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What changed in SOUTH PLAINS FINANCIAL, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SOUTH PLAINS FINANCIAL, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+405 added−158 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-07)

Top changes in SOUTH PLAINS FINANCIAL, INC.'s 2025 10-K

405 paragraphs added · 158 removed · 134 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

74 edited+19 added−10 removed249 unchanged
Biggest changeRulemaking authority for most federal consumer protection laws was transferred from the prudential regulators to the CFPB on July 21, 2011. In some cases, regulators such as the Federal Trade Commission (“FTC”) and the U.S. Department of Justice (“DOJ”) also retain certain rulemaking or enforcement authority.
Biggest changeFailure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general and civil or criminal liability. 19 Table of Contents Rulemaking authority for most federal consumer protection laws was transferred from the prudential regulators to the CFPB on July 21, 2011.
In addition, the SEC maintains an Internet web site (at www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 23 Table of Contents The Company routinely posts important information for investors on its web site (under www.spfi.bank and, more specifically, under the News & Events tab at www.spfi.bank/news-events/press-releases).
In addition, the SEC maintains an Internet web site (at www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 22 Table of Contents The Company routinely posts important information for investors on its web site (under www.spfi.bank and, more specifically, under the News & Events tab at www.spfi.bank/news-events/press-releases).
Significant recent CFPB developments include: • continued focus on fair lending, including promoting racial and economic equity for underserved, vulnerable and marginalized communities; 20 Table of Contents • focused efforts on enforcing certain compliance obligations the CFPB deems a priority, such as automobile loan servicing, debt collection, deposit, overdraft, non-sufficient funds, representment fees and other services fees, mortgage origination and servicing, and remittances, among others; and • rulemaking plans concerning, among others, consumers’ access to their financial information and requirements for financial institutions to collect, report and make public certain information concerning credit applications made by women-owned, minority-owned and small businesses.
Significant recent CFPB developments include: • continued focus on fair lending, including promoting racial and economic equity for underserved, vulnerable and marginalized communities; • focused efforts on enforcing certain compliance obligations the CFPB deems a priority, such as automobile loan servicing, debt collection, deposit, overdraft, non-sufficient funds, representment fees and other services fees, mortgage origination and servicing, and remittances, among others; and • rulemaking plans concerning, among others, consumers’ access to their financial information and requirements for financial institutions to collect, report and make public certain information concerning credit applications made by women-owned, minority-owned and small businesses.
The BHCA and the implementing regulations of the Federal Reserve generally prohibit the Company from controlling or engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions.
Permissible Activities . The BHCA and the implementing regulations of the Federal Reserve generally prohibit the Company from controlling or engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions.
An institution is subject to limitations on certain activities, including payment of dividends, share repurchases and discretionary bonuses to executive officers, if its capital level is below the buffered ratio. The Basel III minimum capital ratios are summarized in the table below.
An institution is subject to limitations on certain activities, including payment of dividends, share repurchases and discretionary bonuses to executive officers, if its capital level is below the buffered ratio. 9 Table of Contents The Basel III minimum capital ratios are summarized in the table below.
Consequently, any restrictions on the ability of the Bank to pay dividends to the Company may, in turn, restrict the ability of the Company to pay dividends to shareholders. As described above, the Bank exceeded its minimum capital requirements under applicable regulatory guidelines as of December 31, 2024. Transactions with Affiliates .
Consequently, any restrictions on the ability of the Bank to pay dividends to the Company may, in turn, restrict the ability of the Company to pay dividends to shareholders. As described above, the Bank exceeded its minimum capital requirements under applicable regulatory guidelines as of December 31, 2025. Transactions with Affiliates .
We currently operate 25 full-service banking locations across seven geographic markets resulting from six acquisitions, de novo branch establishments, and the formation of a de novo bank in Ruidoso, New Mexico, which we later merged into the Bank.
We currently operate 24 full-service banking locations across seven geographic markets resulting from six acquisitions, de novo branch establishments, and the formation of a de novo bank in Ruidoso, New Mexico, which we later merged into the Bank.
In July 2024, the federal banking agencies, including the Federal Reserve and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism (“CFT”) programs.
In July 2024, the federal banking agencies, including the Federal Reserve and FDIC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism (“CFT”) programs.
We believe our exposure to these dynamic and complementary markets provides us with economic diversification and the opportunity for expansion across Texas and New Mexico. Competition The banking and financial services industry is highly competitive, and we compete with a wide range of financial institutions within our markets, including local, regional and national commercial banks and credit unions.
We believe our exposure to these dynamic and complementary markets provides us with economic diversification and the opportunity for expansion across Texas and New Mexico. 5 Table of Contents Competition The banking and financial services industry is highly competitive, and we compete with a wide range of financial institutions within our markets, including local, regional and national commercial banks and credit unions.
A key focus of the CFPB is whether an act or practice hinders a consumer’s decision-making. 21 Table of Contents Incentive Compensation Guidance The federal bank regulatory agencies have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
A key focus of the CFPB is whether an act or practice hinders a consumer’s decision-making. Incentive Compensation Guidance The federal bank regulatory agencies have issued comprehensive guidance intended to ensure that the incentive compensation policies of banking organizations do not undermine the safety and soundness of those organizations by encouraging excessive risk-taking.
Our credit approval policies provide for various levels of officer and senior management lending authority for new credits and renewals, which are based on position, capability and experience. Loans in excess of an individual officer’s lending limit up to $3 million may be approved with joint authorities of a market president and a senior credit officer.
Our credit approval policies provide for various levels of officer and senior management lending authority for new credits and renewals, which are based on position, capability and experience. New loans in excess of an individual officer’s lending limit up to $5.0 million may be approved with joint authorities of a market president and a senior credit officer.
Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. 22 Table of Contents Impact of Monetary Policy The monetary policy of the Federal Reserve has a significant effect on the operating results of financial or bank holding companies and their subsidiaries.
Consumers also have the option to direct banks and other financial institutions not to share information about transactions and experiences with affiliated companies for the purpose of marketing products or services. Impact of Monetary Policy The monetary policy of the Federal Reserve has a significant effect on the operating results of financial or bank holding companies and their subsidiaries.
As of December 31, 2024, the Bank was eligible to accept brokered deposits without a waiver from the FDIC as the Bank was a well-capitalized institution. Deposit Insurance . As an FDIC-insured institution, the Bank is required to pay deposit insurance premiums to the FDIC.
As of December 31, 2025, the Bank was eligible to accept brokered deposits without a waiver from the FDIC as the Bank was a well-capitalized institution. Deposit Insurance . As an FDIC-insured institution, the Bank is required to pay deposit insurance premiums to the FDIC.
The Board Credit Risk Committee is comprised of outside directors and two Bank officers, including the Chairman of the Board and the Bank’s Chief Executive Officer. Loan Approval Process . We seek to achieve an appropriate balance between prudent, disciplined underwriting and flexibility in our decision-making and responsiveness to our customers.
The Board Credit Risk Committee is comprised of outside directors and two Bank officers, including the Chairman of the Board and the Bank’s Chief Executive Officer. 6 Table of Contents Loan Approval Process . We seek to achieve an appropriate balance between prudent, disciplined underwriting and flexibility in our decision-making and responsiveness to our customers.
An institution may borrow from the Federal Reserve “discount window” as a secondary source of funds if the institution meets the Federal Reserve’s credit standards. 15 Table of Contents Liquidity Requirements . Historically, regulation and monitoring of bank and bank holding company liquidity has been addressed as a supervisory matter, without required formulaic measures.
An institution may borrow from the Federal Reserve “discount window” as a secondary source of funds if the institution meets the Federal Reserve’s credit standards. Liquidity Requirements . Historically, regulation and monitoring of bank and bank holding company liquidity has been addressed as a supervisory matter, without required formulaic measures.
At December 31, 2024, approximately 31% of our current staff had been with us for ten years or more. Our employees embody our commitment to excellence, innovation, and customer satisfaction, driving sustainable growth and delivering exceptional results in every aspect of our operations.
At December 31, 2025, approximately 33% of our current staff had been with us for ten years or more. Our employees embody our commitment to excellence, innovation, and customer satisfaction, driving sustainable growth and delivering exceptional results in every aspect of our operations.
Many of the amendments, including those with respect to beneficial ownership, require the Department of Treasury and FinCEN to promulgate rules. On September 29, 2022, FinCEN issued a final rule establishing a beneficial ownership information reporting requirement, pursuant to the Corporate Transparency Act of 2019 (“CTA”).
Many of the amendments, including those with respect to beneficial ownership, require the Department of Treasury and FinCEN to promulgate rules. 18 Table of Contents On September 29, 2022, FinCEN issued a final rule establishing a beneficial ownership information reporting requirement, pursuant to the Corporate Transparency Act of 2019 (“CTA”).
Federal Reserve policies also forbid the payment by bank subsidiaries of management fees which are unreasonable in amount or exceed the fair market value of the services rendered or, if no market exists, actual costs plus a reasonable profit. Financial Subsidiaries .
Federal Reserve policies also forbid the payment by bank subsidiaries of management fees which are unreasonable in amount or exceed the fair market value of the services rendered or, if no market exists, actual costs plus a reasonable profit. 15 Table of Contents Financial Subsidiaries .
Market Area We operate in the following markets (deposit information is as of December 31, 2024): Lubbock/South Plains - We operate 10 branches holding $2.2 billion of deposits in the Lubbock metropolitan statistical area (“MSA”) and the surrounding South Plains region of Texas.
Market Area We operate in the following markets (deposit information is as of December 31, 2025): Lubbock/South Plains - We operate 10 branches holding $2.5 billion of deposits in the Lubbock metropolitan statistical area (“MSA”) and the surrounding South Plains region of Texas.
These asset review procedures provide management with additional information for assessing our asset quality and lending strategies. 7 Table of Contents Investments We manage our securities portfolio primarily for liquidity purposes, including depositor and borrower funding requirements and availability as collateral for public fund deposits, with a secondary focus on interest income.
These asset review procedures provide management with additional information for assessing our asset quality and lending strategies. Investments We manage our securities portfolio primarily for liquidity purposes, including depositor and borrower funding requirements and availability as collateral for public fund deposits, with a secondary focus on interest income.
A rebuttable presumption of control arises under the CIBC Act where a person (or persons acting in concert) controls 10% or more (but less than 25%) of a class of the voting securities of a bank or bank holding (i) which has registered securities under the Exchange Act, such as the Company, or (ii) no other person owns, controls, or holds the power to vote a greater percentage of any class of voting securities immediately after the transaction. 12 Table of Contents Permissible Activities .
A rebuttable presumption of control arises under the CIBC Act where a person (or persons acting in concert) controls 10% or more (but less than 25%) of a class of the voting securities of a bank or bank holding (i) which has registered securities under the Exchange Act, such as the Company, or (ii) no other person owns, controls, or holds the power to vote a greater percentage of any class of voting securities immediately after the transaction.
The fee is based on the amount of the bank’s assets at rates established by the Finance Commission of Texas. During the year ended December 31, 2024, the Bank paid examination assessments to the TDB totaling $ 333 thousand. Capital Requirements . Banks are generally required to maintain minimum capital ratios.
The fee is based on the amount of the bank’s assets at rates established by the Finance Commission of Texas. During the year ended December 31, 2025, the Bank paid examination assessments to the TDB totaling $350 thousand. Capital Requirements . Banks are generally required to maintain minimum capital ratios.
To qualify for this treatment, the insured depository institutions and credit unions must meet conditions relating to prepayment penalties, points and fees, negative amortization, interest-only features and documentation. Home Mortgage Disclosure Act (“HMDA”) .
To qualify for this treatment, the insured depository institutions and credit unions must meet conditions relating to prepayment penalties, points and fees, negative amortization, interest-only features and documentation. 20 Table of Contents Home Mortgage Disclosure Act (“HMDA”) .
In addition, the GLBA imposed new restrictions on transactions between a bank and its financial subsidiaries similar to restrictions applicable to transactions between banks and non-bank affiliates. As of December 31, 2024, the Bank did not have any financial subsidiaries. 16 Table of Contents Loans to Directors, Executive Officers and Principal Shareholders .
In addition, the GLBA imposed new restrictions on transactions between a bank and its financial subsidiaries similar to restrictions applicable to transactions between banks and non-bank affiliates. As of December 31, 2025, the Bank did not have any financial subsidiaries. Loans to Directors, Executive Officers and Principal Shareholders .
We retain mortgage servicing rights from time to time when we sell mortgages to third parties. As of December 31, 2024, we serviced $1.9 billion of mortgages that we originated and sold to third parties.
We retain mortgage servicing rights from time to time when we sell mortgages to third parties. As of December 31, 2025, we serviced $1.8 billion of mortgages that we originated and sold to third parties.
The Bank’s legal lending limit to any one borrower was approximately $112.7 million as of December 31, 2024. Safety and Soundness Standards / Risk Management . The federal banking agencies have adopted guidelines establishing operational and managerial standards to promote the safety and soundness of federally insured depository institutions.
The Bank’s legal lending limit to any one borrower was approximately $123.1 million as of December 31, 2025. Safety and Soundness Standards / Risk Management . The federal banking agencies have adopted guidelines establishing operational and managerial standards to promote the safety and soundness of federally insured depository institutions.
Additional aspects of the Basel III Capital Rules’ risk-weighting requirements that are relevant to the Company and the Bank include: ● assigning exposures secured by single-family residential properties to either a 50% risk weight for first-lien mortgages that meet prudent underwriting standards or a 100% risk weight category for all other mortgages; ● providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (increased from 0% under the previous risk-based capital rules); ● assigning a 150% risk weight to all exposures that are nonaccrual or 90 days or more past due (increased from 100% under the previous risk-based capital rules), except for those secured by single-family residential properties, which will be assigned a 100% risk weight, consistent with the previous risk-based capital rules; ● applying a 150% risk weight instead of a 100% risk weight for certain high-volatility commercial real estate, or HVCRE, loans, or acquisition, development, and construction, or ADC, loans; and ● applying a 250% risk weight to the portion of mortgage servicing rights and deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks that are not deducted from CET1 capital (increased from 100% under the previous risk-based capital rules). 10 Table of Contents As of December 31, 2024, the Company’s and the Bank’s capital ratios exceeded the minimum capital adequacy guideline percentage requirements under the Basel III Capital Rules on a fully phased-in basis.
Additional aspects of the Basel III Capital Rules’ risk-weighting requirements that are relevant to the Company and the Bank include: ● assigning exposures secured by single-family residential properties to either a 50% risk weight for first-lien mortgages that meet prudent underwriting standards or a 100% risk weight category for all other mortgages; ● providing for a 20% credit conversion factor for the unused portion of a commitment with an original maturity of one year or less that is not unconditionally cancellable (increased from 0% under the previous risk-based capital rules); ● assigning a 150% risk weight to all exposures that are nonaccrual or 90 days or more past due (increased from 100% under the previous risk-based capital rules), except for those secured by single-family residential properties, which will be assigned a 100% risk weight, consistent with the previous risk-based capital rules; ● applying a 150% risk weight instead of a 100% risk weight for certain high-volatility commercial real estate, or HVCRE, loans, or acquisition, development, and construction, or ADC, loans; and ● applying a 250% risk weight to the portion of mortgage servicing rights and deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks that are not deducted from CET1 capital (increased from 100% under the previous risk-based capital rules).
Dallas - We operate three branches with $470.0 million of deposits and five loan production offices, which we refer to as mortgage offices, in the Dallas-Fort Worth-Arlington MSA, which we refer to as the Dallas-Fort Worth metroplex. El Paso - We operate two bank branches with $250.4 million of deposits and one mortgage office in the El Paso MSA.
Dallas - We operate three branches with $496.5 million of deposits and five loan production offices, which we refer to as mortgage offices, in the Dallas-Fort Worth-Arlington MSA, which we refer to as the Dallas-Fort Worth metroplex. El Paso - We operate two bank branches with $229.4 million of deposits and one mortgage office in the El Paso MSA.
As of December 31, 2024, the Bank’s total amount of lines of credit for loans to insiders and loans outstanding to insiders was $65.2 million. Limits on Loans to One Borrower . As a Texas banking association, the Bank is subject to limits on the amount of loans it can make to one borrower.
As of December 31, 2025, the Bank’s total amount of lines of credit for loans to insiders and loans outstanding to insiders was $48.9 million. Limits on Loans to One Borrower . As a Texas banking association, the Bank is subject to limits on the amount of loans it can make to one borrower.
Gross revenue derived from our investment services for the year ended December 31, 2024 was $1.7 million with $605.7 million in assets under management at December 31, 2024. 8 Table of Contents SUPERVISION AND REGULATION The following is a general summary of the material aspects of certain statutes and regulations that are applicable to us.
Gross revenue derived from our investment services for the year ended December 31, 2025 was $1.7 million with $684.4 million in assets under management at December 31, 2025. SUPERVISION AND REGULATION The following is a general summary of the material aspects of certain statutes and regulations that are applicable to us.
Our trust department had $423 million of assets under management at December 31, 2024, and contributed $2.7 million of fee income for the year ended December 31, 2024. Investment Services The Investment Center at City Bank provides a variety of investments offered through Raymond James Financial Services, Inc.
Our trust department had approximately $435 million of assets under management at December 31, 2025, and contributed $2.9 million of fee income for the year ended December 31, 2025. Investment Services The Investment Center at City Bank provides a variety of investments offered through Raymond James Financial Services, Inc.
Human Capital Resources As of December 31, 2024, we had approximately 600 total employees, which included 528 full-time employees and 72 part-time employees. None of our employees are covered under a collective bargaining agreement and management considers its employee relations to be satisfactory.
Human Capital Resources As of December 31, 2025, we had approximately 603 total employees, which included 545 full-time employees and 58 part-time employees. None of our employees are covered under a collective bargaining agreement and management considers its employee relations to be satisfactory.
Among other requirements, federal laws, including the Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act and as further amended by the National Defense Authorization Act for Fiscal Year 2021 (the “National Defense Authorization Act”), and implementing regulations, require banks to establish and maintain AML programs that include, at a minimum: ● internal policies, procedures and controls designed to implement and maintain the bank’s compliance with all of the requirements of the BSA, the USA PATRIOT Act, the National Defense Authorization Act and related laws and regulations; ● systems and procedures for monitoring and reporting suspicious transactions and activities; ● a designated compliance officer; ● employee training; 18 Table of Contents ● an independent audit function to test the AML program; ● procedures to verify the identity of each customer upon the opening of accounts; and ● heightened due diligence policies, procedures and controls applicable to certain foreign accounts and relationships.
Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be in violation of these obligations. 17 Table of Contents Among other requirements, federal laws, including the Bank Secrecy Act (“BSA”), as amended by the USA PATRIOT Act and as further amended by the National Defense Authorization Act for Fiscal Year 2021 (the “National Defense Authorization Act”), and implementing regulations, require banks to establish and maintain AML programs that include, at a minimum: ● internal policies, procedures and controls designed to implement and maintain the bank’s compliance with all of the requirements of the BSA, the USA PATRIOT Act, the National Defense Authorization Act and related laws and regulations; ● systems and procedures for monitoring and reporting suspicious transactions and activities; ● a designated compliance officer; ● employee training; ● an independent audit function to test the AML program; ● procedures to verify the identity of each customer upon the opening of accounts; and ● heightened due diligence policies, procedures and controls applicable to certain foreign accounts and relationships.
Our Board requires new loans over $5 million to relationships in excess of $20 million to be reported to the Board Credit Risk Committee. As of December 31, 2024, the Bank had a legal lending limit of approximately $112.7 million.
Our Board requires new loans over $5.0 million to relationships in excess of $20.0 million to be reported to the Board Credit Risk Committee. As of December 31, 2025, the Bank had a legal lending limit of approximately $123.1 million.
While our mortgage operation represents a sizable component of our total noninterest income, comprising 30%, or $14.2 million, for the year ended December 31, 2024, we view the mortgage business as an ancillary part of our operations. Within our mortgage origination portfolio, refinances of existing mortgages represented 19% of total mortgage originations in the year ended December 31, 2024.
While our mortgage operation represents a sizable component of our total noninterest income, comprising 24%, or $10.7 million, for the year ended December 31, 2025, we view the mortgage business as an ancillary part of our operations. Within our mortgage origination portfolio, refinances of existing mortgages represented 18% of total mortgage originations in the year ended December 31, 2025.
Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy. 13 Table of Contents The aggregate liability of the holding company of an undercapitalized bank is limited to the lesser of 5% of the institution’s assets at the time it became undercapitalized or the amount necessary to cause the institution to be “adequately capitalized.” The bank regulators have greater power in situations where an institution becomes “significantly” or “critically” undercapitalized or fails to submit a capital restoration plan.
The aggregate liability of the holding company of an undercapitalized bank is limited to the lesser of 5% of the institution’s assets at the time it became undercapitalized or the amount necessary to cause the institution to be “adequately capitalized.” The bank regulators have greater power in situations where an institution becomes “significantly” or “critically” undercapitalized or fails to submit a capital restoration plan.
At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, may increase or decrease the assessment rates following notice and comment on proposed rulemaking. As a result, the Bank’s FDIC deposit insurance premiums could increase. During the year ended December 31, 2024, the Bank paid $ 2.0 million in FDIC deposit insurance premiums.
At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, may increase or decrease the assessment rates following notice and comment on proposed rulemaking. As a result, the Bank’s FDIC deposit insurance premiums could increase.
Other Banking Services Mortgage Banking Our mortgage originations totaled $292.6 million for the year ended December 31, 2024 and we sold the servicing on approximately 69% of those mortgages.
Other Banking Services Mortgage Banking Our mortgage originations totaled $269.3 million for the year ended December 31, 2025 and we sold the servicing on approximately 57% of those mortgages.
In addition, the federal banking agencies have required many banks and bank holding companies subject to enforcement actions to maintain capital ratios in excess of the minimum ratios otherwise required to be deemed “well-capitalized” and have subjected such institutions to restrictions on various activities, including a bank’s ability to accept or renew brokered deposits. 9 Table of Contents In 2013, the federal bank regulatory agencies issued final rules, or the Basel III Capital Rules, establishing a new comprehensive capital framework for banking organizations.
In addition, the federal banking agencies have required many banks and bank holding companies subject to enforcement actions to maintain capital ratios in excess of the minimum ratios otherwise required to be deemed “well-capitalized” and have subjected such institutions to restrictions on various activities, including a bank’s ability to accept or renew brokered deposits.
We offer a variety of deposit products including demand deposits accounts, interest-bearing products, savings accounts and certificate of deposits. We put continued effort into gathering noninterest-bearing demand deposit accounts through loan production, customer referrals, marketing staffs, mobile and online banking and various involvements with community networks.
We put continued effort into gathering noninterest-bearing demand deposit accounts through loan production, customer referrals, marketing staffs, mobile and online banking and various involvements with community networks.
In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the NASDAQ, to implement listing standards that require listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Beginning on December 31, 2024, the Company is no longer an emerging growth company and, accordingly, the rule will first apply to disclosures in the Company’s proxy statement for the 2025 annual meeting of shareholders. 21 Table of Contents In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including the Nasdaq, to implement listing standards that require listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Houston - We operate one branch with $50.6 million of deposits in the Houston-The Woodlands-Sugarland MSA, which we refer to as Greater Houston. This branch is located in the city of Houston. 5 Table of Contents Bryan/College Station - We operate one branch in the city of College Station, Texas, which has $54.7 million in deposits.
Houston - We operate one branch with $52.8 million of deposits in the Houston-The Woodlands-Sugarland MSA, which we refer to as Greater Houston. This branch is located in the city of Houston. Bryan/College Station - We operate one branch in the city of College Station, Texas, which has $56.1 million in deposits.
Additionally, bank holding companies that qualify and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of non-banking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally.
As the consolidated assets of the Company are less than $10 billion and the Company does not currently exceed the 5% threshold, this aspect of the Volcker Rule does not have any impact on the Company’s consolidated financial statements at this time. 12 Table of Contents Additionally, bank holding companies that qualify and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of non-banking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally.
We had total assets of $4.23 billion, gross loans held for investment of $3.06 billion, total deposits of $3.62 billion, and total shareholders’ equity of $438.9 million as of December 31, 2024. Our history dates back over 80 years.
We had total assets of $4.48 billion, gross loans held for investment of $3.14 billion, total deposits of $3.87 billion, and total shareholders’ equity of $493.8 million as of December 31, 2025. Our history dates back over 80 years.
We refer to the Bryan-College Station MSA as Bryan/College Station. The Permian Basin - We operate six branches with $363.1 million of deposits in the Permian Basin region of Texas. Ruidoso, New Mexico - We operate two branches with $194.9 million of deposits in the village of Ruidoso, New Mexico.
We refer to the Bryan-College Station MSA as Bryan/College Station. The Permian Basin - We operate six branches with $361.3 million of deposits in the Permian Basin region of Texas. Ruidoso, New Mexico - We operate one branch with $200.5 million of deposits in the village of Ruidoso, New Mexico.
Commercial real estate concentrations are monitored by the Board of Directors (“Board”) of the Bank, at least quarterly and the limits are reviewed bi-monthly as part of our credit analytics Board Credit Risk Committee program.
Our loan approval policies establish concentrations limits with respect to industry and loan product type to enhance portfolio diversification. Commercial real estate concentrations are monitored by the Board of Directors (“Board”) of the Bank, at least quarterly and the limits are reviewed bi-monthly as part of our credit analytics Board Credit Risk Committee program.
As of that date, our 20 largest borrowing relationships ranged from approximately $26.3 million to $53.9 million (including unfunded commitments) and totaled approximately $695.9 million in total commitments (representing, in the aggregate, 19.4% of our total outstanding commitments).
As of that date, our 20 largest borrowing relationships ranged from approximately $26.7 million to $57.5 million (including unfunded commitments) and totaled approximately $775.0 million in total commitments (representing, in the aggregate, 21.0% of our total outstanding commitments).
The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary’s compliance with the capital restoration plan up to a certain specified amount.
The capital restoration plan will not be accepted by the regulators unless each company having control of the undercapitalized institution guarantees the subsidiary’s compliance with the capital restoration plan up to a certain specified amount. Any such guarantee from a depository institution’s holding company is entitled to a priority of payment in bankruptcy.
Loan relationships over $3 million are approved by our Executive Loan Committee. These limits are reviewed periodically by the Bank’s Board. We believe that our credit approval process provides for thorough underwriting and efficient decision-making. Credit Risk Management . Credit risk management involves a partnership between our loan officers and our credit approval, credit administration and collections personnel.
New loans to relationships over $5.0 million and renewing loans to relationships over $7.0 million are approved by our Executive Loan Committee. These limits are reviewed periodically by the Bank’s Board. We believe that our credit approval process provides for thorough underwriting and efficient decision-making. Credit Risk Management .
On December 18, 2015, the federal banking agencies jointly issued a “statement on prudent risk management for commercial real estate lending .” As of December 31, 2024, the Company did not exceed the levels to be considered to have a concentration in commercial real estate lending and believes its credit administration to be consistent with the published policy statement. 19 Table of Contents The Basel III Capital Rules also require loans categorized as “high-volatility commercial real estate,” or HVCRE, to be assigned a 150% risk weighting and require additional capital support.
On December 18, 2015, the federal banking agencies jointly issued a “statement on prudent risk management for commercial real estate lending.” As of December 31, 2025, the Company did not exceed the levels to be considered to have a concentration in commercial real estate lending and believes its credit administration to be consistent with the published policy statement.
As of December 31, 2024, the Bank met the requirements for being deemed “well-capitalized” for purposes of the prompt corrective action regulations. 11 Table of Contents Enforcement Powers of Federal and State Banking Agencies The federal bank regulatory agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver for financial institutions.
Enforcement Powers of Federal and State Banking Agencies The federal bank regulatory agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver for financial institutions.
In addition, the Bank’s deposit accounts are insured by the DIF to the maximum extent provided under federal law and FDIC regulations, and the FDIC has certain enforcement powers over the Bank. 14 Table of Contents Depositor Preference .
The FDIC is the Bank’s primary federal regulatory agency and periodically examines the Bank’s operations and financial condition and compliance with federal law. In addition, the Bank’s deposit accounts are insured by the DIF to the maximum extent provided under federal law and FDIC regulations, and the FDIC has certain enforcement powers over the Bank. Depositor Preference .
It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.
Dividends may be declared and paid in a corporation’s own authorized but unissued shares out of the surplus of the corporation upon the satisfaction of certain conditions. 13 Table of Contents It is the Federal Reserve’s policy that bank holding companies should generally pay dividends on common stock only out of income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.
The Basel III Capital Rules implement the Basel Committee’s December 2010 framework for strengthening international capital standards and certain provisions of the Dodd-Frank Act. The Basel III Capital Rules became effective on January 1, 2015.
In 2013, the federal bank regulatory agencies issued final rules, or the Basel III Capital Rules, establishing a new comprehensive capital framework for banking organizations. The Basel III Capital Rules implement the Basel Committee’s December 2010 framework for strengthening international capital standards and certain provisions of the Dodd-Frank Act. The Basel III Capital Rules became effective on January 1, 2015.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (“Interstate Act”), together with the Dodd-Frank Act, relaxed prior branching restrictions under federal law by permitting, subject to regulatory approval, banks to establish branches in states where the laws permit banks chartered in such states to establish branches. 17 Table of Contents Section 109 of the Interstate Act prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production.
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (“Interstate Act”), together with the Dodd-Frank Act, relaxed prior branching restrictions under federal law by permitting, subject to regulatory approval, banks to establish branches in states where the laws permit banks chartered in such states to establish branches.
To determine compliance with Section 109, the appropriate federal banking agency first compares a bank’s estimated statewide loan-to-deposit ratio to the estimated host state loan-to-deposit ratio for a particular state. If a bank’s statewide loan-to-deposit ratio is at least one-half of the published host state loan-to-deposit ratio, the bank has complied with Section 109.
If a bank’s statewide loan-to-deposit ratio is at least one-half of the published host state loan-to-deposit ratio, the bank has complied with Section 109. A second step is conducted if a bank’s estimated statewide loan-to-deposit ratio is less than one-half of the published ratio for that state.
Finally, the Bank may also establish banking offices in other states by merging with banks or by purchasing banking offices of other banks in other states, subject to certain restrictions. Interstate Deposit Restrictions .
Additionally, the final rule significantly reduces the volume of information required to be submitted in branch establishment or relocation filings. Finally, the Bank may also establish banking offices in other states by merging with banks or by purchasing banking offices of other banks in other states, subject to certain restrictions. Interstate Deposit Restrictions .
Loan delinquencies and exceptions are constantly monitored by credit personnel and consultations with loan officers occur as often as daily.
Credit risk management involves a partnership between our loan officers and our credit approval, credit administration and collections personnel. Loan delinquencies and exceptions are constantly monitored by credit personnel and consultations with loan officers occur as often as daily.
Consumer Financial Services We are subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers.
As of December 31, 2025, we had $366.1 million in ADC loans and $16.2 million in HVCRE loans. Consumer Financial Services We are subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers.
A bank that fails both steps is in violation of Section 109 and subject to sanctions by the appropriate agency. Those sanctions may include requiring the bank’s interstate branches in the non-compliant state be closed or not permitting the bank to open new branches in the non-compliant state.
Those sanctions may include requiring the bank’s interstate branches in the non-compliant state be closed or not permitting the bank to open new branches in the non-compliant state. For purposes of Section 109, the Bank’s home state is Texas and the Bank operates branches in one host state: New Mexico.
These state and local laws regulate the manner in which financial institutions deal with customers when taking deposits, making loans or conducting other types of transactions. Failure to comply with these laws and regulations could give rise to regulatory sanctions, customer rescission rights, action by state and local attorneys general and civil or criminal liability.
These state and local laws regulate the manner in which financial institutions deal with customers when taking deposits, making loans or conducting other types of transactions.
New products and services, third party risk management and cybersecurity are critical sources of operational risk that financial institutions are expected to address in the current environment. The Bank is expected to have active board and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls. Branching Authority .
The Bank is expected to have active board and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls. 16 Table of Contents Branching Authority .
Substantially all of our loans are made to borrowers located or operating in our primary market areas with whom we have ongoing relationships across various product lines. The few loans secured by properties outside of our primary market areas were made to borrowers who are otherwise well-known to us. Credit Concentrations .
The few loans secured by properties outside of our primary market areas were made to borrowers who are otherwise well-known to us. Credit Concentrations . In connection with the management of our credit portfolio, we actively manage the composition of our loan portfolio, including credit concentrations.
Subject to certain conditions (including deposit concentration limits established by the BHCA and the Dodd-Frank Act), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the U.S.
In addition, failure to implement or maintain adequate compliance programs could cause bank regulators not to approve an acquisition where regulatory approval is required or to prohibit an acquisition even if approval is not required. 11 Table of Contents Subject to certain conditions (including deposit concentration limits established by the BHCA and the Dodd-Frank Act), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the U.S.
The effect of these statutes, regulations, regulatory policies and rules are significant to our financial condition and results of operations. Further, the nature and extent of future legislative, regulatory or other changes affecting financial institutions are impossible to predict with any certainty.
The effect of these statutes, regulations, regulatory policies and rules are significant to our financial condition and results of operations.
The CFPB also has broad authority to prohibit unfair, deceptive and abusive acts and practices, or UDAAP, and to investigate and penalize financial institutions that violate this prohibition.
In some cases, regulators such as the Federal Trade Commission (“FTC”) and the U.S. Department of Justice (“DOJ”) also retain certain rulemaking or enforcement authority. The CFPB also has broad authority to prohibit unfair, deceptive and abusive acts and practices, or UDAAP, and to investigate and penalize financial institutions that violate this prohibition.
Although the Company and the Bank are QCBOs, the Company and the Bank have currently not elected to opt in to the CBLR framework at this time and will continue to follow the capital requirements under the Basel III Capital Rules as described above.
Although the Company and the Bank are QCBOs, the Company and the Bank have currently not elected to opt in to the CBLR framework at this time and will continue to follow the capital requirements under the Basel III Capital Rules as described above. 10 Table of Contents Prompt Corrective Action The Federal Deposit Insurance Act (“FDIA”) requires federal banking agencies to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements.
These components, together with active credit management, are the foundation of our credit culture, which we believe is critical to enhancing the long-term value of our organization to our customers, employees, shareholders and communities. 6 Table of Contents We have a service-driven, relationship-based, business-focused credit culture, rather than a price-driven, transaction-based culture.
We also seek to maintain a broadly diversified loan portfolio across customer, product and industry types. These components, together with active credit management, are the foundation of our credit culture, which we believe is critical to enhancing the long-term value of our organization to our customers, employees, shareholders and communities.
Our investment policy is reviewed annually by the Bank’s Board. Overall investment goals are established by the Bank’s Board and the Bank’s Investment/Asset Liability Committee. The Bank’s Board has delegated the responsibility of monitoring our investment activities to the Investment/Asset Liability Committee. Sources of Funds Deposits Deposits represent the Company’s primary and most vital source of funds.
Our investment policy is reviewed annually by the Bank’s Board. Overall investment goals are established by the Bank’s Board and the Bank’s Investment/Asset Liability Committee.
Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of banks, their holding companies and their affiliates. These laws are intended primarily for the protection of depositors, customers and the Deposit Insurance Fund (“DIF”), rather than for shareholders.
These laws are intended primarily for the protection of depositors, customers and the Deposit Insurance Fund (“DIF”), rather than for shareholders.
For purposes of Section 109, the Bank’s home state is Texas and the Bank operates branches in one host state: New Mexico. The most recently published host state loan-to-deposit ratio using data as of June 30, 2023 reflects a statewide loan-to-deposit ratio in New Mexico of 60%.
The most recently published host state loan-to-deposit ratio using data as of June 30, 2024 reflects a statewide loan-to-deposit ratio in New Mexico of 61%. As of December 31, 2025, the Bank’s statewide loan-to-deposit ratio in New Mexico was 31.2%.
The CRA and the regulations issued thereunder are intended to encourage insured depository institutions, while operating safely and soundly, to help meet the credit needs of their communities.
Accordingly, management believes that the Bank is in compliance with Section 109 in New Mexico after application of the first step of the two-step test. Community Reinvestment Act . The CRA and the regulations issued thereunder are intended to encourage insured depository institutions, while operating safely and soundly, to help meet the credit needs of their communities.
A second step is conducted if a bank’s estimated statewide loan-to-deposit ratio is less than one-half of the published ratio for that state. The second step requires the appropriate agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank’s interstate branches.
The second step requires the appropriate agency to determine whether the bank is reasonably helping to meet the credit needs of the communities served by the bank’s interstate branches. A bank that fails both steps is in violation of Section 109 and subject to sanctions by the appropriate agency.
However, the EGRRCPA prohibits federal banking regulators from imposing higher capital standards on HVCRE exposures unless they are for ADC and clarifying ADC status. As of December 31, 2024, we had $341.7 million in ADC loans and $ 5.3 million in HVCRE loans.
The Basel III Capital Rules also require loans categorized as “high-volatility commercial real estate,” or HVCRE, to be assigned a 150% risk weighting and require additional capital support. However, the EGRRCPA prohibits federal banking regulators from imposing higher capital standards on HVCRE exposures unless they are for ADC and clarifying ADC status.
Removed
We also seek to maintain a broadly diversified loan portfolio across customer, product and industry types.
Added
Our common stock is listed on the Nasdaq Global Select Market under the symbol “SPFI.” Acquisition Activities On December 1, 2025, SPFI and BOH Holdings, Inc., a Texas corporation (“BOH”), entered into an Agreement and Plan of Reorganization, providing for the acquisition by SPFI of BOH through the merger of BOH with and into SPFI, with SPFI continuing as the surviving entity.
Removed
In connection with the management of our credit portfolio, we actively manage the composition of our loan portfolio, including credit concentrations. Our loan approval policies establish concentrations limits with respect to industry and loan product type to enhance portfolio diversification.
Added
Immediately thereafter, Bank of Houston, a Texas state banking association and wholly-owned subsidiary of BOH (“Bank of Houston”), will merge with and into City Bank, with City Bank continuing as the surviving entity.
Removed
Prompt Corrective Action The Federal Deposit Insurance Act (“FDIA”) requires federal banking agencies to take “prompt corrective action” with respect to depository institutions that do not meet minimum capital requirements.
Added
The proposed transaction is expected to close in 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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBecause the ability of the end borrower to repay its loan from our customer could affect the ability of our customer to repay its loan from us, our inability to exercise control over the relationship with the end borrower and the collateral, except under limited circumstances, could expose us to credit losses that adversely affect our business, financial condition and results of operations. 26 Table of Contents Because a portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Biggest changeBecause the ability of the end borrower to repay its loan from our customer could affect the ability of our customer to repay its loan from us, our inability to exercise control over the relationship with the end borrower and the collateral, except under limited circumstances, could expose us to credit losses that adversely affect our business, financial condition and results of operations.
District Court for the Northern District of Texas, Lubbock Division, or in the event that such court lacks jurisdiction to hear the action, the District Courts of the County of Lubbock, Texas, are the sole and exclusive forum for certain causes of action, which may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits.
District Court for the Northern District of Texas, Lubbock Division, or in the event that such court lacks jurisdiction to hear the action, the District Courts of the County of Lubbock, Texas, are the sole and exclusive forum and venue for certain causes of action, which may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits.
These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if investors determine that the Company has not made sufficient progress on ESG matters. In addition, new government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
These shifts in investing priorities may result in adverse effects on the trading price of the Company’s common stock if investors determine that the Company has not made sufficient progress on ESG matters. In addition, future government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. 24 Table of Contents Our business has been and may continue to be adversely affected by current conditions in the financial markets and economic conditions generally.
Although our asset-liability management strategy is designed to control and mitigate exposure to the risks related to changes in market interest rates, those rates are affected by many factors outside of our control, including governmental monetary policies, inflation, deflation, recession, changes in unemployment, the money supply, international disorder and instability in domestic and foreign financial markets. 23 Table of Contents Our business has been and may continue to be adversely affected by current conditions in the financial markets and economic conditions generally.
These problems, losses or defaults could have an adverse effect on our business, financial condition and results of operations. 34 Table of Contents Risks Related to Our Regulatory Environment We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or failure to comply with them, could adversely affect us.
These problems, losses or defaults could have an adverse effect on our business, financial condition and results of operations. 32 Table of Contents Risks Related to Our Regulatory Environment We operate in a highly regulated environment and the laws and regulations that govern our operations, corporate governance, executive compensation and accounting principles, or changes in them, or failure to comply with them, could adversely affect us.
At December 31, 2024, approximately 7.7% of our total loan portfolio, consisted of indirect dealer loans, originated through automobile dealers for the purchase of new or used automobiles, as well as recreational vehicles, boats, and personal watercraft. We serve customers that cover a range of creditworthiness and the required terms and rates are reflective of those risk profiles.
At December 31, 2025, approximately 7.7% of our total loan portfolio, consisted of indirect dealer loans, originated through automobile dealers for the purchase of new or used automobiles, as well as recreational vehicles, boats, and personal watercraft. We serve customers that cover a range of creditworthiness and the required terms and rates are reflective of those risk profiles.
Any borrowing by the Company in order to make the required capital injection may be more difficult and expensive and may adversely impact the Company’s financial condition, results of operations and/or future prospects. 35 Table of Contents As a regulated entity, we and the Bank must maintain certain required levels of regulatory capital that may limit our and the Bank’s operations and potential growth.
Any borrowing by the Company in order to make the required capital injection may be more difficult and expensive and may adversely impact the Company’s financial condition, results of operations and/or future prospects. 33 Table of Contents As a regulated entity, we and the Bank must maintain certain required levels of regulatory capital that may limit our and the Bank’s operations and potential growth.
Due to our geographic concentration, specifically in Texas, we may be less able than other larger regional or national financial institutions to diversify our credit risk across multiple markets. Changes in U.S. trade policies and other factors beyond the Company’s control, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition and results of operations.
Due to our geographic concentration, specifically in Texas, we may be less able than other larger regional or national financial institutions to diversify our credit risk across multiple markets. 26 Table of Contents Changes in U.S. trade policies and other factors beyond the Company’s control, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition and results of operations.
Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans. As of December 31, 2024, loans to commercial borrowers represent approximately 71.0% of total loans. Loans to commercial borrowers are often larger and involve greater risks than other types of lending.
Many of our loans are to commercial borrowers, which have a higher degree of risk than other types of loans. As of December 31, 2025, loans to commercial borrowers represent approximately 71.0% of total loans. Loans to commercial borrowers are often larger and involve greater risks than other types of lending.
In addition, a security breach could also subject us to additional regulatory scrutiny and expose us to civil litigation and possible financial liability. Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations. We depend on a number of relationships with third-party service providers.
In addition, a security breach could also subject us to additional regulatory scrutiny and expose us to civil litigation and possible financial liability. 30 Table of Contents Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations. We depend on a number of relationships with third-party service providers.
Securities litigation could result in substantial costs and divert management’s attention and resources from our normal business, which could adversely affect our results of operation and financial condition. 37 Table of Contents Future equity issuances, including through our current or any future equity compensation plans, could result in dilution, which could cause the price of our shares of common stock to decline.
Securities litigation could result in substantial costs and divert management’s attention and resources from our normal business, which could adversely affect our results of operation and financial condition. Future equity issuances, including through our current or any future equity compensation plans, could result in dilution, which could cause the price of our shares of common stock to decline.
Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. 32 Table of Contents We are subject to certain operating risks related to employee error and customer, employee and third-party misconduct, which could harm our reputation and business.
Even if we are able to replace third-party service providers, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. We are subject to certain operating risks related to employee error and customer, employee and third-party misconduct, which could harm our reputation and business.
While the target benchmark rate and the prime rate were decreased by 75 basis points in 2024, sustained levels or future increases in market interest rates may have an adverse effect on our business, financial condition and results of operations as it could reduce the demand for loans and affect the ability of our borrowers to repay their indebtedness subjecting us to potential credit losses.
While the FOMC target benchmark rate and the prime rate were decreased by 100 basis points in 2024 and another 75 basis points in 2025, sustained levels or future increases in market interest rates may have an adverse effect on our business, financial condition and results of operations as it could reduce the demand for loans and affect the ability of our borrowers to repay their indebtedness subjecting us to potential credit losses.
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability, and could materially adversely affect our business, financial condition and results of operations. Our portfolio of indirect dealer lending exposes us to increased credit risks.
Unexpected deterioration in the credit quality of our commercial real estate loan portfolio would require us to increase our provision for credit losses, which would reduce our profitability, and could materially adversely affect our business, financial condition and results of operations. 25 Table of Contents Our portfolio of indirect dealer lending exposes us to increased credit risks.
The failure to successfully evaluate and execute mergers, acquisitions or investments or otherwise adequately address these risks could materially harm our business, financial condition and results of operations. 25 Table of Contents We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.
The failure to successfully evaluate and execute mergers, acquisitions or investments or otherwise adequately address these risks could materially harm our business, financial condition and results of operations. We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses.
We seek to mitigate this risk by increasingly performing back-testing to analyze the accuracy of these techniques and approaches. 31 Table of Contents There are investment performance, fiduciary and asset servicing risks associated with our trust operations. Our investment management, fiduciary and asset servicing businesses are significant to the business of the Company.
We seek to mitigate this risk by increasingly performing back-testing to analyze the accuracy of these techniques and approaches. There are investment performance, fiduciary and asset servicing risks associated with our trust operations. Our investment management, fiduciary and asset servicing businesses are significant to the business of the Company.
Furthermore, the Bank is not obligated to pay dividends to us, and any dividends paid to us would depend on the earnings or financial condition of the Bank and various business and regulatory considerations. 38 Table of Contents An investment in our common stock is not an insured deposit and is subject to risk of loss.
Furthermore, the Bank is not obligated to pay dividends to us, and any dividends paid to us would depend on the earnings or financial condition of the Bank and various business and regulatory considerations. An investment in our common stock is not an insured deposit and is subject to risk of loss.
A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations. Customers could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding.
A failure to maintain adequate liquidity could have a material adverse effect on our business, financial condition and results of operations. 28 Table of Contents Customers could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding.
There could also be a negative reaction in the financial markets due to a loss of investor confidence in the reliability of our financial statements. 33 Table of Contents The obligations associated with being a public company require significant resources and management attention.
There could also be a negative reaction in the financial markets due to a loss of investor confidence in the reliability of our financial statements. The obligations associated with being a public company require significant resources and management attention.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. 36 Table of Contents Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.
This competition may limit our future growth and earnings prospects. If we fail to maintain effective internal control over financial reporting, we may not be able to accurately report its financial results or prevent fraud.
This competition may limit our future growth and earnings prospects. 31 Table of Contents If we fail to maintain effective internal control over financial reporting, we may not be able to accurately report its financial results or prevent fraud.
Liquidity is essential to the business of the Bank. We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations.
We rely on our ability to generate deposits and effectively manage the repayment and maturity schedules of our loans and investment securities, respectively, to ensure that we have adequate liquidity to fund our operations.
Agricultural lending and volatility in commodity prices may adversely affect our financial condition and results of operations. At December 31, 2024, agricultural loans were approximately 3.1% of our total loan portfolio. Agricultural lending involves a greater degree of risk and typically involves higher principal amounts than many other types of loans.
Agricultural lending and volatility in commodity prices may adversely affect our financial condition and results of operations. At December 31, 2025, agricultural loans were approximately 2.4% of our total loan portfolio. Agricultural lending involves a greater degree of risk and typically involves higher principal amounts than many other types of loans.
Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us to fund our business through more expensive and less stable sources. At December 31, 2024, our 20 largest deposit relationships accounted for approximately 21.7% of our total deposits.
Our largest deposit relationships currently make up a material percentage of our deposits and the withdrawal of deposits by our largest depositors could force us to fund our business through more expensive and less stable sources. At December 31, 2025, our 20 largest deposit relationships accounted for approximately 22.3% of our total deposits.
An investment in our common stock is not a bank deposit and is not insured against loss or guaranteed by the FDIC, any deposit insurance fund or by any other public or private entity. As a result, you could lose some or all of your investment.
An investment in our common stock is not a bank deposit and is not insured against loss or guaranteed by the FDIC, any deposit insurance fund or by any other public or private entity. As a result, you could lose some or all of your investment. Item 1B. Unresolved Staff Comments None.
Our loan portfolio includes non-owner-occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans. As of December 31, 2024, our non-owner-occupied commercial real estate loans totaled approximately 40.1% of our total loan portfolio.
Our loan portfolio includes non-owner-occupied commercial real estate loans for individuals and businesses for various purposes, which are secured by commercial properties, as well as real estate construction and development loans. As of December 31, 2025, our non-owner-occupied commercial real estate loans totaled approximately 37.0% of our total loan portfolio.
As of December 31, 2024, approximately 73.7% of our loan portfolio was comprised of loans with real estate as a primary component of collateral. Adverse developments affecting real estate values, particularly in our markets, could increase the credit risk associated with our real estate loan portfolio.
As of December 31, 2025, approximately 71.6% of our loan portfolio was comprised of loans with real estate as a primary component of collateral. Adverse developments affecting real estate values, particularly in our markets, could increase the credit risk associated with our real estate loan portfolio.
Mortgage revenues, which are primarily recognized from the sale of mortgage loans in the secondary market, are a source of noninterest income for the Bank and a contributor to the Bank’s net income. Mortgage revenues for the year ended December 31, 2024 were $14.2 million.
Mortgage revenues, which are primarily recognized from the sale of mortgage loans in the secondary market, are a source of noninterest income for the Bank and a contributor to the Bank’s net income. Mortgage revenues for the year ended December 31, 2025 were $10.7 million.
Moreover, as the effects of climate change continue to create a level of concern for the state of the global environment, companies are facing increasing scrutiny from customers, regulators, investors and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure.
Moreover, as the effects of climate change continue to create a level of concern for the state of the global environment, companies are facing increasing scrutiny from customers, regulators, investors and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Increased ESG related compliance costs, in turn, could result in increases to our overall operational costs.
We had $26.3 million of mortgage servicing rights as of December 31, 2024. Our risk management framework may not be effective in mitigating risks or losses to us.
We had $24.0 million of mortgage servicing rights as of December 31, 2025. 29 Table of Contents Our risk management framework may not be effective in mitigating risks or losses to us.
Management makes various assumptions and judgments about the collectability of our loan portfolio, including the diversification by industry of our commercial loan portfolio, the amount of nonperforming loans and related collateral, the volume, growth and composition of our loan portfolio, the effects on the loan portfolio of current economic indicators and their probable impact on borrowers and the evaluation of our loan portfolio through our internal loan review process and other relevant factors.
Management makes various assumptions and judgments about the collectability of our loan portfolio, including the diversification by industry of our commercial loan portfolio, the amount of nonperforming loans and related collateral, the volume, growth and composition of our loan portfolio, the effects on the loan portfolio of current economic indicators and their probable impact on borrowers and the evaluation of our loan portfolio through our internal loan review process and other relevant factors. 24 Table of Contents Accordingly, we maintain an allowance for credit losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.
Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations. 34 Table of Contents We face increased risk under the terms of the CRA, as we accept additional deposits in new geographic markets.
In addition, the resolution of nonperforming assets requires significant commitments of time from management, which may materially and adversely impact their ability to perform their other responsibilities.
In addition, the resolution of nonperforming assets requires significant commitments of time from management, which may materially and adversely impact their ability to perform their other responsibilities. There can be no assurance that we will not experience future increases in nonperforming assets.
Our accounting policies and methods are fundamental to how we report our financial condition and results of operations and we use estimates in determining the fair value of certain of our assets, which estimates may prove to be imprecise and result in significant changes in valuation which could affect our, and thus the Company’s, shareholders’ equity.
Currently, we are not a party to any pending legal proceeding under any environmental statute, nor are we aware of any instances that may give rise to such liability. 27 Table of Contents Our accounting policies and methods are fundamental to how we report our financial condition and results of operations and we use estimates in determining the fair value of certain of our assets, which estimates may prove to be imprecise and result in significant changes in valuation which could affect our, and thus the Company’s, shareholders’ equity.
If we choose to raise capital by selling shares of our common stock, or securities convertible into shares of our common stock, for any reason, the issuance could have a dilutive effect on the holders of our common stock and could have a material negative effect on the market price of our common stock.
If we choose to raise capital by selling shares of our common stock, or securities convertible into shares of our common stock, for any reason, the issuance could have a dilutive effect on the holders of our common stock and could have a material negative effect on the market price of our common stock. 35 Table of Contents We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock.
As of December 31, 2024, our 20 largest borrowing relationships ranged from approximately $26.3 million to $53.9 million (including unfunded commitments), totaling approximately 19.4% of our outstanding commitments.
As of December 31, 2025, our 20 largest borrowing relationships ranged from approximately $26.7 million to $57.5 million (including unfunded commitments), totaling approximately 21.0% of our outstanding commitments.
In addition, companies are facing increased scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
In addition, investor advocacy groups, investment funds and influential investors are also increasingly focused on ESG practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights.
There is a risk that hazardous substances or wastes, contaminants, pollutants or other environmentally restricted substances could be discovered on our properties or our foreclosed assets (particularly with real estate loans). In this event, we might be required to remove the substances from the affected properties or to engage in abatement procedures at our cost.
The properties that we own and certain foreclosed real estate assets could subject us to environmental risks and associated costs. There is a risk that hazardous substances or wastes, contaminants, pollutants or other environmentally restricted substances could be discovered on our properties or our foreclosed assets (particularly with real estate loans).
In such cases, any repossessed collateral for a defaulted agricultural operating loan my not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation or because the assessed value of the collateral exceeds the eventual realization value. 27 Table of Contents Sustained volatility in oil prices and the energy industry, including in Texas, could lead to increased credit losses in our energy portfolio, weaker demand for energy lending, and adversely affect our business, results of operations and financial condition.
In such cases, any repossessed collateral for a defaulted agricultural operating loan my not provide an adequate source of repayment of the outstanding loan balance as a result of the greater likelihood of damage, loss or depreciation or because the assessed value of the collateral exceeds the eventual realization value.
Our bylaws have an exclusive forum provision providing that, unless we consent in writing to an alternative forum, the U.S.
Our bylaws have an exclusive forum provision providing that, unless we consent in writing to an alternative forum, the Business Court in the Ninth Business Court Division (the “Business Court”) of the State of Texas, or in the event that such court lacks jurisdiction to hear the action, the U.S.
Additionally, such circumstances could require us to raise deposit rates in an attempt to attract new deposits, which could adversely affect our results of operations.
Additionally, such circumstances could require us to raise deposit rates in an attempt to attract new deposits, which could adversely affect our results of operations. Under applicable regulations, if the Bank were no longer “well capitalized,” the Bank would not be able to accept brokered deposits without the approval of the FDIC.
We may not be able to effectively or timely implement new technology-driven products and services or be successful in marketing these products and services to our customers and clients.
We may not be able to effectively or timely implement new technology-driven products and services or be successful in marketing these products and services to our customers and clients. Failure to keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition, and results of operations.
Under applicable regulations, if the Bank were no longer “well capitalized,” the Bank would not be able to accept brokered deposits without the approval of the FDIC. 29 Table of Contents Liquidity risk could impair our ability to fund operations and meet our obligations as they become due and could jeopardize our financial condition.
Liquidity risk could impair our ability to fund operations and meet our obligations as they become due and could jeopardize our financial condition. Liquidity is essential to the business of the Bank.
Failure to keep pace with technological change affecting the financial services industry could have a material adverse impact on our business, financial condition, and results of operations. 30 Table of Contents We may be adversely impacted by an economic downturn or a natural disaster affecting one or more of our market areas.
We may be adversely impacted by an economic downturn or a natural disaster affecting one or more of our market areas.
Removed
Accordingly, we maintain an allowance for credit losses that represents management’s judgment of probable losses and risks inherent in our loan portfolio.
Added
Because a portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Removed
New government regulations could result in more stringent forms of ESG oversight and reporting and diligence and disclosure requirements. Increased ESG related compliance costs, in turn, could result in increases to our overall operational costs.
Added
Sustained volatility in oil prices and the energy industry, including in Texas, could lead to increased credit losses in our energy portfolio, weaker demand for energy lending, and adversely affect our business, results of operations and financial condition.
Removed
There can be no assurance that we will not experience future increases in nonperforming assets. 28 Table of Contents The properties that we own and certain foreclosed real estate assets could subject us to environmental risks and associated costs.
Added
In this event, we might be required to remove the substances from the affected properties or to engage in abatement procedures at our cost.
Removed
Currently, we are not a party to any pending legal proceeding under any environmental statute, nor are we aware of any instances that may give rise to such liability.
Removed
We face increased risk under the terms of the CRA, as we accept additional deposits in new geographic markets.
Removed
We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have implemented a comprehensive Information Security and Risk Management Program that is designed and maintained to be compliant with all applicable federal and state regulations, and is regularly audited by independent experts to ensure continuous effectiveness and compliance.
Biggest changeFor more information on how cybersecurity risk may materially affect the Company’s business strategy, results of operations or financial condition, please refer to Item 1A, Risk Factors of this Form 10-K. 36 Table of Contents We have implemented a comprehensive Information Security and Risk Management Program that is designed and maintained to be compliant with all applicable federal and state regulations, and is regularly audited by independent experts to ensure continuous effectiveness and compliance.
Both the current Chief Information Security Officer and Chief Technology Officer have over 20 years of experience in Information Technology and Information Security. 40 Table of Contents The Information Security Committee, consisting of senior management and analysts from Information Security and Information Technology, monitors and assesses cyber threat intelligence, responds to cyber incidents at a technical level, and determines whether new controls are needed to address emerging risks or active cyber exploits.
The Information Security Committee, consisting of senior management and analysts from Information Security and Information Technology, monitors and assesses cyber threat intelligence, responds to cyber incidents at a technical level, and determines whether new controls are needed to address emerging risks or active cyber exploits.
The loss or disclosure of sensitive data as a result of cyberattacks could have a material impact on our business. For more information on how cybersecurity risk may materially affect the Company’s business strategy, results of operations or financial condition, please refer to Item 1A, Risk Factors of this Form 10-K.
The loss or disclosure of sensitive data as a result of cyberattacks could have a material impact on our business.
Added
Both the current Chief Information Security Officer and Chief Technology Officer have over 20 years of experience in Information Technology and Information Security.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWorth LPO Lubbock University Branch Grand Prairie LPO Morton Branch Southlake LPO Idalou Branch Levelland Branch El Paso Houston Location Branch or LPO Location Branch or LPO El Paso East Branch Houston Branch El Paso West Branch El Paso Mesa Hills LPO Bryan/College Station Ruidoso, New Mexico Location Branch or LPO Location Branch or LPO College Station Branch Ruidoso Gateway Branch Ruidoso River Crossing Branch The Permian Basin Other Markets Location Branch or LPO Location Branch or LPO Odessa University Branch Abilene, Texas LPO Odessa Grandview Branch Midland Branch Kermit Branch Fort Stockton Branch Monahans Branch We lease certain of our banking facilities and believe that the leases to which we are subject are generally on terms consistent with prevailing market terms, and none of the leases are with our directors, officers, beneficial owners of more than 5% of our voting securities or any affiliates of the foregoing.
Biggest changeWorth LPO Lubbock University Branch Grand Prairie LPO Morton Branch North Richland Hills LPO Idalou Branch Levelland Branch 37 Table of Contents El Paso Houston Location Branch or LPO Location Branch or LPO El Paso East Branch Houston Branch El Paso West Branch El Paso Mesa Hills LPO Bryan/College Station Ruidoso, New Mexico Location Branch or LPO Location Branch or LPO College Station Branch Ruidoso River Crossing Branch The Permian Basin Other Markets Location Branch or LPO Location Branch or LPO Odessa University Branch Abilene, Texas LPO Odessa Grandview Branch Midland Branch Kermit Branch Fort Stockton Branch Monahans Branch We lease certain of our banking facilities and believe that the leases to which we are subject are generally on terms consistent with prevailing market terms, and none of the leases are with our directors, officers, beneficial owners of more than 5% of our voting securities or any affiliates of the foregoing.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not presently involved in any litigation, nor to our knowledge is any litigation threatened against us, that in management’s opinion would result in any material adverse effect on our financial position or results of operations or that is not expected to be covered by insurance. 41 Table of Contents
Biggest changeWe are not presently involved in any litigation, nor to our knowledge is any litigation threatened against us, that in management’s opinion would result in any material adverse effect on our financial position or results of operations or that is not expected to be covered by insurance. Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal Shares Repurchased Average Price Paid Per Share Total Dollar Amount Purchased Pursuant to Publicly-Announced Plans Maximum Dollar Amount Remaining Available for Repurchase Pursuant to Publicly-Announced Plans October 2024 — $ — $ — $ 8,659,477 November 2024 — — — — December 2024 — — — — Total — 42 Table of Contents On February 21 , 2025, the Company’s board of directors approved a new stock repurchase program pursuant to which the Company may, from time to time, purchase up to $ 15 .0 million of its outstanding shares of common stock (the “New Program”).
Biggest changeUpon the expiration of the Program, on February 21, 2025, the Company’s board of directors approved a new stock repurchase program pursuant to which the Company may, from time to time, purchase up to $15.0 million of its outstanding shares of common stock (the “New Program”).
The shares can be repurchased from time to time in privately negotiated transactions or the open market, including pursuant to Rule 10b5-1 trading plans, and in accordance with applicable regulations of the SEC.
The shares can be repurchased from time to time under the New Program in privately negotiated transactions or the open market, including pursuant to Rule 10b5-1 trading plans, and in accordance with applicable regulations of the SEC.
Additionally, the Company paid a dividend of $0.15 per common share in the first quarter of 2025 . Also, see “Item 1. Business – Supervision and Regulation – Dividend Payments, Stock Redemptions and Repurchases” and “Item 7.
Additionally, the Company paid a dividend of $0.17 per common share in the first quarter of 2026. Also, see “Item 1. Business – Supervision and Regulation – Dividend Payments, Stock Redemptions and Repurchases” and “Item 7.
The following table summarizes the share repurchase activity for the three months ended December 31, 2024.
The following table summarizes the share repurchase activity for the three months ended December 31, 2025.
The Company is not obligated to purchase any shares of its common stock under the New Program and the extent to which the Company repurchases its shares, and the manner, timing and exact amount of any repurchases , will depend on various factors , including the performance of the Company’s stock price, general market and other conditions, regulatory requirements , availability of funds and other relevant considerations, as determined by the Company.
The Company was not obligated to purchase any shares of its common stock under the Program or the New Program and the timing and exact amount of any repurchases depends on various factors including, the performance of the Company’s stock price, general market and other conditions, regulatory requirements, availability of funds and other relevant considerations, as determined by the Company.
Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Awards Weighted-Average Exercise Price of Outstanding Awards Number of Shares Available for Future Grants Equity compensation plans approved by shareholders (1) 1,363,682 $ 15.38 2,411,104 Equity compensation plans not approved by shareholders — — — Total 1,363,682 $ 15.38 2,411,104 (1) The number of shares available for future issuance includes 2,411,104 shares available under the Company’s 2019 Equity Incentive Plan (which allows for the issuance of options, as well as various other stock-based awards).
Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Awards Weighted-Average Exercise Price of Outstanding Awards Number of Shares Available for Future Grants Equity compensation plans approved by shareholders (1) 1,296,349 $ 18.92 2,803,344 Equity compensation plans not approved by shareholders — — — Total 1,296,349 $ 18.92 2,803,344 (1) The number of shares available for future issuance includes 2,803,344 shares available under the Company’s 2019 Equity Incentive Plan (which allows for the issuance of options, as well as various other stock-based awards).
Management’s Discussion and Analysis of the Financial Condition and Results of Operations – Liquidity and Capital Resources – Capital Requirements” of this Report for restrictions on our present or future ability to pay dividends, particularly those restrictions arising under federal and state banking laws.
Management’s Discussion and Analysis of the Financial Condition and Results of Operations – Liquidity and Capital Resources – Capital Requirements” of this Report for restrictions on our present or future ability to pay dividends, particularly those restrictions arising under federal and state banking laws. 38 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information at December 31, 2025 with respect to compensation plans under which shares of our common stock may be issued.
Stock Performance Graph The following performance graph compares total stockholders’ return on the Company’s common stock with the cumulative total return of the S&P 500 and the S&P United States BMI Banks Index measured at the last trading date of each year shown below.
Total Shares Repurchased Average Price Paid Per Share Total Dollar Amount Purchased Pursuant to Publicly-Announced Plans Maximum Dollar Amount Remaining Available for Repurchase Pursuant to Publicly-Announced Plans October 2025 — $ — $ — $ 8,659,477 November 2025 — — — — December 2025 — — — — Total — Stock Performance Graph The following performance graph compares total stockholders’ return on the Company’s common stock with the cumulative total return of the S&P 500 and the S&P United States BMI Banks Index measured at the last trading date of each year shown below.
Dividends The Company paid a dividend of $0.13 per common share in the first and second quarters of 2024, a dividend of $0.14 per common share in the third quarter of 2024, and a dividend of $0.15 per common share in the fourth quarter of 2024.
Holders of Record As of March 3, 2026, there were approximately 192 holders of record of the Company’s common stock. Dividends The Company paid a dividend of $0.15 per common share in the first and second quarters of 2025, and a dividend of $0.16 per common share in the third and fourth quarters of 2025.
This performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act of 1934, or incorporated by reference into any future SEC filing, except as shall be expressly set forth by specific reference in such filing.
This performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act of 1934, or incorporated by reference into any future SEC filing, except as shall be expressly set forth by specific reference in such filing. 39 Table of Contents Dollars 2020 2021 2022 2023 2024 2025 South Plains Financial, Inc. $ 100.0 $ 148.68 $ 149.67 $ 160.74 $ 196.49 $ 223.17 S&P United States BMI Banks Index 100.0 135.97 112.77 123.02 164.70 211.47 S&P 500 100.0 128.71 105.40 133.10 166.40 196.16 Source: S&P Global Market Intelligence © 2026 Item 6. [Reserved]
Removed
Holders of Record As of March 5, 2025, there were approximately 181 holders of record of the Company’s common stock.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans The following table sets forth information at December 31, 2024 with respect to compensation plans under which shares of our common stock may be issued.
Removed
The Company was not obligated to purchase any shares of its common stock under the Program and the timing and exact amount of any repurchases depends on various factors including, the performance of the Company’s stock price, general market and other conditions, applicable legal requirements and other factors.
Removed
The shares can be repurchased from time to time through various means, including privately negotiated transactions or the open market, including pursuant to Rule 10b5-1 trading plans, and in accordance with applicable regulations of the SEC.
Removed
Dollars 2019 2020 2021 2022 2023 2024 South Plains Financial, Inc. $ 100.0 $ 91.68 $ 136.32 $ 137.23 $ 147.38 $ 180.15 S&P United States BMI Banks Index 100.0 87.24 118.61 98.38 107.32 143.68 S&P 500 100.0 118.40 152.39 124.79 157.59 197.02 Source: S&P Global Market Intelligence © 2025

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 64 Item 8. Financial Statements and Supplementary Data 65 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 107 Item 9A. Controls and Procedures 107 Item 9B. Other Information 108 Item 9C.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included in Item 8. Financial Statements and Supplementary Data.
Removed
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 108 PART III Item 10. Directors, Executive Officers and Corporate Governance 109 Item 11. Executive Compensation 109 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109 Item 13. Certain Relationships and Related Transactions, and Director Independence 109 Item 14.
Added
This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate.
Removed
Principal Accounting Fees and Services 109 PART IV Item 15. Exhibits, Financial Statement Schedules 110
Added
Certain risks, uncertainties and other factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and elsewhere in this Report, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis.
Added
Except as required by law, we assume no obligation to update any of these forward-looking statements. Discussion in this Form 10-K includes results of operations and financial condition for 2025 and 2024 and year-over-year comparisons between 2025 and 2024.
Added
For discussion on results of operations and financial condition pertaining to 2024 and 2023 and year-over-year comparisons between 2024 and 2023, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 7, 2025.
Added
Overview We are a bank holding company headquartered in Lubbock, Texas, and our wholly-owned subsidiary, City Bank is one of the largest independent banks in West Texas and has additional banking operations in the Dallas, El Paso, Greater Houston, the Permian Basin, and College Station, Texas markets, and the Ruidoso, New Mexico market.
Added
Through City Bank, we provide a wide range of commercial and consumer financial services to small and medium-sized businesses and individuals in our market areas.
Added
Our principal business activities include commercial and retail banking, along with investment, trust and mortgage services. 40 Table of Contents 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”).
Added
At December 31, 2025, BOH had $745.1 million in assets, $624.5 million in total gross loans, and $603.0 million in deposits.
Added
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.
Added
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.
Added
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.
Added
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.
Added
Selected Financial Data The following table sets forth certain of our selected financial data for, and as of the end of, each of the periods indicated (dollars in thousands, except per share data).
Added
As of and for the Year Ended December 31, 2025 2024 2023 Selected Income Statement Data: Net interest income $ 166,999 $ 147,098 $ 139,747 Provision for credit losses 5,195 4,300 4,610 Noninterest income 44,889 48,072 79,226 Noninterest expense 132,620 127,578 134,946 Income tax expense 15,602 13,575 16,672 Net income 58,471 49,717 62,745 Share and Per Share Data: Earnings per share (basic) $ 3.59 $ 3.03 $ 3.73 Earnings per share (diluted) 3.44 2.92 3.62 Dividends per share 0.62 0.56 0.52 Tangible book value per share (1) 29.05 25.40 23.47 Selected Period End Balance Sheet Data: Cash and cash equivalents $ 552,439 $ 359,082 $ 330,158 Investment securities 567,540 577,240 622,762 Gross loans held for investment 3,144,502 3,055,054 3,014,153 Allowance for credit losses on loans 45,131 43,237 42,356 Total assets 4,480,500 4,232,239 4,204,793 Total deposits 3,874,077 3,620,876 3,626,153 Borrowings 60,493 110,354 110,168 Total stockholders’ equity 493,837 438,949 407,114 Performance Ratios: Return on average assets 1.33 % 1.17 % 1.54 % Return on average stockholders’ equity 12.70 % 11.75 % 16.58 % Net interest margin (2) 3.98 % 3.65 % 3.61 % Efficiency ratio (3) 62.32 % 65.07 % 61.33 % Credit Quality Ratios: Nonperforming assets to total assets (4) 0.26 % 0.58 % 0.14 % Nonperforming loans to total loans held for investment (5) 0.31 % 0.79 % 0.17 % Allowance for credit losses on loans to nonperforming loans (5) 460.29 % 179.98 % 818.00 % Allowance for credit losses on loans to total loans held for investment 1.44 % 1.42 % 1.41 % Net loan charge-offs to average loans 0.10 % 0.11 % 0.07 % Capital Ratios: Total stockholders’ equity to total assets 11.02 % 10.37 % 9.68 % Tangible common equity to tangible assets (1) 10.61 % 9.92 % 9.21 % Common equity tier 1 capital ratio 14.45 % 13.53 % 12.41 % Tier 1 leverage ratio 12.53 % 12.04 % 11.33 % Tier 1 risk-based capital ratio 15.70 % 14.80 % 13.69 % Total risk-based capital ratio 17.26 % 17.86 % 16.74 % (1) Represents a non-GAAP financial measure.
Added
See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.” (2) Net interest margin is calculated as the annual net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.
Added
(3) The efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income on a tax-equivalent basis and noninterest income. (4) Nonperforming assets consist of nonperforming loans plus foreclosed assets.
Added
(5) Nonperforming loans include nonaccrual loans and loans past due 90 days or more. 41 Table of Contents Results of Operations 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.
Added
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.
Added
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.
Added
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.
Added
Net Interest Income Net interest income is the principal source of the Company’s net income and represents the difference between interest income (interest and fees earned on assets, primarily loans and investment securities) and interest expense (interest paid on deposits and borrowed funds). We generate interest income from interest-earning assets that we own, including loans and investment securities.
Added
We incur interest expense from interest-bearing liabilities, including interest-bearing deposits and other borrowings, notably FHLB advances and subordinated notes. To evaluate net interest income, we measure and monitor (i) yields on our loans and other interest-earning assets, (ii) the costs of our deposits and other funding sources, (iii) our net interest spread and (iv) our net interest margin.
Added
Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as the annualized net interest income on a fully tax-equivalent basis divided by average interest-earning assets.
Added
Changes in the market interest rates and interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income.
Added
The following table presents, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin.
Added
For purposes of this table, interest income, net interest margin and net interest spread are shown on a fully tax-equivalent basis. 42 Table of Contents Year Ended December 31, 2025 2024 2023 Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate Average Balance Interest Yield/Rate (Dollars in thousands) Assets: Interest-earning assets: Loans (1) $ 3,087,635 $ 211,231 6.84 % $ 3,054,189 $ 202,301 6.62 % $ 2,924,473 $ 176,627 6.04 % Investment securities – taxable 504,853 18,634 3.69 % 532,730 21,090 3.96 % 570,655 21,590 3.78 % Investment securities – non-taxable 153,691 4,196 2.73 % 155,168 4,076 2.63 % 185,205 4,901 2.65 % Other interest-earning assets (2) 468,655 18,847 4.02 % 312,917 14,319 4.58 % 223,152 9,973 4.47 % Total interest-earning assets 4,214,834 252,908 6.00 % 4,055,004 241,786 5.96 % 3,903,485 213,091 5.46 % Noninterest-earning assets 171,720 179,527 176,495 Total assets $ 4,386,554 $ 4,234,531 $ 4,079,980 Liabilities and Stockholders’ Equity: Interest-bearing liabilities: NOW, savings and money market deposits $ 2,337,103 $ 63,062 2.70 % $ 2,250,942 $ 70,362 3.13 % $ 2,117,985 $ 55,423 2.62 % Time deposits 433,760 16,293 3.76 % 411,028 16,719 4.07 % 321,205 9,564 2.98 % Short-term borrowings 8 — 0.00 % 3 — 0.00 % 84 5 5.95 % Subordinated debt 51,412 2,730 5.31 % 63,868 3,339 5.23 % 75,458 4,018 5.32 % Junior subordinated deferrable interest debentures 46,393 2,914 6.28 % 46,393 3,381 7.29 % 46,393 3,276 7.06 % Total interest-bearing liabilities 2,868,676 84,999 2.96 % 2,772,234 93,801 3.38 % 2,561,125 72,286 2.82 % Noninterest-bearing liabilities: Noninterest-bearing deposits 991,899 968,307 1,069,280 Other liabilities 65,476 70,777 71,102 Total noninterest-bearing liabilities 1,057,375 1,039,084 1,140,382 Stockholders’ equity 460,503 423,213 378,473 Total liabilities and stockholders’ equity $ 4,386,554 $ 4,234,531 $ 4,079,980 Net interest income $ 167,909 $ 147,985 $ 140,805 Net interest spread 3.04 % 2.58 % 2.64 % Net interest margin (3) 3.98 % 3.65 % 3.61 % (1) Average loan balances include nonaccrual loans and loans held for sale.
Added
(2) Includes income and average balances for interest-earning deposits at other banks, nonmarketable securities, federal funds sold and other miscellaneous interest-earning assets. (3) Net interest margin is calculated as the annualized net interest income, on a fully tax-equivalent basis, divided by average interest-earning assets.
Added
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following tables set forth the effects of changing rates and volumes on our net interest income during the period shown.
Added
Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volume and rate have been allocated to volume.
Added
Year Ended December 31, 2025 over 2024 Year Ended December 31, 2024 over 2023 Change due to: Change due to: Volume Rate Total Variance Volume Rate Total Variance (Dollars in thousands) Interest-earning assets: Loans $ 2,215 $ 6,715 $ 8,930 $ 7,834 $ 17,840 $ 25,674 Investment securities – taxable (1,104 ) (1,352 ) (2,456 ) (1,435 ) 935 (500 ) Investment securities – non-taxable (39 ) 159 120 (795 ) (30 ) (825 ) Other interest-earning assets 7,127 (2,599 ) 4,528 4,012 334 4,346 Total interest-earning assets 8,199 2,923 11,122 9,616 19,079 28,695 Interest-bearing liabilities: NOW, Savings, MMDAs 2,693 (9,993 ) (7,300 ) 3,479 11,460 14,939 Time deposits 925 (1,351 ) (426 ) 2,675 4,480 7,155 Short-term borrowings — — — (5 ) — (5 ) Subordinated debt (651 ) 42 (609 ) (617 ) (62 ) (679 ) Junior subordinated deferrable interest debentures — (467 ) (467 ) — 105 105 Total interest-bearing liabilities 2,967 (11,769 ) (8,802 ) 5,532 15,983 21,515 Net change $ 5,232 $ 14,692 $ 19,924 $ 4,084 $ 3,096 $ 7,180 43 Table of Contents 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%.
Added
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.
Added
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.
Added
This recovery positively impacted the loan yield by approximately 6 basis points during 2025.
Added
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.
Added
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.
Added
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. Provision for Credit losses Credit risk is inherent in the business of making loans.
Added
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.
Added
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.
Added
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.
Added
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. 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.
Added
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.
Added
Further discussion of the allowance for credit losses is noted below. Noninterest Income 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.
Added
Other sources of noninterest income include service charges on deposit accounts, and bank card services and interchange fees.
Added
The following table sets forth the major components of our noninterest income for the periods indicated: Year Ended December 31, 2025 over 2024 Year Ended December 31, 2024 over 2023 2025 2024 Increase (decrease) 2024 2023 Increase (decrease) (Dollars in thousands) Noninterest income: Service charges on deposit accounts $ 8,823 $ 8,026 $ 797 $ 8,026 $ 7,130 $ 896 Bank card services and interchange fees 13,912 13,640 272 13,640 13,323 317 Mortgage banking activities 10,684 14,186 (3,502 ) 14,186 13,817 369 Investment commissions 1,700 1,704 (4 ) 1,704 1,698 6 Fiduciary income 2,932 2,719 213 2,719 2,433 286 Gain on sale of subsidiary — — — — 33,778 (33,778 ) Other income and fees (1) 6,838 7,797 (959 ) 7,797 7,047 750 Total noninterest income $ 44,889 $ 48,072 $ (3,183 ) $ 48,072 $ 79,226 $ (31,154 ) (1) Other income and fees includes income and fees associated with the increase in the cash surrender value of life insurance, safe deposit box rental, check printing, collections, legal settlements, wire transfer, Small Business Investment Company (“SBIC”) investments, income from sweep accounts, and other miscellaneous services. 44 Table of Contents 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%.
Added
Significant changes in the components of noninterest income are detailed below. 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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
Noninterest Expense The following table sets forth the major components of our noninterest expense for the periods indicated: Year Ended December 31, 2025 over 2024 Year Ended December 31, 2024 over 2023 2025 2024 Increase (decrease) 2024 2023 Increase (decrease) (Dollars in thousands) Noninterest expense: Salaries and employee benefits $ 76,947 $ 74,338 $ 2,609 $ 74,338 $ 79,377 $ (5,039 ) Occupancy and equipment, net 16,051 16,105 (54 ) 16,105 16,102 3 Professional services 7,310 6,583 727 6,583 6,433 150 Marketing and development 4,023 3,782 241 3,782 3,453 329 IT and data services 4,701 4,286 415 4,286 3,410 876 Bankcard expenses 6,099 5,873 226 5,873 5,557 316 Realized loss on sale of securities — — — — 3,409 (3,409 ) Other expenses (1) 17,489 16,611 878 16,611 17,205 (594 ) Total noninterest expense $ 132,620 $ 127,578 $ 5,042 $ 127,578 $ 134,946 $ (7,368 ) (1) Other expenses include items such as banking regulatory assessments, telephone expenses, postage, courier fees, directors’ fees, appraisal expenses, and insurance.
Added
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.
Added
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.
Added
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.
Added
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. 45 Table of Contents 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.
Added
The increase relates primarily to the continued rising cost of technology services and customers using more digital services. 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.
Added
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. Financial Condition 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.
Added
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.
Added
Loan Portfolio Our loans represent the largest portion of earning assets, greater than our securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration when reviewing the Company’s financial condition.
Added
We originate substantially all of the loans in our portfolio, except certain loan participations that are independently underwritten by the Company prior to purchase. 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.
Added
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.
Added
The following table shows the contractual maturities of our loans held for investment portfolio at December 31, 2025: Due in One Year or Less Due after One Year Through Five Years Due after Five Years Through Fifteen Years Due after Fifteen Years Total (Dollars in thousands) Commercial real estate $ 181,701 $ 593,794 $ 233,142 $ 55,988 $ 1,064,625 Commercial - specialized 167,817 131,105 69,569 40,860 409,351 Commercial - general 153,713 228,991 193,761 82,858 659,323 Consumer: 1-4 family residential 39,192 122,709 107,105 320,845 589,851 Auto loans 3,346 159,180 96,631 — 259,157 Other consumer 8,909 38,343 14,840 — 62,092 Construction 84,279 11,128 638 4,058 100,103 Total loans $ 638,957 $ 1,285,250 $ 715,686 $ 504,609 $ 3,144,502 The following table shows the distribution between fixed and adjustable interest rate loans for maturities greater than one year as of December 31, 2025: Fixed Rate Adjustable Rate (Dollars in thousands) Commercial real estate $ 368,362 $ 514,562 Commercial - specialized 98,431 143,103 Commercial - general 201,699 303,911 Consumer: 1-4 family residential 345,865 204,794 Auto loans 255,811 — Other consumer 53,183 — Construction 271 15,553 Total loans $ 1,323,622 $ 1,181,923 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.
Added
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.
Added
The Wall Street Journal prime rate is the predominate index used by the Bank. 46 Table of Contents The Bank is primarily involved in real estate, commercial, agricultural and consumer lending activities with customers throughout Texas and Eastern New Mexico.
Added
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.
Added
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.
Added
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.
Added
We have established concentration limits in the loan portfolio for commercial real estate loans and unsecured lending, among other loan types. All loan types are within established limits. We use underwriting guidelines to assess the borrowers’ historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios.
Added
Financial and performance covenants are used in commercial lending to allow us to react to a borrower’s deteriorating financial condition, should that occur. Commercial Real Estate .
Added
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.
Added
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.
Added
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.
Added
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.
Added
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. Commercial – General and Specialized . Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably.
Added
Underwriting standards have been designed to determine whether the borrower possesses sound business ethics and practices, to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed, and to ensure appropriate collateral is obtained to secure the loan.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Sensitivity and Market Risk” of this Report for discussion on how the Company manages market risk. 64 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Sensitivity and Market Risk” of this Report for discussion on how the Company manages market risk.

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