South Plains Financial, Inc.

Good morning, ladies and gentlemen, and welcome to the South Plains Financial Inc. Fourth Quarter and Full Year 2023 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. 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. Mr. Crockett, please go ahead, sir.

Thank you, Operator, and good morning, everyone. We appreciate your participation in our earnings conference call. With me here today are Curtis Griffith, our Chairman and Chief Executive Officer, Corey Newsom, our President, and Brent Bates, our Chief Credit Officer. The related earnings press release and earnings presentation are available on the news and events section of our website, spfi.bank. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements. They are subject to a variety of risk, uncertainties, and other factors that could cause actual results to differ materially from those anticipated future results. Please see our safe harbor statement in our earnings press release or on slide two of the earnings presentation. All comments made during today's call are subject to those safe harbor statements. Any forward-looking statements presented herein are made only as of today's date. And we do not undertake any duty to update such forward-looking statements, except as required by law. Additionally, during today's call, we may discuss certain non-GAAP measures, which we believe are useful in evaluating our performance. A reconciliation of these non-GAAP measures to the most comparable GAAP measures can also be found in our earnings release and in the earnings presentation. Curtis, let me hand it over to you.

Thank you, Steve, and good morning. On today's call, I will briefly review the highlights of our full year 2023 results, as well as provide an update on our capital allocation priorities. Corey will discuss our loan portfolio as well as our initiatives to drive deposit and fee income growth in the year ahead. Steve will then conclude with a more detailed review of our fourth quarter financial results. I would like to start by thanking our employees. for their efforts and commitment to both the bank and our customers during an extremely challenging year for our industry. Our success would not be possible without their dedication and hard work. As shown on slide four of our earnings presentation, we delivered 9.7% loan growth for the full year, driven by the expansion of our lending platform, combined with a resilient economy as Texas continues to benefit from in-migration and a favorable business climate. If inflation continues to moderate and the Federal Reserve begins to reduce their benchmark interest rate, we expect economic growth to accelerate as we look to the second half of 2024. Looking back at the past year, our community-based deposit franchise grew modestly, which is impressive given the significant dislocation that occurred following the failures of Silicon Valley Bank and Signature Bank in the first quarter. For the full year, our core deposits grew 1%, excluding brokered deposits, to $3.26 billion, which demonstrates the resilience of our franchise combined with our strong customer relationships. At quarter end, 81% of our deposits were in our rural markets, with 19% in our major metropolitan markets of Dallas, Houston, and El Paso. Additionally, our average deposit account balance is approximately $36,000, with only an estimated 16% of our total deposits being uninsured or uncollateralized. The credit quality of our loan portfolio also remained strong through the fourth quarter, as our classified loans have remained at the lowest level since the start of the pandemic as we ended the year. Lastly, we increased our return on average assets the 1.54% for the full year 2023, as compared with 1.47% for the full year 2022. We also completed the sale of our Windmark Crop Insurance subsidiary in April for a pre-tax gain of $33.8 million. The gain that we recorded positioned us to strategically sell $56 million of investment securities at a loss in a tax-efficient manner, and reinvest those proceeds into higher yielding loans. Given our strong capital and liquidity position, our board of directors authorized a $15 million stock repurchase program in May, which has been exhausted. We repurchased 218,000 shares in the fourth quarter and a total of 686,000 shares during 2023. Through the year, our board has believed that our shares have traded below intrinsic value and we have been aggressive buying our stock in the open market. Looking to the year ahead, we will maintain our liquidity and continue to watch for opportunities to expand the bank and our earnings power. M&A is an area of interest and we believe you will see transactions take place in the market as sellers' expectations are becoming more realistic. The decline in interest rates at the end of the year also led to a recovery in banks' securities portfolios, which will increase the probability that we will see deal volumes pick up. However, we will only be interested in acquiring a bank with the right culture, excess liquidity, a stable deposit base, and at a valuation that makes sense for us and our shareholders. In the meantime, we remain focused on organic growth while returning a steady stream of income to our shareholders through our quarterly dividend. Our board of directors again authorized a 13 cents per share quarterly dividend as announced last week. This will be our 19th consecutive quarterly dividend to be paid on February 12th, 2024 for shareholders of record on January 29th, 2024. Now I'll turn the call over to Corey.