SOUTH PLAINS FINANCIAL, INC.
For the period ended Dec 31, 2025. Filed Mar 5, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 5, 2026
SPFI$42.45-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-07.
0001140361-25-007609
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-05.
0001140361-26-008087
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 147 previous paragraphs and 144 current paragraphs.
91 unchanged; 43 reworded; 10 added; 13 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 34 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
On December 1, 2025, SPFI, and BOH Holdings, Inc., a Texas corporation (“BOH”), entered into an Agreement and Plan of Reorganization (the “Reorganization Agreement”), providing for the acquisition by SPFI of BOH through the merger of BOH with and into SPFI, with SPFI surviving the merger (the “Merger”). At December 31, 2025, BOH had $745.1 million in assets, $624.5 million in total gross loans, and $603.0 million in deposits. Pursuant to the terms and subject to the conditions of the Reorganization Agreement, which has been unanimously approved by the boards of directors of each of SPFI and BOH, each share of BOH common stock issued and outstanding immediately prior to the effective time of the Merger (the “effective time”) will be converted into the right to receive, without interest, 0.1925 shares of SPFI common stock, subject to adjustment pursuant to the terms of the Reorganization Agreement (the “Exchange Ratio”), plus cash in lieu of any fractional shares.
Current report
Based on the closing price of $37.79 for SPFI common stock on November 28, 2025, the Merger would have an aggregate value of approximately $105.9 million, though the transaction value is likely to change until closing due to fluctuations in the price of SPFI common stock. Immediately following the consummation of the Merger, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH, will merge with and into City Bank, with City Bank surviving the merger. The Merger is expected to close during the second quarter of 2026, subject to the satisfaction of customary closing conditions, including the receipt of all required regulatory approvals and the approval of BOH’s shareholders.
Current report
The $8.8 million decrease in interest expense for the year ended December 31, 2025 was primarily related to a 42 basis points decrease in the rate paid on interest-bearing liabilities over the same period in 2024, partially offset by an increase of $96.4 million in average interest-bearing liabilities. The decline in rates was largely attributed to the Federal Open Market Committee (“FOMC”) of the Board of Governors of the Federal Reserve dropping their target benchmark interest rate, resulting in federal funds rate decreases of 75 basis points in the last four months of 2025.
Current report
Salaries and employee benefits - Salaries and employee benefits increased $2.6 million, or 3.5%, from $74.3 million for the year ended December 31, 2024 to $76.9 million for the year ended December 31, 2025. This was primarily driven by annual salary adjustments, which became effective in January of 2025.
Current report
Professional services - Professional services increased $727 thousand, or 11.0%, from $6.6 million for the year ended December 31, 2024 to $7.3 million for the year ended December 31, 2025. This was primarily driven by approximately $500 thousand in merger related expenses and by increased consulting fees for technology projects and other initiatives during 2025 as compared to 2024.
Current report
Other expenses -Other expenses increased $878 thousand, or 5.3%, from $16.6 million for the year ended December 31, 2024 to $17.5 million for the year ended December 31, 2025. This increase was primarily driven by an increase of $845 thousand in the ineffectiveness related to fair value hedges on municipal securities in 2025 as compared to 2024.
Current report
Commercial real estate loans decreased $54.4 million, or 4.9%, to $1.06 billion as of December 31, 2025 from $1.12 billion as of December 31, 2024. The decrease was primarily driven by a decrease of $86.2 million in multi-family loans and $18.9 million in hospitality loans, partially offset by increases in residential and commercial land development loans and other commercial real estate loans.
Current report
Construction loans decreased $3.8 million, or 3.6%, to $100.1 million as of December 31, 2025 from $103.9 million as of December 31, 2024.
Current report
The ACL for loans was $45.1 million at December 31, 2025 compared to $43.2 million at December 31, 2024, an increase of $1.9 million, or 4.4%. The ACL for loans as a percentage of loans held for investment was 1.44% at December 31, 2025 and 1.42% at December 31, 2024.
Current report
Net charge-offs totaled $3.0 million and were 0.10% of average loans outstanding for the year ended December 31, 2025, compared to $3.5 million and 0.11% for the year ended December 31, 2024. Gross charge-offs increased $44 thousand and recoveries increased $472 thousand for the year ended December 31, 2025 compared to the same period in 2024.
Removed paragraphs (13)
Previous report
On April 1, 2023, SPFI entered into a Securities Purchase Agreement (“Agreement”) with Alliant Insurance Services, Inc. (“Alliant”), providing for the sale of Windmark Insurance Agency, Inc. (“Windmark”) through a sale of all of the outstanding shares of capital stock of Windmark to Alliant. The transaction was consummated on April 1, 2023. Pursuant to the terms and subject to the conditions of the Agreement, SPFI received an aggregate purchase price of $36.1 million in exchange for Windmark’s common shares, representing a pre-tax gain of $33.8 million. This transaction did not meet the criteria for discontinued operations reporting.
Previous report
The $21.5 million increase in interest expense for the year ended December 31, 2024 was primarily related to an increase of $211.1 million in average interest-bearing liabilities and a 56 basis points increase in the rate paid on interest-bearing liabilities over the same period in 2023. Average interest-bearing deposits grew $222.8 million and the rate paid on those deposits increased 60 basis points during the compared period. The larger growth in deposits began during the second and third quarters of 2023 in response to loan demand and increased emphasis on liquidity. Interest rates paid on deposits continued to rise until the fourth quarter of 2024, given the easing of shorter-term interest rates.
Previous report
Income from insurance activities - Due to the sale of Windmark in the second quarter of 2023, there was a decline of $1.4 million in income from insurance activities for year ended December 31, 2024 as compared to the same period in 2023.
Previous report
Gain on sale of subsidiary - A $33.8 million gain from the sale of Windmark was recorded in 2023.
Previous report
Salaries and employee benefits - Salaries and employee benefits decreased $5.0 million, or 6.3%, from $79.4 million for the year ended December 31, 2023 to $74.3 million for the year ended December 31, 2024. This was primarily driven by approximately $2.7 million of compensation related to operation of Windmark in the first quarter of 2023 and the related sale in the second quarter of 2023. There was also a decrease of $1.5 million in mortgage personnel costs, due to the reduction in mortgage loan originations and operations during 2024 as compared to 2023.
Previous report
Loss on sale of securities - The Company sold approximately $56.2 million of available for sale securities in the second quarter of 2023 which resulted in a loss on sale of $3.4 million. There were no sales of securities during 2024.
Previous report
Commercial real estate loans increased $38.0 million, or 3.5%, to $1.12 billion as of December 31, 2024 from $1.08 billion as of December 31, 2023. The increase was primarily driven by an increase of $27.5 million related to the completion of four multi-family properties loans during 2024.
Previous report
Construction loans decreased $25.3 million, or 19.6%, to $103.9 million as of December 31, 2024 from $129.2 million as of December 31, 2023. The decrease resulted from the continued reduced demand for residential construction as interest rate levels remained elevated and projects were completed and sold.
Previous report
As discussed in Note 1 - Summary of Significant Accounting Policies in the accompanying notes to consolidated financial statements, our policies and procedures related to accounting for credit losses changed effective January 1, 2023, as we adopted the accounting standard update as codified in Accounting Standards Codification (“ASC”) Topic 326 (“ASC 326”) Financial Instruments - Credit Losses. The amount of allowance represents management’s best estimate of current expected credit losses (“CECL”) on these financial instruments over the contractual term of the instrument. Upon adoption, we recognized a cumulative effect adjustment to the ACL for loans and off-balance sheet credit exposures of $1.3 million. The CECL model requires recording life-of-loan projected losses in the loan portfolio based on future economic events and related loan portfolio credit performance. The prior accounting standard recorded reserves based on incurred losses at the balance sheet date.
Previous report
The allowance for credit losses was $43.2 million at December 31, 2024 compared to $42.4 million at December 31, 2023, an increase of $0.9 million, or 2.1%. The increase was primarily a result of a provision for credit losses on loans of $4.3 million being recorded during 2024 based on growth in the loan portfolio and net charge-offs of $3.5 million during 2024.
Previous report
Net charge-offs totaled $3.5 million and were 0.11% of average loans outstanding for the year ended December 31, 2024, compared to $2.0 million and 0.07% for the year ended December 31, 2023. Gross charge-offs increased $1.3 million and recoveries decreased $191 thousand for the year ended December 31, 2024 compared to the same period in 2023. The increase in charge-offs was primarily attributable to an increase of $613 thousand in general commercial loan charge-offs and an increase of $298 thousand in charge-offs on consumer auto loans in 2024. The allowance for credit losses as a percentage of loans held for investment was 1.42% at December 31, 2024 and 1.41% at December 31, 2023.
Previous report
On September 29, 2020, the Company issued $50.0 million in subordinated notes. Proceeds were reduced by approximately $926 thousand in debt issuance costs. The notes have a maturity date of September 2030 with a fixed rate of 4.50% for the first five years. After the expiration of the fixed rate period, the notes will reset quarterly at a variable rate equal to the then current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York, plus 438 basis points. These notes pay interest semi-annually, are unsecured, and may be called by the Company at any time after the remaining maturity is five years or less. Additionally, these notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations.
Previous report
Mortgage Servicing Rights. When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the consolidated statement of comprehensive income (loss) effect recorded in net gain on sale of loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model administered by a third-party that calculates present value of estimated future servicing income. The fair values of servicing rights are subject to significant fluctuations in valuation model assumptions as a result of changes in estimated and actual prepayment speeds and default rates and losses. Estimating prepayment speed and/or discount rates within ranges that market participants would use in determining the fair value of the MSR requires significant management judgment.
Reworded paragraphs (43)
Previous wording
Net income for the year ended December 31, 2024 was $49.7 million, or $2.92 per diluted share, compared to $62.7 million, or $3.62 per diluted share, for the year ended December 31, 2023. The decrease in net income was primarily the result of a decrease of $31.2 million in noninterest income, partially offset by an increase of $7.4 million in net interest income, and a decrease of $7.4 million in noninterest expenses. Details of the changes in the various components are further discussed below.
Current wording
Net income for the year ended December 31, 2025 was $58.5 million, or $3.44 per diluted share, compared to $49.7 million, or $2.92 per diluted share, for the year ended December 31, 2024. The increase in net income was primarily the result of an increase of $19.9 million in net interest income, partially offset by a decrease of $3.2 million in noninterest income and an increase of $5.0 million in noninterest expenses. Details of the changes in the various components are further discussed below.
Previous wording
Return on average assets was 1.17% and return on average equity was 11.75% for the year ended December 31, 2024, compared to 1.54% and 16.58%, respectively, for the year ended December 31, 2023. The decrease in return on average assets was primarily due to the decrease in net income of 20.8%, relative to an increase of 3.8% in total average assets.
Current wording
Return on average assets was 1.33% and return on average equity was 12.70% for the year ended December 31, 2025, compared to 1.17% and 11.75%, respectively, for the year ended December 31, 2024. The increase in return on average assets was primarily due to the increase in net income of 17.6%, relative to an increase of 3.6% in total average assets.
Previous wording
Net interest income for the year ended December 31, 2024 was $147.1 million compared to $139.7 million for the year ended December 31, 2023, an increase of $7.4 million, or 5.3%. The increase in net interest income in 2024 was comprised of a $28.9 million, or 13.6%, increase in interest income, partially offset by a $21.5 million, or 29.8%, increase in interest expense. The growth in interest income was primarily attributable to increases of $25.7 million in loan interest income and $4.3 million in interest income from other interest-earning assets. The increase in loan interest income was primarily due to growth of $129.7 million in average loans outstanding and an increase of 58 basis points in the yield on loans. The increase in interest income on other interest-earning assets was primarily due to growth of $89.8 million in average other interest-earning assets.
Current wording
Net interest income for the year ended December 31, 2025 was $167.0 million compared to $147.1 million for the year ended December 31, 2024, an increase of $19.9 million, or 13.5%. The increase in net interest income in 2025 was comprised of a $11.1 million, or 4.6%, increase in interest income and a $8.8 million, or 9.4%, decrease in interest expense. The growth in interest income was primarily attributable to increases of $8.9 million in loan interest income. The increase in loan interest income was primarily due to growth of $33.4 million in average loans outstanding and an increase of 22 basis points in the yield on loans. Additionally, there was a recovery of $1.7 million in interest during the second quarter of 2025, related to a full repayment of a loan that had previously been on nonaccrual. This recovery positively impacted the loan yield by approximately 6 basis points during 2025.
Previous wording
For the year ended December 31, 2024, net interest margin and net interest spread were 3.65% and 2.58%, respectively, compared to 3.61% and 2.64% for the same period in 2023, respectively, which reflects the changes in interest income and interest expense discussed above.
Current wording
For the year ended December 31, 2025, net interest margin and net interest spread were 3.98% and 3.04%, respectively, compared to 3.65% and 2.58% for the same period in 2024, respectively, which reflects the changes in interest income and interest expense discussed above.
Previous wording
Credit risk is inherent in the business of making loans. We establish an allowance for credit losses (“ACL”) through charges to earnings, which are shown in the consolidated statements of comprehensive income (loss) as the provision for credit losses. Credit losses on loans are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. The provision for credit losses is determined by conducting a quarterly evaluation of the adequacy of our ACL and charging the shortfall or excess, if any, to the current quarter’s expense. This has the effect of creating variability in the amount and frequency of charges to our earnings. The provision for credit losses and the amount of allowance for each period are dependent upon many factors, including loan growth, net charge offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market areas. See “Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included elsewhere in this Report for more detailed discussion.
Current wording
Credit risk is inherent in the business of making loans. We establish an allowance for credit losses (“ACL”) through charges to earnings, which are shown in the consolidated statements of comprehensive income as the provision for credit losses. Credit losses on loans are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. The provision for credit losses is determined by conducting a quarterly evaluation of the adequacy of our ACL and charging the shortfall or excess, if any, to the current quarter’s expense. This has the effect of creating variability in the amount and frequency of charges to our earnings. The provision for credit losses and the amount of allowance for each period are dependent upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market areas. See “Financial Statements and Supplementary Data – Note 1. Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included elsewhere in this Report for more detailed discussion.
Previous wording
The provision for credit losses for the year ended December 31, 2024 was $4.3 million compared to $4.6 million for the year ended December 31, 2023. The provision during the year ended December 31, 2024 was largely attributable to net charge-offs of $3.5 million and loan growth during 2024. Net charge-offs increased $1.5 million during 2024 as compared to 2023. The allowance for credit losses as a percentage of loans held for investment was 1.42% at December 31, 2024 and 1.41% at December 31, 2023. Further discussion of the allowance for credit losses is noted below.
Current wording
The provision for credit losses for the year ended December 31, 2025 was $5.2 million compared to $4.3 million for the year ended December 31, 2024. The provision during the year ended December 31, 2025 was largely attributable to net charge-offs of $3.0 million and loan growth during 2025. Net charge-offs decreased $428 thousand during 2025 as compared to 2024. The allowance for credit losses as a percentage of loans held for investment was 1.44% at December 31, 2025 and 1.42% at December 31, 2024. Further discussion of the allowance for credit losses is noted below.
Previous wording
While interest income remains the largest single component of total revenues, noninterest income is an important contributing component. The largest portion of our noninterest income is associated with our mortgage banking activities. Other sources of noninterest income include service charges on deposit accounts, bank card services and interchange fees. Prior to the sale of Windmark in 2023, income from insurance activities also comprised a large portion of noninterest income.
Current wording
While interest income remains the largest single component of total revenues, noninterest income is an important contributing component. The largest portion of our noninterest income is associated with our mortgage banking activities. Other sources of noninterest income include service charges on deposit accounts, and bank card services and interchange fees.
Previous wording
Noninterest income for the year ended December 31, 2024 was $48.1 million compared to $79.2 million for the year ended December 31, 2023, a decrease of $31.2 million, or 39.3%. Significant changes in the components of noninterest income are detailed below.
Current wording
Noninterest income for the year ended December 31, 2025 was $44.9 million compared to $48.1 million for the year ended December 31, 2024, a decrease of $3.2 million, or 6.6%. Significant changes in the components of noninterest income are detailed below.
Previous wording
Service charges on deposit accounts - Income from service charges on deposit accounts increased $896 thousand, or 12.6% for the year ended December 31, 2024 compared to the same period in 2023. This was largely a result of an increased focus on commercial treasury revenue and expanding that customer base.
Current wording
Service charges on deposit accounts - Income from service charges on deposit accounts increased $797 thousand, or 9.9% for the year ended December 31, 2025 compared to the same period in 2024. This was largely a result of increased commercial deposits, a continued focus on growing treasury management services, which began building during 2024, and an increase in customer overdraft fees.
Previous wording
Mortgage banking activities - Income from mortgage banking activities increased $369 thousand, or 2.7%, to $14.2 million for the year ended December 31, 2024 from $13.8 million for the year ended December 31, 2023. The increase was primarily the result of a $1.2 million decrease in the valuation adjustment for the fair value of the Company’s mortgage servicing rights portfolio for the year ended December 31, 2024 as compared to a $2.4 million decrease for the same period in 2023. This increase was partially offset with a decrease in gain on loan sales as a result of a decrease of $29.5 million, or 9.2%, in mortgage loan originations in the current year as compared to the prior year.
Current wording
Mortgage banking activities - Income from mortgage banking activities decreased $3.5 million, or 24.7%, to $10.7 million for the year ended December 31, 2025 from $14.2 million for the year ended December 31, 2024. The decrease was primarily the result of a $3.3 million negative fair value adjustment of the Company’s mortgage servicing rights portfolio for the year ended December 31, 2025 as compared to a negative $1.2 million adjustment for the same period in 2024. The $2.1 million larger negative adjustment in 2025 was mainly due to overall lower rates during the year as compared to 2024. In addition, there was also a decrease of $23.3 million, or 8.0%, in mortgage loan originations in the current year as compared to the prior year.
Previous wording
Other income and fees - Other noninterest income and fees increased $2.1 million for the year ended December 31, 2024 compared to the same period in 2023. Theincreasewas largely as a result of an increase of $715 thousand in income from sweep accounts, year over year, and from $700 thousand received in 2024 in insurance proceeds for property damage.
Current wording
Other income and fees - Other noninterest income and fees decreased $959 thousand for the year ended December 31, 2025 compared to the same period in 2024. The decrease was primarily the result of decreases of $576 thousand in income from SBIC investments and $611 thousand recognized for property insurance proceeds during the current year as compared to the prior year.
Previous wording
Noninterest expense for the year ended December 31, 2024 was $127.6 million compared to $134.9 million for the year ended December 31, 2023, a decrease of $7.4 million, or 5.5%. Significant changes in the components of noninterest expense are detailed below.
Current wording
Noninterest expense for the year ended December 31, 2025 was $132.6 million compared to $127.6 million for the year ended December 31, 2024, an increase of $5.0 million, or 4.0%. Significant changes in the components of noninterest expense are detailed below.
Previous wording
IT and data services – IT and data services expenses increased $876 thousand or 25.7% in the current year from $3.4 million for the year ended December 31, 2023 to $4.3 million for the year ended December 31, 2024. The increase relates primarily to the Company’s cloud migration project.
Current wording
IT and data services – IT and data services expenses increased $415 thousand or 9.7% in the current year from $4.3 million for the year ended December 31, 2024 to $4.7 million for the year ended December 31, 2025. The increase relates primarily to the continued rising cost of technology services and customers using more digital services.
Previous wording
Our total assets increased $27.4 million, or 0.7%, to $4.23 billion at December 31, 2024 as compared to $4.20 billion at December 31, 2023. Our loans held for investment increased $40.9 million, or 1.4%, to $3.06 billion at December 31, 2024, compared to $3.01 billion at December 31, 2023. Total deposits increased $5.3 million, or 0.1% to $3.62 billion at December 31, 2024, compared to $3.63 billion at December 31, 2023.
Current wording
Our total assets increased $248.3 million, or 5.9%, to $4.48 billion at December 31, 2025 as compared to $4.23 billion at December 31, 2024. Our loans held for investment increased $89.4 million, or 2.9%, to $3.14 billion at December 31, 2025, compared to $3.06 billion at December 31, 2024. Total deposits increased $253.2 million, or 7.0% to $3.87 billion at December 31, 2025, compared to $3.62 billion at December 31, 2024.
Previous wording
Loans held for investments increased $40.9 million, or 1.4%, to $3.06 billion at December 31, 2024 as compared to $3.01 billion at December 31, 2023. The organic loan growth remained relationship-focused and occurred primarily in commercial real estate loans, residential mortgage loans, and energy loans, partially offset by decreases in consumer auto loans and residential construction loans.
Current wording
Loans held for investments increased $89.4 million, or 2.9%, to $3.14 billion at December 31, 2025 as compared to $3.06 billion at December 31, 2024. The organic loan growth remained relationship-focused and occurred broadly across the loan portfolio, partially offset by a decrease of $86.2 million in multi-family property loans.
Previous wording
At December 31, 2024, there was $1.55 billion in adjustable rate loans, with $865.9 million of these loans that mature or reprice in the next twelve months. Of these loans that mature or reprice in the next twelve months, $516.5 million will reprice immediately upon changes in the underlying index rate, with the remaining $349.4 million being subject to rate ceilings, floors above the current index, or a future repricing date. The Wall Street Journal prime rate is the predominate index used by the Bank.
Current wording
At December 31, 2025, there was $1.59 billion in adjustable rate loans, with $877.7 million of these loans that mature or reprice in the next twelve months. Of these loans that mature or reprice in the next twelve months, $597.0 million will reprice immediately upon changes in the underlying index rate, with the remaining $280.7 million being subject to rate ceilings, floors above the current index, or a future repricing date. The Wall Street Journal prime rate is the predominate index used by the Bank.
Previous wording
The Bank is primarily involved in real estate, commercial, agricultural and consumer lending activities with customers throughout Texas and Eastern New Mexico. We have a collateral concentration as 73.7% of our loans were secured by real property as of December 31, 2024, compared to 72.7% as of December 31, 2023. We believe that these loans are not concentrated in any one single property type and that they are geographically dispersed throughout the areas we serve. Although the Bank has diversified portfolios, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the markets in which it operates, which consist primarily of agribusiness, wholesale/retail, oil and gas and related businesses, healthcare industries and institutions of higher education. Commercial real estate loans and residential construction loans represent 40.1% of loans held for investment as of December 31, 2024 and represented 40.1% of loans held for investment as of December 31, 2023. Further, 97% of the total dollar amount of these loans are secured by collateral located in the state of Texas.
Current wording
The Bank is primarily involved in real estate, commercial, agricultural and consumer lending activities with customers throughout Texas and Eastern New Mexico. We have a collateral concentration as 71.6% of our loans were secured by real property as of December 31, 2025, compared to 73.7% as of December 31, 2024. We believe that these loans are not concentrated in any one single property type and that they are geographically dispersed throughout the areas we serve. Although the Bank has diversified portfolios, its debtors’ ability to honor their contracts is substantially dependent upon the general economic conditions of the markets in which it operates, which consist primarily of agribusiness, wholesale/retail, oil and gas and related businesses, healthcare industries and institutions of higher education. Commercial real estate loans and residential construction loans represent 37.0% of loans held for investment as of December 31, 2025 and represented 40.1% of loans held for investment as of December 31, 2024. Further, 96% of the total dollar amount of these loans are secured by collateral located in the state of Texas.
Previous wording
Commercial Real Estate. Our commercial real estate portfolio includes loans for commercial property that is owned by real estate investors, construction loans to build owner-occupied properties, and loans to developers of commercial real estate investment properties and residential developments. Commercial real estate loans are subject to underwriting standards and processes similar to our commercial loans. These 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 our 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.
Current wording
Commercial Real Estate. Our commercial real estate portfolio includes loans for commercial property that is owned by real estate investors, construction loans to build owner-occupied properties, and loans to developers of commercial real estate investment properties and residential developments. Residential construction loans are broken out separately below. Commercial real estate loans are subject to underwriting standards and processes similar to our commercial loans. These 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 our 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.
Previous wording
Commercial general loans increased $40.0 million, or 7.7%, to $557.4 million as of December 31, 2024 from $517.4 million as of December 31, 2023. The increase in commercial general loans was primarily due to increases in loans to companies in the services industry of $25.9 millionand increases in loans in the restaurant/retail industry of $6.7 million.
Current wording
Commercial general loans increased $102.0 million, or 18.3%, to $659.3 million as of December 31, 2025 from $557.4 million as of December 31, 2024. The increase in commercial general loans was primarily due to increases broadly across this segment with the largest increases coming from restaurant and retail loans and goods and services loans.
Previous wording
Commercial specialized loans increased $16.6 million, or 4.5%, to $389.0 million as of December 31, 2024 from $372.4 million as of December 31, 2023. This increase was primarily due to growth of $20.9 million in energy sector loans, and a $5.4 million increase in ag production loans, partially offset by a decrease of $13.8 million in ag real estate loans .
Current wording
Commercial specialized loans increased $20.4 million, or 5.2%, to $409.4 million as of December 31, 2025 from $389.0 million as of December 31, 2024. This increase was primarily due to growth of $28.1 million in energy sector loans, partially offset by a decrease of $7.1 million in agricultural real estate loans.
Previous wording
Consumer loans decreased $28.4 million, or 3.1%, to $885.8 million as of December 31, 2024, from $914.2 million as of December 31, 2023. The decrease in these loans was primarily a result of a $50.8 million decrease in consumer auto loans, partially offset with an increase of $31.7 million in residential mortgage loans. The reduction in consumer auto loans was planned given competitiveness for the best credit indirect auto loans. As of December 31, 2024, our consumer loan portfolio was comprised of $566.4 million in 1-4 family residential loans, $254.5 million in auto loans, and $64.9 million in other consumer loans.
Current wording
Consumer loans increased $25.3 million, or 2.9%, to $911.1 million as of December 31, 2025, from $885.8 million as of December 31, 2024. The increase in these loans was primarily a result of a $23.5 million increase in residential mortgage loans. As of December 31, 2025, our consumer loan portfolio was comprised of $589.9 million in 1-4 family residential loans, $259.2 million in auto loans, and $62.1 million in other consumer loans.
Previous wording
The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.22 billion at December 31, 2024 and $1.21 billion at December 31, 2023. Nonowner-occupied commercial real estate loans are made up of income-producing commercial real estate property loans and construction, acquisition, and development property loans. As of December 31, 2024, total income-producing commercial real estate property loans totaled $881.2 million and was comprised of $315.9 million of multi-family property loans, $181.0 million of retail property loans, $141.9 million of office property loans, $61.0 million in hospitality loans, and $181.4 million in other property loans. Other property loans include types such as industrial, warehouse, mini-storage, and convenience stores. As of December 31, 2024, total construction, acquisition, and development property loans totaled $341.7 million and was comprised of $103.8 million in residential construction property loans and $237.9 million of commercial construction and other land development loans. The weighted average loan-to-value of income-producing nonowner-occupied commercial real estate loans was approximately 53% at December 31, 2024. The weighted average loan-to-value of nonowner-occupied office commercial real estate loans was approximately 56% at December 31, 2024.
Current wording
The commercial real estate and construction categories comprise the Company’s nonowner-occupied real estate loans. Total nonowner-occupied real estate loans were $1.16 billion at December 31, 2025 and $1.22 billion at December 31, 2024. Nonowner-occupied commercial real estate loans are made up of income-producing commercial real estate property loans and construction, acquisition, and development property loans. As of December 31, 2025, total income-producing commercial real estate property loans totaled $796.3 million and was comprised of $229.7 million of multi-family property loans, $183.3 million of retail property loans, $141.3 million of office property loans, $42.2 million in hospitality loans, and $199.8 million in industrial and other property loans. Industrial and other property loans include types such as warehouse, mini-storage, and convenience stores. As of December 31, 2025, total construction, acquisition, and development property loans totaled $368.4 million and was comprised of $100.1 million in residential construction property loans and $268.3 million of commercial construction and other land development loans. The weighted average loan-to-value of income-producing nonowner-occupied commercial real estate loans was approximately 55% at December 31, 2025. The weighted average loan-to-value of nonowner-occupied office commercial real estate loans was approximately 58% at December 31, 2025.
Previous wording
Owner-occupied commercial real estate loans totaled $366.8 million at December 31, 2024 and $341.1 million at December 31, 2023.
Current wording
Owner-occupied commercial real estate loans totaled $419.0 million at December 31, 2025 and $366.8 million at December 31, 2024.
Previous wording
At December 31, 2024, our total nonaccrual loans were $22.1 million, or 0.72% of total loans held for investment, as compared to $3.2 million, or 0.11% of total loans held for investment, at December 31, 2023. These loans within this amount that exceeded $250 thousand were specifically analyzed and specific valuation allowances were established as necessary and included in the ACL for loans as of December 31, 2024 to cover any probable loss. The increase in the year ended December 31, 2024 was primarily due to one $19.5 million loan that was placed on nonaccrual status during the second quarter of 2024 after the maturity date was accelerated.
Current wording
At December 31, 2025, our total nonaccrual loans were $7.1 million, or 0.22% of total loans held for investment, as compared to $22.1 million, or 0.72% of total loans held for investment, at December 31, 2024. These loans within this amount that exceeded $250 thousand were specifically analyzed and specific valuation allowances were established as necessary and included in the ACL for loans as of December 31, 2025 to cover any probable loss. The decrease in the year ended December 31, 2025 was primarily due to the full repayment of a $19.5 million loan in the second quarter of 2025 that had been on nonaccrual at December 31, 2024. This decrease was partially offset by other loans being placed on nonaccrual status during 2025.
Previous wording
Nonperforming loans were $24.0 million at December 31, 2024 and $5.2 million at December 31, 2023. This increase is mainly due to the new nonaccrual loan noted above.
Current wording
Nonperforming loans were $9.8 million at December 31, 2025 and $24.0 million at December 31, 2024. This decrease is mainly due to the nonaccrual changes noted above.
Previous wording
If a borrower on a restructured accruing loan has demonstrated performance under the previous terms, is not experiencing financial difficulty and shows the capacity to continue to perform under the restructured terms, the loan will remain on accrual status. Otherwise, the loan will be placed on nonaccrual status until the borrower demonstrates a sustained period of performance, which generally requires six consecutive months of payments.
Current wording
If a borrower on a modified accruing loan has demonstrated performance under the previous terms, is not experiencing financial difficulty and shows the capacity to continue to perform under the restructured terms, the loan will remain on accrual status. Otherwise, the loan will be placed on nonaccrual status until the borrower demonstrates a sustained period of performance, which generally requires six consecutive months of payments.
Previous wording
Total securities at December 31, 2024 were $577.2 million, representing a decrease of $45.5 million, or 7.3%, compared to $622.8 million at December 31, 2023. The decrease was primarily due to $33.2 million in maturities, prepayments and calls, net of purchases and a $9.7 million decrease in the fair value of available for sale securities at December 31, 2024 as compared to December 31, 2023.
Current wording
Total securities at December 31, 2025 were $567.5 million, representing a decrease of $9.7 million, or 1.7%, compared to $577.2 million at December 31, 2024. The decrease was primarily due to $28.9 million in maturities, prepayments and calls, net of purchases and a $21.7 million decrease in the fair value of securities available for sale at December 31, 2025 as compared to December 31, 2024.
Previous wording
Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. During the year ended December 31, 2024, the fair value adjustment to the Company’s available for sale securities decreased $9.7 million after increasing by $20.7 million during 2023. The change resulted from increased longer-term interest rates during 2024. At December 31, 2024, the Company evaluated whether the decline in fair value has resulted from credit losses or other factors. Within this evaluation, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agency, and adverse conditions specifically related to the security, among other factors. Based on management’s evaluation no unrealized losses on securities were determined to be due to credit loss. Additionally, we anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not probable that we will be required to sell them before recovery of the amortized cost basis, which may be at maturity, thus no ACL or losses have been recognized or realized in the consolidated financial statements for securities in the portfolio.
Current wording
Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. During the year ended December 31, 2025, the fair value adjustment to the Company’s securities available for sale increased $21.7 million after decreasing by $9.7 million during 2024. The change resulted from decreased longer-term interest rates during 2025. At December 31, 2025, the Company evaluated whether the decline in fair value has resulted from credit losses or other factors. Within this evaluation, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by rating agency, and adverse conditions specifically related to the security, among other factors. Based on management’s evaluation no unrealized losses on securities were determined to be due to credit loss. Additionally, we anticipate full recovery of amortized cost with respect to these securities by maturity, or sooner in the event of a more favorable market interest rate environment. We do not intend to sell these securities and it is not probable that we will be required to sell them before recovery of the amortized cost basis, which may be at maturity, thus no ACL or losses have been recognized or realized in the consolidated financial statements for securities in the portfolio.
Previous wording
Total deposits at December 31, 2024 were $3.62 billion, representinga decrease of $5.3 million, or 0.1%, compared to $3.63 billion at December 31, 2023. Deposits were essentially unchanged, year-over-year, with an increase in interest-bearing deposits offset by a decline in noninterest-bearing deposits. As of December 31, 2024, 25.8% of total deposits were comprised of noninterest-bearing demand accounts, 61.9% of interest-bearing non-maturity accounts and 12.3% of time deposits. Interest-bearing non-maturity accounts included $207.8 million in brokered deposits, which represented 5.7% of total deposits at December 31, 2024.
Current wording
Total deposits at December 31, 2025 were $3.87 billion, representing an increase of $253.2 million, or 7.0%, compared to $3.62 billion at December 31, 2024. The increase was due to organic growth and occurred broadly across commercial and retail deposits, with growth in both noninterest-bearing and interest-bearing deposits. As of December 31, 2025, 26.4% of total deposits were comprised of noninterest-bearing demand accounts, 62.5% of interest-bearing non-maturity accounts and 11.1% of time deposits. Interest-bearing non-maturity accounts included $210.8 million in brokered deposits, which represented 5.4% of total deposits at December 31, 2025.
Previous wording
The estimated amount of uninsured deposits as of December 31, 2024 was $1.2 billion. This represented approximately 33% of total deposits and excludes $274 million of collateralized public fund deposits.
Current wording
The estimated amount of uninsured deposits as of December 31, 2025 was $1.40 billion. This represented approximately 36% of total deposits and excludes $336 million of collateralized public fund deposits.
Previous wording
In addition to deposits, we utilize advances from the FHLB and other borrowings as a supplementary funding source to finance our operations.
Current wording
In addition to deposits, we may utilize advances from the FHLB and other borrowings as a supplementary funding source to finance our operations.
Previous wording
FHLB Advances. The FHLB allows us to borrow, both short and long-term, on a blanket floating lien status collateralized by first mortgage loans and commercial real estate loans as well as FHLB stock. At December 31, 2024 and 2023, we had total remaining borrowing capacity from the FHLB of $1.11 billion and $1.10 billion, respectively. We had no FHLB borrowings during the years ended December 31, 2024 or 2023.
Current wording
FHLB Advances. The FHLB allows us to borrow, both short and long-term, on a blanket floating lien status collateralized by first mortgage loans and commercial real estate loans as well as FHLB stock. At December 31, 2025 and 2024, we had total remaining borrowing capacity from the FHLB of $1.27 billion and $1.11 billion, respectively. We had no FHLB borrowings during the years ended December 31, 2025 or 2024.
Previous wording
The Company may use FHLB letters of credit to pledge to certain public deposits. The outstanding balance of FHLB letters of credit was $75.0 million and $0 at December 31, 2024 and December 31, 2023, respectively.
Current wording
The Company may use FHLB letters of credit to pledge to certain public deposits. The outstanding balance of FHLB letters of credit was $0 and $75.0 million at December 31, 2025 and December 31, 2024, respectively.
Previous wording
Federal Reserve Bank of Dallas. The Bank has a line of credit with the FRB. The amount of the line is determined on a monthly basis by the Federal Reserve Bank. The line is collateralized by a blanket floating lien on all agriculture, commercial and consumer loans. The amount of the line was $654.0 million and $595.4 million at December 31, 2024 and 2023, respectively. There were no amounts outstanding on the FRB line of credit at December 31, 2024 and 2023. We had no long-term FRB borrowings during the years ended December 31, 2024 or 2023.
Current wording
Federal Reserve Bank of Dallas. The Bank has a line of credit with the FRB. The amount of the line is determined on a monthly basis by the Federal Reserve Bank. The line is collateralized by a blanket floating lien on all agriculture, commercial and consumer loans. The amount of the line was $659.7 million and $654.0 million at December 31, 2025 and 2024, respectively. There were no amounts outstanding on the FRB line of credit at December 31, 2025 and 2024. We had no long-term FRB borrowings during the years ended December 31, 2025 or 2024.
Previous wording
In December 2018, the Company issued $26.5 million in subordinated notes. Notes totaling $12.4 million (the “2028 Notes”) have a maturity date of December 2028 and a weighted average fixed rate of 5.74% for the first five years. The remaining $14.1 million of notes have a maturity date of December 2030 and a weighted average fixed rate of 6.41% for the first seven years. After the fixed rate periods, all notes will float at the Wall Street Journal prime rate, with a floor of 4.0% and a ceiling of 7.5%. These notes pay interest quarterly, are unsecured, and may be called by the Company at any time after the remaining maturity is five years or less. Additionally, these notes qualify for Tier 2 capital treatment, subject to regulatory limitations.
Current wording
In December 2018, the Company issued $14.1 million of subordinated notes that have a maturity date of December 2030 and a weighted average fixed rate of 6.41% for the first seven years. After the fixed rate period, all notes will float at the Wall Street Journal prime rate, with a floor of 4.0% and a ceiling of 7.5%. These notes pay interest quarterly, are unsecured, and may be called by the Company at any time after the remaining maturity is five years or less. Additionally, these notes are intended to qualify for Tier 2 capital treatment, subject to regulatory limitations.
Previous wording
On November 8, 2023, the Company notified holders of its 2028 Notes that it had elected to redeem all the outstanding 2028 Notes effective on December 15, 2023 (the “Redemption Date”). Each of the 2028 Notes were redeemed pursuant to the terms of the Indenture, dated as of December 14, 2018, between the Company and Argent Trust Company, N.A., as trustee for the 2028 Notes (the “Trustee”), at the redemption price totaling approximately $12.4 million in aggregate principal amount, plus accrued and unpaid interest. As provided in the redemption notice, on the Redemption Date, the Trustee paid the relevant Redemption Price to the holders of 2028 Notes appearing on the books and records of the Trustee on the Redemption Date. The 2028 Notes ceased to represent the right to payment of principal and interest upon the payment to the holders of 2028 Notes by the Trustee representing the Redemption Price. The Company received all necessary regulatory approvals for the redemption of the 2028 Notes.
Current wording
On September 29, 2020, the Company issued $50.0 million in subordinated notes. Proceeds were reduced by approximately $926 thousand in debt issuance costs. The notes had a maturity date of September 2030 with a fixed rate of 4.50% for the first five years. On August 25, 2025, the Company notified holders (the “Redemption Notice”) of these notes that it had elected to redeem all of these outstanding notes effective on September 30, 2025 (the “Redemption Date”). Each of these notes were redeemed pursuant to the terms of the Indenture, dated as of September 29, 2020, between the Company and UMB Bank, National Association, as trustee for these notes (the “Trustee”), at the Redemption Price totaling $50.0 million in aggregate principal amount, plus accrued and unpaid interest (the “Redemption Price”). As provided in the Redemption Notice, on the Redemption Date, the Trustee paid the relevant Redemption Price to the holders of these notes appearing on the books and records of the Trustee on the Redemption Date. The notes ceased to represent the right to payment of principal and interest upon the payment to the holders of the notes by the Trustee representing the Redemption Price. The Company received all necessary regulatory approvals for the redemption of these notes.
Previous wording
As of December 31, 2024, the total amount of subordinated debt outstanding was $64.1 million, less approximately $139 thousand of remaining debt issuance costs for a total balance of $64.0 million.
Current wording
As of December 31, 2025, the total amount of subordinated debt outstanding was $14.1 million.
Previous wording
The chart below indicates certain information, as of December 31, 2024, about each of the statutory trusts and the junior subordinated deferrable interest debentures, including the date the junior subordinated deferrable interest debentures were issued, outstanding amounts of trust preferred securities and junior subordinated deferrable interest debentures, the maturity date of the junior subordinated deferrable interest debentures, the interest rates on the junior subordinated deferrable interest debentures and the investment banker.
Current wording
The chart below indicates certain information, as of December 31, 2025, about each of the statutory trusts and the junior subordinated deferrable interest debentures, including the date the junior subordinated deferrable interest debentures were issued, outstanding amounts of trust preferred securities and junior subordinated deferrable interest debentures, the maturity date of the junior subordinated deferrable interest debentures, and the interest rates on the junior subordinated deferrable interest debentures.
Previous wording
Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits, and additional borrowings from correspondent banks, FHLB advances, and the FRB discount window. We had available borrowing capacity of up to approximately $1.77 billion through the FHLB, the FRB’s discount window at December 31, 2024, which includes the unused line with the FHLB of $1.11 billion and the unused line with the FRB of $654.0 million. Additionally, we have uncollateralized lines with multiple banks totaling $140 million at December 31,2024. These lines are not guaranteed and we are not placing reliance on them.
Current wording
Our liquidity position is supported by management of liquid assets and access to alternative sources of funds. Our liquid assets include cash, interest-bearing deposits in correspondent banks, federal funds sold, and fair value of unpledged investment securities. Other available sources of liquidity include wholesale deposits, and additional borrowings from correspondent banks, FHLB advances, and the FRB discount window. At December 31, 2025, the Bank had the capacity to borrow funds from the FHLB and the Federal Reserve discount window of up to approximately $1.27 billion and $659.7 million, respectively. Additionally, we have uncollateralized lines with multiple banks totaling $140.0 million at December 31, 2025. These lines are not guaranteed and we are not placing reliance on them.
Previous wording
Total stockholders’ equity increased to $438.9 million as of December 31, 2024, compared to $407.1 million as of December 31, 2023. The increase from December 31, 2023 was primarily the result of $49.7 million in net income, partially offset by an increase in other comprehensive loss of $8.9 million, $9.2 million in dividends paid, and repurchases of common stock of $1.3 million for the year ended December 31, 2024.
Current wording
Total stockholders’ equity increased to $493.8 million as of December 31, 2025, compared to $438.9 million as of December 31, 2024. The increase from December 31, 2024 was primarily the result of $58.5 million in net income and an increase of $12.9 million in accumulated other comprehensive income (“AOCI”) related to fair value changes in securities available for sale and related fair value hedges, partially offset by $10.1 million in dividends paid, and repurchases of common stock of $8.5 million for the year ended December 31, 2025.
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