South Plains Financial, Inc.

Good afternoon, ladies and gentlemen, and welcome to the South Plains Financial Week second quarter 2024 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. Please go ahead, sir.

Thank you, Operator, and good afternoon, everyone. We appreciate you joining our earnings conference call. With me here today are Curtis Griffith, our chairman and chief executive officer, Corey Newsome, our president, and Brent Bates, our chief credit officer. The related earnings press release and earnings presentation are available on our 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 and are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated future results. Please see our safe harbor statements in our earnings press release and in our 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 financial measures, which we believe are useful in evaluating our performance. A reconciliation of these non-GAAP financial measures to the most comparable GAAP financial 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 afternoon. On today's call, I will briefly review the highlights of our second quarter 2024 results, as well as discuss our efforts to drive our profitability and returns as we continue to strive to be a high-performing bank. Corey will discuss our loan portfolio, as well as our initiatives to drive growth across the bank. Steve will then conclude with a more detailed review of our second quarter financial results. Starting on slide four of our earnings presentation, we delivered second quarter diluted earnings per share of 66 cents as compared to 64 cents in the first quarter of 2024. Strength in the quarter came from robust organic loan growth, which lifted the yield on our loan portfolio and contributed to our margin expansion. We also continued to closely manage our liquidity with a focus on maximizing the profitability and returns of the bank. This led to a modest reduction in customer deposits as we worked to keep deposit costs steady through the quarter. Importantly, we believe competitive pressures for deposits have started to ease while new loan yields have remained robust, leading to our solid NIM expansion in the quarter. Looking to the second half of the year, we expect our NIM expansion to moderate as deposit costs are likely to move modestly higher while loan growth returns to more normal levels, as Corey will discuss in a moment. Strength in the quarter also led to further improvement in our efficiency ratio, which declined to 66.7% as compared to 67.9% in the linked quarter, while our return on average assets improved three basis points to 1.07% as compared to the first quarter. We also grew our tangible book value per share to $24.15 at June 30th as compared to $23.56 at March 31st, 2024. I am very pleased with the steady financial progress that we continue to deliver, which is a credit to our employees and their commitment to the bank and our customers. I am also pleased that our performance is being recognized more broadly as Forbes Magazine ranked Citibank 12th in their 2024 Best Banks in America list. while S&P Global Market Intelligence ranked us the 28th best-performing U.S. community bank with assets between $3 and $10 billion in 2023. This speaks to our management team's focus on operating South Plains at a high level while maximizing value for all our stakeholders. Turning to credit, we continue to aggressively manage the credit quality of our loan portfolio. During the second quarter, we moved a substandard multifamily property loan in Houston to non-accrual. This is a loan that we have had rated substandard since June of last year and have been closely monitoring and proactively working on the credit over that time period. This is not a surprise nor a reflection of the multifamily market in Houston or in any of our markets. As we have discussed on prior calls, we have a strong credit culture that is focused on identifying problems early, working with our borrowers and taking the appropriate steps to resolve challenges. We continue to vigorously stress test the credit quality of our loan portfolio in order to identify potential problems early and then work to remediate them. We will never sacrifice credit quality for growth, especially in the current environment where we are starting to see a few stresses in the national economy. We are fortunate to operate in Texas where the economy remains healthy with a growing population and a business friendly state government. We will remain cautious and vigilant given the current high interest rate environment. As a result, we are aggressively preparing for whatever environment may come over the next few quarters and have confidence in the credit quality of our loan portfolio. While the economic outlook may be uncertain, We believe that we are in a strong position as the bank and the company each significantly exceed the minimum regulatory levels necessary to be deemed well-capitalized. At June 30, 2024, the consolidated common equity Tier 1 risk-based capital ratio was 12.61%, and our Tier 1 leverage ratio was 11.81%. Additionally, our loans held for investment to deposit ratio stood at 85% at quarter end. Given our capital position, we remain focused on both growing the bank while also returning a steady stream of income to our shareholders through our quarterly dividend. Yesterday, our Board of Directors authorized a 14 cents per share quarterly dividend, which will be our 21st consecutive quarterly dividend, to be paid on August 12, 2024 for shareholders of record on July 29, 2024. We also have a $10 million stock repurchase program in place, which our board authorized in February. We had limited buyback activity through the second quarter as we balanced liquidity for growth as well as being mindful of the limited trading volume of our shares. To conclude, the bank is doing well and is positioned, we believe, to drive organic growth across both our community and metropolitan markets while being well prepared for varying economic conditions as we have proactively managed the credit quality of our loan portfolio to ensure we're staying ahead of any challenges. I'm excited for the many opportunities that lay ahead. Now let me turn the call over to Corey.