, net		1,265			1,720
Mortgage servicing rights		24,458			26,292
Deferred tax asset, net		21,650			22,840
Other assets		37,046			42,699
Total assets	$	4,479,437		$	4,232,239

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits:
Noninterest-bearing	$	1,049,501		$	935,510
Interest-bearing		2,831,642			2,685,366
Total deposits		3,881,143			3,620,876
Accrued expenses and other liabilities		59,999			62,060
Subordinated debt		14,100			63,961
Junior subordinated deferrable interest debentures		46,393			46,393
Total liabilities		4,001,635			3,793,290

Stockholders’ equity:
Common stock, $1.00 par value per share, 30,000,000 shares authorized; 16,247,839 and 16,455,826 issued and outstanding at September 30, 2025 and December 31, 2024, respectively		16,248			16,456
Additional paid-in capital		91,116			97,287
Retained earnings		421,542			385,827
Accumulated other comprehensive loss		(51,104	)		(60,621	)
Total stockholders’ equity		477,802			438,949
Total liabilities and stockholders’ equity	$	4,479,437		$	4,232,239

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Interest income:
Loans, including fees	$	53,928		$	51,505		$	158,384		$	151,008
Securities:
Taxable		4,638			5,300			14,030			16,096
Non-taxable		853			803			2,456			2,419
Federal funds sold and interest-bearing deposits in banks		5,101			4,032			13,707			10,052
Total interest income		64,520			61,640			188,577			179,575
Interest expense:
Deposits		19,925			22,653			59,814			65,945
Subordinated debt		835			835			2,505			2,505
Junior subordinated deferrable interest debentures		741			858			2,209			2,575
Total interest expense		21,501			24,346			64,528			71,025
Net interest income		43,019			37,294			124,049			108,550
Provision for credit losses		500			495			3,420			3,100
Net interest income, after provision for credit losses		42,519			36,799			120,629			105,450
Noninterest income:
Service charges on deposit accounts		2,266			2,023			6,505			5,785
Net gain on sales of loans		2,338			2,715			7,584			8,157
Bank card services and interchange fees		3,403			3,302			10,553			10,415
Other mortgage banking income		237			(825	)		710			1,075
Investment commissions		428			391			1,288			1,275
Fiduciary fees		729			613			2,161			2,087
Other		1,764			2,416			5,154			5,959
Total noninterest income		11,165			10,635			33,955			34,753
Noninterest expense:
Salaries and employee benefits		19,413			18,767			58,562			56,954
Occupancy and equipment, net		4,046			4,255			12,045			12,204
Professional services		1,293			1,807			4,897			5,028
Marketing and development		979			1,015			2,803			2,629
IT and data services		1,184			1,092			3,529			3,168
Bank card expenses		1,637			1,500			4,670			4,413
Appraisal expenses		284			246			712			702
Other		4,188			4,446			12,379			12,532
Total noninterest expense		33,024			33,128			99,597			97,630
Income before income taxes		20,660			14,306			54,987			42,573
Income tax expense		4,342			3,094			11,770			9,353
Net income	$	16,318		$	11,212		$	43,217		$	33,220
Earnings per share:
Basic	$	1.00		$	0.68		$	2.65		$	2.02
Diluted	$	0.96		$	0.66		$	2.55		$	1.96

Net income	$	16,318		$	11,212		$	43,217		$	33,220
Other comprehensive income:
Unrealized gains on securities available for sale		12,450			25,268			16,749			14,997
Less: Change in fair value on hedged state and municipal securities		(878	)		(4,196	)		(4,703	)		(3,274	)
Tax effect		(2,430	)		(4,425	)		(2,529	)		(2,462	)
Other comprehensive income		9,142			16,647			9,517			9,261
Comprehensive income	$	25,460		$	27,859		$	52,734		$	42,481

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data)

	Common Stock						Additional Paid-in			Retained			Accumulated Other Comprehensive
	Shares			Amount			Capital			Earnings			Income (Loss)			Total
Nine Months Ended September 30, 2024
Balance at beginning of period		16,417,099		$	16,417		$	97,107		$	345,264		$	(51,674	)	$	407,114
Net income		—			—			—			33,220			—			33,220
Cash dividends declared - $0.41 per share		—			—			—			(6,702	)		—			(6,702	)
Other comprehensive income		—			—			—			—			9,261			9,261
Net issuance of stock related to stock-based awards		23,327			23			(155	)		—			—			(132	)
Repurchases of common stock		(53,799	)		(54	)		(1,286	)		—			—			(1,340	)
Stock-based compensation		—			—			1,701			—			—			1,701
Balance at end of period		16,386,627		$	16,386		$	97,367		$	371,782		$	(42,413	)	$	443,122

Nine Months Ended September 30, 2025
Balance at beginning of period		16,455,826		$	16,456		$	97,287		$	385,827		$	(60,621	)	$	438,949
Net income		—			—			—			43,217			—			43,217
Cash dividends declared - $0.46 per share		—			—			—			(7,502	)		—			(7,502	)
Other comprehensive income		—			—			—			—			9,517			9,517
Net issuance of stock related to stock-based awards		35,134			35			(312	)		—			—			(277	)
Stock issued under employee stock purchase plan		15,925			16			435			—			—			451
Repurchases of common stock		(259,046	)		(259	)		(8,267	)		—			—			(8,526	)
Stock-based compensation		—			—			1,973			—			—			1,973
Balance at end of period		16,247,839		$	16,248		$	91,116		$	421,542		$	(51,104	)	$	477,802

Three Months Ended September 30, 2024
Balance at beginning of period		16,424,021		$	16,424		$	97,766		$	362,855		$	(59,060	)	$	417,985
Net income		—			—			—			11,212			—			11,212
Cash dividends declared - $0.14 per share		—			—			—			(2,285	)		—			(2,285	)
Other comprehensive income		—			—			—			—			16,647			16,647
Net issuance of stock related to stock-based awards		2,606			2			(2	)		—			—			—
Repurchases of common stock		(40,000	)		(40	)		(960	)		—			—			(1,000	)
Stock-based compensation		—			—			563			—			—			563
Balance at end of period		16,386,627		$	16,386		$	97,367		$	371,782		$	(42,413	)	$	443,122

Three Months Ended September 30, 2025
Balance at beginning of period		16,230,475		$	16,230		$	90,268		$	407,822		$	(60,246	)	$	454,074
Net income		—			—			—			16,318			—			16,318
Cash dividends declared - $0.16 per share		—			—			—			(2,598	)		—			(2,598	)
Other comprehensive income		—			—			—			—			9,142			9,142
Net issuance of stock related to stock-based awards		10,153			11			(11	)		—			—			—
Stock issued under employee stock purchase plan		7,211			7			209			—			—			216
Stock-based compensation		—			—			650			—			—			650
Balance at end of period		16,247,839		$	16,248		$	91,116		$	421,542		$	(51,104	)	$	477,802

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net income	$	43,217		$	33,220
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses		3,420			3,100
Depreciation and amortization		4,359			4,913
Accretion and amortization		2,195			2,095
Other gains, net		(266	)		(2	)
Net gain on sales of loans		(7,584	)		(8,157	)
Proceeds from sales of loans held for sale		220,546			235,525
Loans originated for sale		(206,298	)		(224,947	)
Deferred income tax benefit		(1,339	)		(1,938	)
Earnings on bank-owned life insurance		(1,220	)		(1,145	)
Stock-based compensation		1,973			1,701
Change in valuation of mortgage servicing rights		2,666			2,685
Net change in:
Accrued interest receivable and other assets		5,719			4,607
Accrued expenses and other liabilities		(2,331	)		3,552
Net cash provided by operating activities		65,057			55,209

Cash flows from investing activities:
Activity in securities available for sale:
Purchases		(16,903	)		(299,849	)
Maturities, prepayments, and calls		37,698			328,763
Loan originations and principal collections, net		(3,089	)		(27,239	)
Purchases of premises and equipment		(4,615	)		(2,325	)
Proceeds from sales of premises and equipment		2,240			69
Proceeds from sales of foreclosed assets		1,163			1,348
Net cash provided by investing activities		16,494			767

Cash flows from financing activities:
Net change in deposits		260,267			93,207
Proceeds from common stock issuance		451			—
Payments on subordinated debt		(50,000	)		—
Payments to tax authorities for stock-based compensation		(277	)		(132	)
Cash dividends paid on common stock		(7,502	)		(6,702	)
Payments to repurchase common stock		(8,526	)		(1,340	)
Net cash provided by financing activities		194,413			85,033

Net change in cash and cash equivalents		275,964			141,009
Beginning cash and cash equivalents		359,082			330,158
Ending cash and cash equivalents	$	635,046		$	471,167

Supplemental disclosures of cash flow information:
Interest paid on deposits and borrowed funds	$	65,965		$	71,479
Income taxes paid		11,443			8,321
Supplemental schedule of noncash activities:
Loans transferred to foreclosed assets	$	2,462		$	1,407
Additions to mortgage servicing rights		832			689

The accompanying notes are an integral part of these consolidated financial statements.

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SOUTH PLAINS FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations – South Plains Financial, Inc. (“SPFI”) is a Texas corporation and registered bank holding company that conducts its principal activities through its subsidiaries from offices located throughout Texas and Eastern New Mexico. Principal activities include commercial and retail banking, along with investment, trust, and mortgage services. The following were subsidiaries of SPFI as of September 30, 2025:

Wholly-Owned, Consolidated Subsidiaries:
City Bank	Bank subsidiary
Ruidoso Retail, Inc.	Non-bank subsidiary
CB Provence, LLC	Non-bank subsidiary
CBT Brushy Creek, LLC	Non-bank subsidiary
CBT Properties, LLC	Non-bank subsidiary
Wholly-Owned, Equity Method Subsidiaries:
South Plains Financial Capital Trusts (“SPFCT”) III-V	Non-bank subsidiaries

Basis of Presentation and Consolidation – The consolidated financial statements in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2025 (this “Form 10-Q”) include the accounts of SPFI and its wholly-owned consolidated subsidiaries (collectively referred to as the “Company”) identified above. All significant intercompany balances and transactions have been eliminated in consolidation.

The interim consolidated financial statements in this Form 10-Q have not been audited by an independent registered public accounting firm, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows. All such adjustments were of a normal and recurring nature. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q adopted by the U.S. Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements, and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 7, 2025 (the “2024 Annual Report on Form 10-K”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Determination of the adequacy of the allowance for credit losses (“ACL”) is a material estimate that is particularly susceptible to significant change in the near term; the assumptions used in stock-based compensation, derivatives, mortgage servicing rights, and fair values of financial instruments can also involve significant management estimates.

Recent Accounting Pronouncements – Updates to the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) are prescribed in Accounting Standards Updates (“ASUs”), which are not authoritative until incorporated into the ASC.

ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in this ASU modify the disclosure or presentation requirements of a variety of Topics in the Codification. Certain of the amendments represent clarifications to, or technical corrections of the current requirements. Each amendment in the ASU will only become effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027. The amendments in this ASU are not expected to have a material impact on the Company’s financial statements.

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ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this ASU are intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments intended to improve the effectiveness of income tax disclosures. This ASU is effective for annual periods beginning after December 15, 2024. The adoption of this ASU is not expected to have a material effect on the Company’s financial statements.

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires public companies to disclose in a tabular format, in the notes to the financial statements, specific disaggregated information about certain prescribed categories of expenses at each interim and annual reporting period. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. This ASU is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Implementation of this ASU may be applied prospectively or retrospectively. The Company does not expect the adoption of this ASU to have a material impact on the Company’s financial statements.

Subsequent Events – The Company has evaluated subsequent events and transactions from September 30, 2025 through the date this Form 10-Q was filed with the SEC for potential recognition or disclosure as required by GAAP.

2. SECURITIES

A summary of the amortized cost, related gross unrealized gains and losses, allowance for credit losses, and estimated fair value of securities available for sale at the dates indicated is presented below (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
September 30, 2025
Available for sale:
State and municipal	$	200,414	$	350	$	(25,617	)	$	—	$	175,147
Residential mortgage-backed securities		308,335		118		(44,427	)		—		264,026
Commercial mortgage-backed securities		47,584		—		(4,288	)		—		43,296
Commercial collateralized mortgage obligations		68,213		73		(197	)		—		68,089
Asset-backed and other amortizing securities		14,617		—		(912	)		—		13,705
Other securities		7,000		—		(125	)		—		6,875
	$	646,163	$	541	$	(75,566	)	$	—	$	571,138
December 31, 2024
Available for sale:
State and municipal	$	199,588	$	1	$	(26,292	)	$	—	$	173,297
Residential mortgage-backed securities		321,021		—		(56,925	)		—		264,096
Commercial mortgage-backed securities		46,601		—		(6,241	)		—		40,360
Commercial collateralized mortgage obligations		73,697		—		(214	)		—		73,483
Asset-backed and other amortizing securities		16,107		—		(1,526	)		—		14,581
Other securities		12,000		—		(577	)		—		11,423
	$	669,014	$	1	$	(91,775	)	$	—	$	577,240

The amortized cost and estimated fair value of securities at September 30, 2025 are presented below by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Declining-balance securities are shown separately since they are not due at a single maturity date.

	Available for Sale
	Amortized Cost		Fair Value
Within 1 year	$	205	$	205
After 1 year through 5 years		5,490		5,421
After 5 years through 10 years		19,867		18,951
After 10 years		181,852		157,445
Declining-balance securities		438,749		389,116
	$	646,163	$	571,138

At both September 30, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. government, its agencies, or its sponsored enterprises, in an amount greater than 10% of stockholders’ equity.

Securities with a carrying value of approximately $406.9 million and $309.0 million at September 30, 2025 and December 31, 2024, respectively, were pledged to collateralize public deposits and for other purposes as required or permitted by law.

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The following table segregates securities with unrealized losses at the periods indicated, by the duration they have been in a loss position for which an allowance for credit losses has not been recorded (dollars in thousands):

	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2025
State and municipal	$	205	$	—	$	164,102	$	25,617	$	164,307	$	25,617
Residential mortgage-backed securities		—		—		255,160		44,427		255,160		44,427
Commercial mortgage-backed securities		1,976		7		41,321		4,281		43,297		4,288
Commercial collateralized mortgage obligations		63,443		197		—		—		63,443		197
Asset-backed and other amortizing securities		—		—		13,705		912		13,705		912
Other securities		—		—		6,875		125		6,875		125
	$	65,624	$	204	$	481,163	$	75,362	$	546,787	$	75,566

December 31, 2024
State and municipal	$	205	$	1	$	171,306	$	26,291	$	171,511	$	26,292
Residential mortgage-backed securities		8		—		264,088		56,925		264,096		56,925
Commercial mortgage-backed securities		—		—		40,360		6,241		40,360		6,241
Commercial collateralized mortgage obligations		73,483		214		—		—		73,483		214
Asset-backed and other amortizing securities		—		—		14,581		1,526		14,581		1,526
Other securities		—		—		11,423		577		11,423		577
	$	73,696	$	215	$	501,758	$	91,560	$	575,454	$	91,775

There were 129 securities with an unrealized loss at September 30, 2025, generally due to a continuation of the elevated market interest rate environment. Management evaluates securities available for sale (“AFS”) in unrealized loss positions to determine whether the impairment is due to credit-related factors or non-credit related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for the anticipated recovery in fair value. Management does not have the intent to sell any of the securities in an unrealized loss position and believes that it is not likely that the securities will have to be sold before a recovery of cost. The fair value of these securities is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of September 30, 2025, management believes the unrealized loss positions detailed in the previous table are due to non-credit related factors, including changes in interest rates and other market conditions, and therefore no ACL for AFS securities or losses have been recognized or realized in the consolidated financial statements.

3. LOANS HELD FOR INVESTMENT

Loans held for investment are summarized by category as of the dates presented below (dollars in thousands):

	September 30, 2025			December 31, 2024
Commercial real estate	$	1,035,926		$	1,119,063
Commercial - specialized		377,783			388,955
Commercial - general		629,256			557,371
Consumer:
1-4 family residential		592,578			566,400
Auto loans		256,281			254,474
Other consumer		63,727			64,936
Construction		97,952			103,855
		3,053,503			3,055,054
Allowance for credit losses on loans		(44,125	)		(43,237	)
Loans, net	$	3,009,378		$	3,011,817

The Company has certain lending policies, underwriting standards, and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies, underwriting standards, and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

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Commercial Real Estate – Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial real estate loans are underwritten primarily based on projected cash flows for income-producing properties and collateral values for non-income-producing properties. The repayment of these loans is generally dependent on the successful operation of the property securing the loans or the sale or refinancing of the property. Real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are diversified by type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry.

Commercial – General and Specialized – Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably. Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations, as agreed and ensure appropriate collateral is obtained to secure the loan. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as real estate, accounts receivable, or inventory, and typically include personal guarantees. Owner-occupied real estate is included in commercial loans, as the repayment of these loans is generally dependent on the operations of the commercial borrower’s business rather than on income-producing properties or the sale of the properties. Commercial loans are grouped into two distinct sub-categories: specialized and general. Commercial related segments that are considered “specialized” include agricultural production and real estate loans, energy loans, and finance, investment, and insurance loans. Commercial related segments that contain a broader diversity of borrowers, sub-industries, or serviced industries are grouped into the “general category.” These include goods, services, restaurant & retail, construction, and other industries. Performance of these loans is subject to operating and cash flow results of the borrower, with risk in the volatility of operating results for particular industries.

Consumer – Loans to consumers include 1-4 family residential loans, auto loans, and other loans for recreational vehicles or other purposes. The Company utilizes a computer-based credit scoring analysis to supplement its policies and procedures in underwriting consumer loans. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimizes the Company’s risk. The Company generally requires mortgage title insurance and hazard insurance on 1-4 family residential loans. All consumer loans are generally dependent on the risk characteristics of the borrower’s ability to repay the loan, a consideration of the debt to income ratio, employment and income stability, the loan-to-value ratio, and the age, condition and marketability of the collateral.

Construction – Loans for residential construction are for single-family properties to developers, builders, or end-users. These loans are underwritten based on estimates of costs and completed value of the project. Funds are advanced based on estimated percentage of completion for the project. Performance of these loans is affected by economic conditions as well as the ability to control costs of the projects.

The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.13 billion at September 30, 2025, and $1.22 billion at December 31, 2024.

The ACL for loans was $44.1 million at September 30, 2025, compared to $43.2 million at December 31, 2024. The ratio of ACL for loans to loans held for investment was 1.45% at September 30, 2025 and 1.42% at December 31, 2024.

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The following tables detail the activity in the ACL for loans for the periods indicated (dollars in thousands). Allocation of a portion of the ACL to one category of loans does not preclude its availability to absorb losses in other categories.

	Beginning Balance		Provision for Credit Losses			Charge-offs			Recoveries		Ending Balance
For the three months ended September 30, 2025
Commercial real estate	$	15,706	$	(228	)	$	(541	)	$	—	$	14,937
Commercial - specialized		4,881		(81	)		—			9		4,809
Commercial - general		7,228		87			(172	)		105		7,248
Consumer:
1-4 family residential		11,150		234			(307	)		3		11,080
Auto loans		2,995		132			(202	)		41		2,966
Other consumer		1,102		303			(261	)		40		1,184
Construction		1,948		(47	)		—			—		1,901
	$	45,010	$	400		$	(1,483	)	$	198	$	44,125

For the three months ended September 30, 2024
Commercial real estate	$	15,593	$	290		$	—		$	41	$	15,924
Commercial - specialized		4,736		149			—			22		4,907
Commercial - general		6,841		(373	)		(78	)		10		6,400
Consumer:
1-4 family residential		9,702		(143	)		(3	)		2		9,558
Auto loans		3,287		30			(296	)		39		3,060
Other consumer		974		294			(364	)		55		959
Construction		2,040		353			(315	)		—		2,078
	$	43,173	$	600		$	(1,056	)	$	169	$	42,886
For the nine months ended September 30, 2025
Commercial real estate	$	15,973	$	(495	)	$	(541	)	$	—	$	14,937
Commercial - specialized		4,640		79			—			90		4,809
Commercial - general		6,874		526			(530	)		378		7,248
Consumer:
1-4 family residential		9,677		1,659			(307	)		51		11,080
Auto loans		3,015		716			(897	)		132		2,966
Other consumer		1,115		712			(832	)		189		1,184
Construction		1,943		(47	)		—			5		1,901
	$	43,237	$	3,150		$	(3,107	)	$	845	$	44,125

For the nine months ended September 30, 2024
Commercial real estate	$	15,808	$	160		$	(86	)	$	42	$	15,924
Commercial - specialized		4,020		821			—			66		4,907
Commercial - general		6,391		747			(798	)		60		6,400
Consumer:
1-4 family residential		9,177		551			(175	)		5		9,558
Auto loans		3,601		129			(786	)		116		3,060
Other consumer		968		730			(895	)		156		959
Construction		2,391		2			(315	)		—		2,078
	$	42,356	$	3,140		$	(3,055	)	$	445	$	42,886

During the three and nine months ended September 30, 2025 the Company recorded a provision for credit loss of $500 thousand and $3.4 million, respectively, which was comprised of a provision for credit losses on loans of $400 thousand and $3.2 million, respectively, and a provision for off-balance sheet credit exposures of $100 thousand and $270 thousand, respectively. During the three and nine months September 30, 2024, the Company recorded a provision for credit loss of $495 thousand and $3.1 million, respectively, which was comprised of a provision for credit losses on loans of $600 thousand and $3.1 million, respectively, and a provision for off-balance sheet credit exposures of $(105) and $(40) thousand, respectively.

The following tables show the Company’s amortized cost and related ACL for individually evaluated collateral dependent loans by class using the fair value of collateral loss estimation methodology of evaluating expected credit losses at the dates indicated (dollars in thousands).

	Equipment		Real Estate		Other		Total Loans Individually Evaluated		Total ACL for Individually Evaluated Loans
September 30, 2025
Commercial real estate	$	—	$	3,179	$	—	$	3,179	$	—
Commercial - specialized		—		—		—		—		—
Commercial - general		1,059		2,896		—		3,955		147
Consumer:
1-4 family residential		—		102		—		102		—
Auto loans		—		—		—		—		—
Other consumer		—		—		—		—		—
Construction		—		141		—		141		—
	$	1,059	$	6,318	$	—	$	7,377	$	147
December 31, 2024
Commercial real estate	$	—	$	19,543	$	—	$	19,543	$	552
Commercial - specialized		—		—		—		—		—
Commercial - general		—		—		—		—		—
Consumer:
1-4 family residential		—		—		—		—		—
Auto loans		—		—		—		—		—
Other consumer		—		—		—		—		—
Construction		—		1,575		—		1,575		—
	$	—	$	21,118	$	—	$	21,118	$	552

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The tables below provide an age analysis on accruing past-due loans and nonaccrual loans at the dates indicated (dollars in thousands):

	30-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Nonaccrual with no ACL
September 30, 2025
Commercial real estate	$	226	$	46	$	3,179	$	3,179
Commercial - specialized		—		—		167		—
Commercial - general		780		28		4,109		—
Consumer:
1-4 Family residential		2,429		882		883		102
Auto loans		408		163		—		—
Other consumer		622		94		17		—
Construction		529		—		141		141
	$	4,994	$	1,213	$	8,496	$	3,422
December 31, 2024
Commercial real estate	$	594	$	96	$	19,543	$	—
Commercial - specialized		1,770		240		105		—
Commercial - general		1,374		244		180		—
Consumer:
1-4 Family residential		1,966		1,042		676		—
Auto loans		1,004		114		—		—
Other consumer		1,125		185		23		—
Construction		95		—		1,575		1,575
	$	7,928	$	1,921	$	22,102	$	1,575

Credit Quality Indicators

The Company grades its loans on a thirteen-point grading scale. These grades fit in one of the following categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful, or (v) loss. Loans categorized as loss are charged-off immediately. The grading of loans reflects a judgment by the Company about the risks of default associated with the loan. The Company reviews the grades on loans as part of the Company’s on-going monitoring of the credit quality of the loan portfolio. These risk ratings are assigned based on relevant information about the ability of the borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.

Pass loans have financial factors or nature of collateral that are considered reasonable credit risks in the normal course of lending and encompass several grades that are assigned based on varying levels of risk, ranging from credits that are secured by cash or marketable securities, to watch credits which have all the characteristics of an acceptable credit risk but warrant more than the normal level of monitoring.

Special mention loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the loans at some future date.

Substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. These loans have a well-defined weakness or weaknesses that jeopardize collection and present the distinct possibility that some loss will be sustained if the deficiencies are not corrected. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed. Substandard loans can be accruing or can be nonaccrual depending on the circumstances of the individual loans.

Doubtful loans have all the weaknesses inherent in substandard loans with the added characteristics that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. All doubtful loans are on nonaccrual.

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In connection with the review of the Company’s loan portfolio, management considers risk elements attributable to particular loan type or categories in assessing the quality of individual loans. The list of loans to be analyzed for individual evaluation consists of non-accrual loans over $250 thousand. Interest income recognized using a cash-basis method on non-accrual loans for the three and nine months ended September 30, 2025 and 2024 was not significant. In addition, the Company closely monitors substandard accruing loans over $1 million, and past due accruing loans over $100 thousand for possible individual evaluation. All other loans will be evaluated collectively in designated pools unless a loss exposure has been identified. Additional funds committed to be advanced on individually analyzed loans are not significant.

The following tables reflect the amortized cost basis in loans held for investment by credit quality indicator and origination year at the dates indicated, and related year-to-date gross charge-offs. Loans acquired are shown in the table by origination year. The Company had an immaterial amount of revolving loans converted to term loans at September 30, 2025 and December 31, 2024.

	Term Loans
	Amortized Cost Basis by Origination Year September 30, 2025
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total

Commercial real estate
Pass	$	137,102	$	148,914	$	204,634	$	249,340	$	103,723	$	151,600	$	7,943	$	1,003,256
Special mention		—		2,840		6,730		—		173		1,104		—		10,847
Substandard		363		62		5,268		4,543		5,539		6,048		—		21,823
Total commercial real estate loans	$	137,465	$	151,816	$	216,632	$	253,883	$	109,435	$	158,752	$	7,943	$	1,035,926
Year-to-date gross charge-offs	$	—	$	—	$	541	$	—	$	—	$	—	$	—	$	541

Commercial - specialized
Pass	$	89,081	$	38,820	$	41,657	$	25,520	$	33,548	$	30,738	$	92,206	$	351,570
Special mention		6,377		8,968		845		1,042		1,747		915		3,606		23,500
Substandard		—		55		536		831		1,223		68		—		2,713
Total commercial - specialized loans	$	95,458	$	47,843	$	43,038	$	27,393	$	36,518	$	31,721	$	95,812	$	377,783
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial - general
Pass	$	131,853	$	102,390	$	52,346	$	94,831	$	46,455	$	87,500	$	87,849	$	603,224
Special mention		—		2,170		10,675		—		1,022		480		1,365		15,712
Substandard		—		509		2,335		1,306		4,900		1,145		125		10,320
Total commercial - general loans	$	131,853	$	105,069	$	65,356	$	96,137	$	52,377	$	89,125	$	89,339	$	629,256
Year-to-date gross charge-offs	$	—	$	13	$	164	$	81	$	42	$	180	$	50	$	530

Consumer 1-4 family residential
Pass	$	86,941	$	71,022	$	92,336	$	141,828	$	79,469	$	100,836	$	4,766	$	577,198
Special mention		—		—		488		—		5,087		—		—		5,575
Substandard		—		2,960		1,385		1,072		641		3,747		—		9,805
Total consumer 1-4 family residential loans	$	86,941	$	73,982	$	94,209	$	142,900	$	85,197	$	104,583	$	4,766	$	592,578
Year-to-date gross charge-offs	$	—	$	—	$	31	$	—	$	215	$	61	$	—	$	307

Consumer auto loans
Pass	$	88,719	$	53,983	$	48,530	$	47,558	$	13,942	$	3,196	$	—	$	255,928
Special mention		—		—		—		—		—		—		—		—
Substandard		—		33		30		197		74		19		—		353
Total consumer auto loans	$	88,719	$	54,016	$	48,560	$	47,755	$	14,016	$	3,215	$	—	$	256,281
Year-to-date gross charge-offs	$	—	$	162	$	288	$	283	$	135	$	29	$	—	$	897

Consumer other consumer
Pass	$	23,433	$	14,783	$	8,022	$	8,669	$	2,645	$	4,593	$	1,487	$	63,632
Special mention		—		—		—		—		—		—		—		—
Substandard		17		14		—		15		13		36		—		95
Total consumer other consumer loans	$	23,450	$	14,797	$	8,022	$	8,684	$	2,658	$	4,629	$	1,487	$	63,727
Year-to-date gross charge-offs (1)	$	345	$	177	$	31	$	97	$	40	$	141	$	1	$	832

Construction
Pass	$	53,617	$	36,677	$	5,822	$	570	$	596	$	—	$	—	$	97,282
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		670		—		—		—		—		670
Total construction loans	$	53,617	$	36,677	$	6,492	$	570	$	596	$	—	$	—	$	97,952
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

⁽¹⁾Includes $345 thousand in charged-off demand deposit overdrafts reported as 2025 originations.

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					Term Loans Amortized Cost Basis by Origination Year December 31, 2024
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total
	2024		2023		2022		2021		2020		Prior		Revolving Loans		Total

Commercial real estate
Pass	$	164,205	$	233,047	$	300,828	$	126,548	$	43,628	$	175,319	$	6,417	$	1,049,992
Special mention		—		—		—		32,243		441		5,464		483		38,631
Substandard		—		—		147		25,164		3,125		2,004		—		30,440
Total commercial real estate loans	$	164,205	$	233,047	$	300,975	$	183,955	$	47,194	$	182,787	$	6,900	$	1,119,063
Year-to-date gross charge-offs	$	—	$	—	$	65	$	—	$	—	$	22	$	—	$	87

Commercial - specialized
Pass	$	103,288	$	60,881	$	37,940	$	41,721	$	15,678	$	28,488	$	98,092	$	386,088
Special mention		214		—		1,600		—		—		—		—		1,814
Substandard		510		—		85		84		297		77		—		1,053
Total commercial - specialized loans	$	104,012	$	60,881	$	39,625	$	41,805	$	15,975	$	28,565	$	98,092	$	388,955
Year-to-date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial - general
Pass	$	107,947	$	72,500	$	109,808	$	65,564	$	29,808	$	82,909	$	78,321	$	546,857
Special mention		—		—		960		554		—		499		200		2,213
Substandard		98		463		2,405		4,427		19		805		84		8,301
Total commercial - general loans	$	108,045	$	72,963	$	113,173	$	70,545	$	29,827	$	84,213	$	78,605	$	557,371
Year-to-date gross charge-offs	$	—	$	199	$	466	$	17	$	—	$	134	$	266	$	1,082

Consumer 1-4 family residential
Pass	$	87,266	$	101,022	$	150,358	$	91,929	$	49,057	$	73,730	$	5,800	$	559,162
Special mention		—		—		—		—		—		—		—		—
Substandard		—		810		284		1,057		225		4,812		50		7,238
Total consumer 1-4 family residential loans	$	87,266	$	101,832	$	150,642	$	92,986	$	49,282	$	78,542	$	5,850	$	566,400
Year-to-date gross charge-offs	$	—	$	—	$	121	$	51	$	—	$	3	$	—	$	175

Consumer auto loans
Pass	$	70,621	$	72,009	$	76,412	$	25,869	$	7,293	$	1,931	$	—	$	254,135
Special mention		—		—		—		—		—		—		—		—
Substandard		21		28		82		179		4		25		—		339
Total consumer auto loans	$	70,642	$	72,037	$	76,494	$	26,048	$	7,297	$	1,956	$	—	$	254,474
Year-to-date gross charge-offs	$	23	$	386	$	519	$	198	$	25	$	35	$	—	$	1,186

Consumer other consumer
Pass	$	23,665	$	12,969	$	14,790	$	5,477	$	1,232	$	5,382	$	1,324	$	64,839

SOUTH PLAINS FINANCIAL, INC. 10-Q