South Plains Financial Q3 2020 Earnings Report
Key Takeaways
South Plains Financial, Inc. reported a net income of $16.7 million for the third quarter of 2020, with diluted earnings per share of $0.92. The company experienced strong revenue growth, particularly in mortgage banking activities, and maintained a conservative approach to its loan portfolio and reserves.
Net income for Q3 2020 was $16.7 million, a significant increase from both the previous quarter and the same quarter last year.
Diluted earnings per share for Q3 2020 reached $0.92, surpassing the figures from Q2 2020 and Q3 2019.
The company saw a sharp decline in active loan modifications related to COVID-19 during Q3 2020.
Strong revenue growth was experienced, driven by investments in the mortgage business.
South Plains Financial
South Plains Financial
South Plains Financial Revenue by Segment
Forward Guidance
The company issued $50 million of fixed-to-floating rate subordinated notes, that qualify as Tier 2 capital for regulatory purposes. The company continues to be pleased with their acquisition of West Texas State Bank this past year and see M&A as an attractive strategy to further expand their geographic footprint in West Texas.
Positive Outlook
- Smooth bank operations.
- Customers have largely weathered the uncertain economic environment to date.
- Borrowers were allowed to modify their loans to interest-only payments early in the pandemic.
- Local economies are improving with the pace of business accelerating.
- Investments are generating strong results in the mortgage business.
Challenges Ahead
- Uncertainty remains from COVID-19.
- The full extent of the impact on the economy and the Bank’s customers is unknown at this time.
- Additional provisions for loan losses may be necessary in future periods.
- Drought conditions or damaged crops where the borrower received crop insurance proceeds to pay down the loans.
- A $5.4 million relationship in the transportation industry was put on nonaccrual.