View:
Free Writing Prospectus
Filed Pursuant to Rule 433
Registration Statement No. 333-230851
Dated April 29, 2019
0 Initial Public Offering South Plains Financial, Inc. (NASDAQ: SPFI)
1 Safe Harbor and Disclaimers South Plains Financial, Inc. (“South Plains”, “the Company” or “we”) has filed a
registration statement (including a prospectus, which is preliminary and subject to completion) with the U.S. Securities and Exchange Commission (the “SEC”) for the offering to which this presentation relates. Before you invest in any securities, you
should read the prospectus in that registration statement and the other documents South Plains has filed with the SEC for more complete information about South Plains and the offering. When available, you may obtain these documents for free by
visiting EDGAR on the SEC website at www.sec.gov. Alternatively, South Plains, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by contacting Keefe, Bruyette & Woods, Inc.,
toll-free at (800) 966-1559 or by emailing [email protected] or Sandler O’Neill + Partners, L.P., 1251 Avenue of the Americas, 6th Floor, New York, New York 10020, by phone, toll-free at (866) 805-4128 or by email at
[email protected]. Neither the SEC nor any state securities commission has approved or disapproved of the securities of South Plains or passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a
criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. South Plains common stock is not a deposit or savings account of South Plains’ bank subsidiary, and is not insured by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality. This presentation and oral statements made regarding the subject of this presentation contain forward-looking statements. These forward-looking statements reflect South Plains’ current
views with respect to, among other things, future events and South Plains’ financial performance. Any statements about South Plains’ expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not
historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,”
“projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in (or conveyed orally regarding) this presentation may turn out to be inaccurate. The inclusion of or reference to
forward-looking information in this presentation should not be regarded as a representation by South Plains or any other person that the future plans, estimates or expectations contemplated by South Plains will be achieved. South Plains has based
these forwardlooking statements largely on its current expectations and projections about future events and financial trends that South Plains believes may affect its financial condition, results of operations, business strategy and financial needs.
South Plains actual results could differ materially from those anticipated in such forward-looking statements as a result of risks, uncertainties and assumptions that are difficult to predict. If one or more events related to these or other risks or
uncertainties materialize, or if South Plains’ underlying assumptions prove to be incorrect, actual results may differ materially from what South Plains anticipates. You are cautioned not to place undue reliance on forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made and South Plains undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement
is made or to reflect the occurrence of unanticipated events. All forward-looking statements herein are qualified by these cautionary statement. This presentation includes industry and trade association data, forecasts and information that South
Plains has prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other information publicly available to South Plains, which information
may be specific to particular markets or geographic locations. Some data is also based on South Plains’ good faith estimates, which are derived from management’s knowledge of the industry and independent sources. Industry publications, surveys and
forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Statements as to South Plains’ market position are based on market data currently available to South Plains. Although South
Plains believes these sources are reliable, South Plains has not independently verified the information contained therein. While South Plains is not aware of any misstatements regarding the industry data presented in this presentation, South Plains’
estimates involve risks and uncertainties and are subject to change based on various factors. Similarly, South Plains believes that its internal research is reliable, even though such research has not been verified by independent sources. This
presentation includes certain non-GAAP financial measures, including adjusted net income, adjusted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity, tangible shareholders’ equity, and tangible
shareholders’ equity to tangible assets. These non-GAAP financial measures and any other non-GAAP financial measures that we discuss in this presentation should not be considered in isolation, and should be considered as additions to, and not
substitutes for or superior to, measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other
companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of South Plains’ non-GAAP financial measures as tools for comparison.
2 Offering Summary Issuer Ticker / Exchange Base Offering Size Base Shares Offered Overallotment Option Filing
Range Lock-Ups Use of Proceeds Joint Bookrunning Managers Expected Pricing Date South Plains Financial, Inc. SPFI / Nasdaq Global Select $63 million comprised of $50 million primary and $13 million secondary (based on the midpoint of range and
excluding the overallotment option) 3,380,000 total, comprised of 2,700,000 primary and 680,000 secondary shares 15% (all primary shares) $17.50 - $19.50 per share 180 days for the company, management, directors and certain pre-IPO stockholders
Strategic acquisitions and organic growth, and general corporate purposes Keefe, Bruyette & Woods, A Stifel Company | Sandler O’Neill + Partners Week of May 6th Pro Forma Market Capitalization $323 million (based on the midpoint of range and
excluding the overallotment option)
3 Today’s Presenters Curtis C. Griffith Chairman and Chief Executive Officer Cory T. Newsom President Kevin R.
Bass Chief Credit Officer Steven B. Crockett Chief Financial Officer and Treasurer
4 Balance Sheet Total assets $2,713 Gross loans held for investment 1,957 Total deposits 2,277
Noninterest-bearing deposits 510 Core deposits(1) 2,058 Tangible shareholders' equity (2) (5) 213 Loans to deposits 86.6% Profitability Net Income (3) $20.8 Return on average assets (3) 0.79% Return on average equity (3) (5) 9.66 Net interest margin
3.94 Efficiency ratio 77.6 Capital Ratios Tangible shareholders' equity to tangible assets (2) (5) 7.84% Common equity tier 1 capital ratio 9.91 Tier 1 leverage ratio 9.63 Tier 1 risk-based capital ratio 11.98 Total risk-based capital ratio 14.28
Asset Quality Nonperforming assets to loans and OREO(4) 0.47% Allowance for loan losses to gross loans 1.18 Allowance for loan losses to nonperforming loans(4) 332.6 Net charge-offs to average loans 0.27 A Leading West Texas Franchise Our Company _
Bank holding company headquartered in Lubbock, Texas with $2.7 billion in total assets _ One of the largest independent banks headquartered in West Texas _ Will be one of only two publicly-traded Texas institutions west of I-35 _ Repeatedly
recognized as an outstanding place to work, including being on American Banker’s Best Banks to Work For list six consecutive times Note: Financial data is as of or for the year ended December 31, 2018. Dollars in millions. (1) Defined as total
deposits less (i) time deposits greater than or equal to $250,000, (ii) deposits obtained from listing services and, (iii) brokered deposits. (2) Non-GAAP financial measure. We did not have any goodwill or other intangible assets as of the years
ended December 31, 2014 to 2018. Please see the Appendix for the most directly comparable GAAP financial measure. (3) Profitability metrics are tax adjusted as if the Company were a C Corporation for the full year ended December 31, 2018. (4)
Nonperforming assets include nonperforming loans and OREO. Nonperforming loans include nonaccrual loans and loans 90+ days past due. (5) Reflects the company’s pro forma shareholders’ equity after giving effect to the ESOP Repurchase Right
Termination. 2018 Financial Highlights SPFI Branches (21)
5 Our History and Growth Profile Gross Loans Held for Investment Deposits Note: Financial data as of December 31
of each respective year. $2,335 $2,537 $2,501 $2,573 $2,713 2014 2015 2016 2017 2018 $1,550 $1,679 $1,661 $1,838 $1,957 2014 2015 2016 2017 2018 $2,033 $2,127 $2,091 $2,154 $2,277 2014 2015 2016 2017 2018 _ History traces back more than 75 years with
the founding of First State Bank of Morton, a community bank that held approximately $1 million of total assets in 1941 _ Parent company to First State Bank of Morton acquired South Plains National Bank of Levelland, Texas in 1991 and changed its
name to South Plains Bank _ Company became the holding company to First State Bank of Morton and South Plains Bank in 1993 _ Acquired City Bank in 1993, which was originally established in Lubbock in 1984, and merged First State Bank of Morton and
South Plains Bank into City Bank in 1998 and 1999, respectively _ 21 full-service banking locations across six geographic markets, and 13 mortgage loan production offices (Dollars in millions) Our History Total Assets
6 Experienced Management Team Name Title Age Years with SPFI / City Bank History and Experience Curtis C.
Griffith Chairman & Chief Executive Officer 66 47 _ Elected to the board of directors of Texas-based First State Bank of Morton in 1972 _ Became employed by the Bank in 1979 and was elected Chairman in 1984 _ Chairman of the Company since 1993
Cory T. Newsom President 51 36 _ 36-year banking career with the Company focusing on lending and operations _ Appointed President and Chief Executive Officer of the Bank in 2008 _ Joined the Board in 2008 Steven B. Crockett Chief Financial Officer
& Treasurer 47 18 _ Began his career in public accounting in 1994 by serving for seven years with a local firm in Lubbock, Texas _ Controller of the Bank and the Company for 14 and 5 years, respectively Kevin R. Bass Chief Credit Officer 52 23 _
Former credit analyst and bank regulator _ Joined the Company in 1995 as an asset review officer and has served as Chief Credit Officer since 2012 _ Elected to the Bank board in 2006 Mikella D. Newsom Chief Risk Officer & Secretary 45 20 _
23-year banking career _ Secretary and Chief Risk Officer of the Company since 2013 _ Previously Chief Financial Officer of the Bank Ownership 17.0% 2.1% < 1.0% < 1.0% < 1.0%
7 Outside Directors Name Title Years with SPFI / City Bank History and Experience Richard “Danny” Campbell Lead
Director 8 _ Director of the Company and Bank since 2011 _ Executive officer and investment team leader for the Henry Family Office, which he joined in May of 2007 bringing 26 years of oil / gas and banking experience _ Served as Executive Vice
President and as a member of the board of directors of Community National Bank in Midland, Texas, from 2002 until 2007 Cynthia B. Keith Director 3 _ Director of the Company since 2019 and Bank since 2016 _ Former partner of PricewaterhouseCoopers,
LLC _ Specialized in audits of and consulting with technology and communications clients over a 25-year career with PricewaterhouseCoopers, LLC Allison S. Navitskas Director 1 _ Director of the Company and Bank since 2019 _ Served as Managing
Director, Global Business Development and Strategy, for Lone Star Funds, a global private equity fund investing in debt and equity _ Practiced law with Hunton & Williams LLP specializing in financial institutions, mergers and acquisitions,
corporate finance, and securities law _ Has served on the board of two public companies Noe G. Valles Director 4 _ Director of the Company since 2019 and Bank since 2015 _ An attorney who has acted as a managing partner of Glasheen, Valles and
Inderman, LLP since 2004 – licensed to practice in Texas and New Mexico _ Board of Managers of University Medical Center in Lubbock for 11 years Kyle R. Wargo Director 17 _ Director of the Company since 2016 and Bank since 2013, and served as an
advisory director to the Bank from 2002 through 2012 _ Has served as Executive Director of Region 17 Education Service Center since 1996 and has previously been a member of the Texas Tech University graduate faculty _ Has 30 years of educational
administration experience
8 Emphasize Community Banking _ Significant market share and brand recognition in the smaller markets we serve _
Leverage our relationship-based platform in higher growth metropolitan markets such as Dallas and Houston Enterprise Risk Management _ Implemented a rigorous enterprise risk management, or ERM, system in the aftermath of the financial crisis _ System
delivers an effective and comprehensive approach to risk management across a number of functional areas _ Expect the ERM system will enhance our ability to consummate acquisitions with less risk and increased cost savings Investment Highlights
Organic Growth Acquisitive Growth Improving Efficiency and Profitability _ Focus primarily on existing business lines in current market areas _ Gather low-cost deposits in non-metropolitan markets and deploy them in larger, more dynamic lending
markets _ Continue to actively recruit lenders from other institutions _ Will be the second publicly traded Texas bank headquartered west of Interstate 35 (DFW to Laredo) _ Being a public company should enhance visibility to potential targets and
allow us to become a favored acquirer _ Primarily target banks in non-metropolitan areas with low-cost core deposit bases _ Invested in systems and processes that we believe are comparable to those of a much larger organization _ New BSA software to
increase efficiencies, streamline processes, and create operating leverage Strong Inside Ownership _ Officers, directors, and employees (though our ESOP) together represent shareholders who own more than 70% of our common stock _ Executive
compensation is closely tied to company performance metrics
9 Our Markets Note: Deposit data as of 12/31/2018. Dollars in millions. Market Branches Market Highlights
Lubbock / South Plains 12 $1,699 _ Population in excess of 315,000 with major industries in agribusiness, education, and trade among others _ Home of Texas Tech University – enrollment of 35,000 students Dallas 3 $259 _ DFW is the largest MSA in
Texas and fourth largest in the nation _ Responsible for producing 33% of Texas GDP in 2018 El Paso 2 $111 _ Population of 850,000+ with major military presence through Fort Bliss _ Adjacent to Juarez, Mexico, which has a growing industrial center,
and an estimated population of 1.5 million people _ Home to four universities including The University of Texas at El Paso Houston / The Woodlands / Sugarland 1 $25 _ Second largest MSA in Texas and fifth largest in the nation _ Home to 21 Fortune
500 Companies _ Called the “Energy Capital of the World,” the area also boasts the world’s largest medical center and second busiest port in the U.S. Bryan / College Station 1 $68 _ Home to Texas A&M University – enrollment of 68,000 students _
Ranked first in Texas and third nationwide for Best Small Places for Business and Careers in 2017 by Forbes Deposits ($mm) Ruidoso / Eastern New Mexico 2 $116 _ Serves as a regional economic hub _ Large investments from developers over the past ten
years – housing subdivisions, condominiums, retail establishments, etc. _ Growing retirement community
10 Lubbock, Texas – Our Home Market Source: Forbes, bls.gov, and lubbockchamber.com Note: Deposit data as of
6/30/2018 per FDIC. Economy _ Major industries include agriculture – primarily cotton, corn, and grain sorghum – as well as education, trade and transportation, health services and government _ Home to Texas Tech University – enrollment ranks within
the top 10 for universities in Texas as of Spring 2018 at 35,000+ students _ The Lubbock MSA reports unemployment of 3.1% for 2018 _ Forbes listed Lubbock as one of its ‘‘Best Places for Business and Careers’’ during 2018 Lubbock MSA Deposit Market
Share Market Headquarters Deposits Share Rank Institution Name City State Branches ($mm) (%) 1 Hilltop Holdings Inc. Dallas TX 11 $1,601 18.4% 2 South Plains Financial Inc. Lubbock TX 9 1,440 16.6 3 Wells Fargo & Co. San Francisco CA 11 785 9.0 4
Prosperity Bancshares Inc. Houston TX 16 731 8.4 5 Amarillo National Bancorp Inc. Amarillo TX 10 707 8.1 6 Heartland Financial USA Inc. Dubuque IA 7 707 8.1 7 Peoples Bancorp Inc. Lubbock TX 6 374 4.3 8 Bank of America Corporation Charlotte NC 2 325
3.7 9 Vista Bancshares Inc. Ralls TX 6 297 3.4 10 Americo Bancshares Inc. Wolfforth TX 6 255 2.9 Total For Top 10 Institutions 84 $7,223 83.2%
11 Priority Expansion Markets – West Texas Source: Odessa-tx.gov, U.S. Department of Energy. Midland / Odessa _
Located along Permian Basin, which is a petroleum rich area that extends into the South Plains region of Lubbock and west into the southeastern portion of New Mexico _ The Permian Basin has been called the “Heart of American Oil Country” and is
responsible for the production of nearly four million barrels of crude oil per day, or roughly one third of total U.S. oil production _ Led the nation in job growth, with employment surging by nearly 12% during 2018 _ More than 450 drilling rigs, or
about half of the operating rigs in the United states _ Analysts predict the region’s output will expand over time due to cost-reducing advances in hydraulic fracturing El Paso _ Adjacent to Juarez, Mexico, which has a growing industrial center, an
estimated population of 1.5 million people, and has contributed to significant growth in the El Paso MSA _ Civil employers include a number of universities, including The University of Texas at El Paso, The Texas Tech School of Medicine, El Paso
Community College, and Vista College _ Home to Fort Bliss, which houses the 1st Armored Division, the 32nd Army Air and Missile Defense Command and the 402nd Field Artillery Brigade, among other major units
12 Acquisition Strategy _ We plan to take advantage of acquisition opportunities, and use a combination of
public stock and cash to become the acquirer of choice in West Texas _ Catalysts for acquisition activity include management succession, shareholder liquidity needs, scale, and excessive regulation _ There are 32 banks located in the West Texas
market area with between $250 million and $2.0 billion in total assets, which provides us with ample opportunities to make acquisitions that increase shareholder value _ Economic Guidelines for Acquisitions: _ Substantial EPS accretion _ Reasonable
tangible book value dilution _ Acceptable earnback period _ Strong Internal Rate of Return Source: S&P Global Market Intelligence. SPFI Branches (21) Commentary
13 NOW & Other Trans. Accounts 12% Noninterest- Bearing 22% MMDA & Other Savings 48% Brokered Deposits
4% Jumbo Time Deposits 6% Retail Time Deposits 8% Low Cost Deposit Franchise Deposit Mix Over Time Deposit Composition as of December 31, 2018 _ Core deposits(1) totaled $2.1 billion, or 90.4% of total deposits _ Noninterest-bearing deposits totaled
$510.1 million, or 22.4% of total deposits as of December 31, 2018 _ Our cost of total deposits was 80 basis points for the year ended December 31, 2018 _ Strong public fund relationships Total Deposits: $2,277 33% 48% 14% 22% 5% 12% 18% 8% 16% 14%
6% 4% 2008 2018 Brokered Deposits Jumbo Time Deposits Retail Time Deposits NOW & Other Trans. Accounts Noninterest-Bearing MMDA & Other Savings Dollars are in millions. Financial data is as of the twelve months ended December 31 of each
respective year. (1) Defined as total deposits less (i) jumbo time deposits greater than or equal to $250,000, (ii) deposits obtained from listing services and, (iii) brokered deposits. 2018 Cost of Deposits: 0.80% Strong Core Deposit Base
14 Diversified Revenue Stream Net Interest Income 65% Noninterest Income 35% Total Revenues 2018: $147.7 million
Mortgage 41% Insurance 14% Trust 3% Investment Services 3% Interchange Fees 17% Service Charges on Deposits 15% Other 7% Noninterest Income 2018: $52.1 million For the Year Ended December 31, 2018
15 Commercial Real Estate, Non-Ow ner Occupied 20% Commercial Construction 7% Commercial Real Estate, Ow ner
Occupied 11% Other Commercial - General 11% Agricultural Production 8% Farmland 3% Energy 1% Finance, Investment, and Insurance 3% 1-4 Family Residential 18% Automotive 10% Other Consumer 4% 1-4 Family Construction 4% Well-Balanced Loan Portfolio
Gross Loan Portfolio by Major Category Consumer $608.0 million 31% Commercial Real Estate $538.0 million 27% Commercial – General $427.7 million 22% Commercial – Specialized $305.0 million 16% Data as of December 31, 2018. 100% and 300% regulatory
thresholds on commercial real estate have significant cushion as of December 31, 2018 100% bucket = 75% | 300% bucket = 208% Gross Loans Held for Investment: $2.0 billion
16 Conservative Credit Culture Nonperforming Assets to Loans and OREO Net Charge-Offs to Average Loans Allowance
for Loan Losses to Gross Loans Allowance for Loan Losses to Nonperforming Loans Financial data is as of or for the twelve months ended December 31 of each respective year. 1.81% 0.98% 0.90% 0.91% 0.47% 2014 2015 2016 2017 2018 0.12% 0.27% 0.30% 0.21%
0.27% 2014 2015 2016 2017 2018 135.2% 275.1% 294.3% 154.4% 332.6% 2014 2015 2016 2017 2018 1.80% 1.44% 1.27% 1.17% 1.18% 2014 2015 2016 2017 2018
17 Historical Performance Return on Average Assets(1) Return on Average Equity(1)(2) Note: Financial data is as
of December 31 of each respective year. (1) Profitability metrics are tax adjusted as if the Company were a C Corporation for each of the periods presented. (2) Reflects the company’s pro forma shareholders’ equity after giving effect to the ESOP
Repurchase Right Termination. 78.7% 78.3% 77.0% 77.9% 77.6% 2014 2015 2016 2017 2018 Net Interest Margin Efficiency Ratio 0.64% 0.71% 0.77% 0.69% 0.79% 2014 2015 2016 2017 2018 9.34% 9.68% 10.02% 8.48% 9.66% 2014 2015 2016 2017 2018 3.66% 3.78% 3.60%
3.85% 3.94% 2014 2015 2016 2017 2018
18 Strong Capital Base Tangible Common Equity to Tangible Assets(1)(2) Tier 1 Risk-Based Capital Ratio Tier 1
Leverage Ratio Total Risk-Based Capital Ratio Note: Financial data is for the twelve months ended December 31 of each respective year. (1) Non-GAAP financial measure. We did not have any goodwill or other intangible assets as of the years ended
December 31, 2014 to 2018. Please see the Appendix for the most directly comparable GAAP financial measure. (2) Reflects the company’s pro forma shareholders’ equity after giving effect to the ESOP Repurchase Right Termination. 7.29% 7.30% 7.99%
8.37% 7.84% 2014 2015 2016 2017 2018 9.16% 9.34% 9.56% 10.06% 9.63% 2014 2015 2016 2017 2018 13.07% 12.41% 13.38% 13.02% 11.98% 2014 2015 2016 2017 2018 15.61% 14.79% 15.69% 15.15% 14.28% 2014 2015 2016 2017 2018
19 Pro Forma Capitalization (1) Shown on an as-adjusted basis giving effect to (i) the ESOP Repurchase Right
Termination (as defined in the Registration Statement) as if it had occurred on December 31, 2018 and (ii) the sale of 2,700,000 shares of common stock by us in the offering and the receipt of the net proceeds from the sale of these shares, at an
assumed public offering price of $18.50 per share, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. (2) Non-GAAP financial measure. We did not have any goodwill or other intangible assets as of
ended December 31, 2018. Please see the Appendix for the most directly comparable GAAP financial measure. As of December 31, 2018 Pro Forma Dollars in thousands Actual As Adjusted(1) Borrowings: Subordinated debt securities $ 34,002 $ 34,002 Trust
preferred securities 45,000 45,000 Commitments and Contingent Liabilities: ESOP-owned shares 58,195 - Shareholders' Equity: Preferred stock, par value $1.00 per share - - Common stock, par value $1.00 per share 14,772 17,472 Additional paid-in
capital 80,412 123,323 Retained earnings 119,834 119,834 Accumulated other comprehensive income (2,243) (2,243) Total shareholders' equity, including ESOP-owned shares 212,775 258,386 Less: ESOP-owned shares (58,195) - Total shareholders' equity, net
of ESOP-owned shares 154,580 258,386 Total capitalization $ 233,582 $ 337,388 Capital Ratios: Total shareholders' equity to total assets 7.84 % 9.37 % Tangible common equity to tangible assets(2) 7.84 9.37 Common equity tier 1 capital ratio 9.91
12.01 Tier 1 leverage ratio 9.63 11.13 Tier 1 risk-based capital ratio 11.98 14.08 Total risk-based capital ratio 14.28 16.38
20 Recent Developments For the three months ended March 31, Earnings 2018 2019 Net income $4.6 million $4.8
million Earnings per share (diluted) $0.31 $0.32 Return on average assets 0.73% 0.71% Return on average equity (1) 8.73% 8.98% _ Due to the seasonality of our agricultural production loans, we historically have experienced large paydowns on these
loans during the first quarter of each year _ Additionally, we incurred $115 thousand of after-tax legal expense during the three months ended March 31, 2019 in connection with the offering and related activities As of Balance Sheet March 31, 2018
March 31, 2019 Total assets $2.6 billion $2.7 billion Gross loans held for investment $1.8 billion $1.9 billion Total deposits $2.2 billion $2.3 billion Noninterest-bearing deposits $468.3 million $497.6 million Total shareholders equity (1) $215.5
million $218.6 million Tangible book value per share (2) (3) $14.59 $14.80 (1) Reflects the company’s pro forma shareholders’ equity after giving effect to the ESOP Repurchase Right Termination. (2) Non-GAAP financial measure. We did not have any
goodwill or other intangible assets for either period presented, therefore book value per share is the same as tangible book value per share. (3) Gives effect to a 29-for-1 stock dividend effected by the company on March 11, 2019. The stock dividend
has the effect of a stock split on outstanding shares and per share figures and has been retroactively applied to all periods shown. Commentary
21 Recap of Franchise Highlights Continued emphasis on community banking Enterprise risk management system has
improved internal processes Consistent focus on organic growth Become the acquirer of choice in West Texas Built-in operating leverage will improve efficiency over time Management, employee, and shareholder alignment through strong insider ownership
22 Appendix
23 Selected Financial Highlights (1) The Company calculates its pro forma C Corporation net income, return on
average assets, return on average shareholders’ equity and earnings per share by adding back its franchise S Corporation tax to net income, and using tax rate for Federal income taxes of 35.0% prior to January 1, 2018 and 21.0% after January 1, 2018.
This calculation reflects only the revocation of the Company’s status as an S Corporation and does not give effect to any other transaction. (2) Gives effect to a 29-for-1 stock dividend effected by the company on March 11, 2019. The stock dividend
has the effect of a stock split on outstanding shares and per share figures and has been retroactively applied to all periods shown. As of or for the Year Ended December 31, Dollars in thousands, except per share amounts 2014 2015 2016 2017 2018
Statement of Income Data: Interest income $ 88,753 $ 95,033 $ 97,220 $ 104,440 $ 118,094 Interest expense 14,304 13,543 14,582 15,977 22,482 Net interest income 74,449 81,490 82,638 88,463 95,612 Provision for loan losses 649 781 1,968 3,966 6,901
Noninterest income 31,863 39,630 49,896 47,389 52,121 Noninterest expense 85,972 97,293 104,388 108,144 115,443 Net income – S Corp 19,560 22,932 26,077 23,635 29,290 Net income – C Corp (1) 14,683 17,073 19,652 17,580 20,757 Balance Sheet Data: Cash
and cash equivalents $ 295,936 $ 360,503 $ 363,400 $ 294,563 $ 245,989 Investment securities 362,056 331,322 324,823 284,009 338,196 Gross loans held for investment 1,550,033 1,679,314 1,661,186 1,838,155 1,957,197 Allowance for loan losses 27,940
24,220 21,174 21,461 23,126 Total assets 2,335,383 2,536,865 2,500,813 2,573,375 2,712,745 Interest-bearing deposits 1,680,441 1,713,476 1,658,198 1,678,919 1,767,387 Noninterest-bearing deposits 352,207 413,777 432,725 475,162 510,067 Total deposits
2,032,648 2,127,253 2,090,923 2,154,081 2,277,454 Borrowings 117,150 206,418 189,196 177,830 193,100 ESOP-owned shares 34,376 39,867 49,700 57,121 58,195 Total shareholders’ equity excluding ESOP-owned shares 135,942 145,372 150,019 158,206 154,580
Pro forma total shareholders’ equity 170,318 185,239 199,719 215,327 212,775 Share and Per Share Data: (2) Earnings per share (basic) – S Corp $ 1.31 $ 1.53 $ 1.75 $ 1.60 $ 1.98 Earnings per share (basic) – C Corp (1) 0.98 1.14 1.32 1.19 1.41
Earnings per share (diluted) – S Corp 1.29 1.52 1.74 1.60 1.98 Earnings per share (diluted) – C Corp (1) 0.97 1.13 1.31 1.19 1.41 Dividends per share 0.27 0.48 0.43 0.53 2.03 Book value per share 11.38 12.33 13.58 14.58 14.40 Tangible book value per
share 11.38 12.33 13.58 14.58 14.40 Weighted average common shares outstanding (basic) 14,960,756 14,963,288 14,932,021 14,769,086 14,771,520 Weighted average common shares outstanding (diluted) 15,153,510 15,092,592 14,997,897 14,771,520 14,771,520
Shares outstanding at end of period 15,153,510 15,028,830 14,771,520 14,771,520 14,771,520
24 Selected Financial Highlights (Continued) (1) The Company calculates its pro forma C Corporation net income,
return on average assets, return on average shareholders’ equity and earnings per common share by adding back its franchise S Corporation tax to net income, and using tax rate for Federal income taxes of 35.0% prior to January 1, 2018 and 21.0% after
January 1, 2018. This calculation reflects only the revocation of the Company’s status as an S Corporation and does not give effect to any other transaction. (2) Reflects the company’s pro forma shareholders’ equity after giving effect to the ESOP
Repurchase Right Termination. As of or for the Year Ended December 31, 2014 2015 2016 2017 2018 Performance Ratios: Return on average: Assets – S Corp 0.86% 0.95% 1.02% 0.93% 1.12% Assets – C Corp (1) 0.64 0.71 0.77 0.69 0.79 Shareholders’ equity – S
Corp (2) 12.44 13.00 13.30 11.40 13.63 Shareholders’ equity – C Corp (1) (2) 9.34 9.68 10.02 8.48 9.66 Net interest margin 3.66 3.78 3.60 3.85 3.94 Efficiency ratio 78.74 78.33 77.01 77.87 77.64 Deposit Ratios: Total loans to deposits 75.62% 79.85%
79.67% 85.70% 86.61% Core deposits to total deposits 86.55 87.97 89.97 88.40 90.38 Noninterest-bearing deposits to total deposits 17.33 19.45 20.70 22.06 22.40 Cost of total deposits 0.59 0.54 0.55 0.58 0.80 Credit Quality Ratios: Nonperforming
assets to total loans and OREO 1.81% 0.98% 0.90% 0.91% 0.47% Allowance for loan losses to nonperforming loans 135.18 275.07 294.29 154.38 332.56 Allowance for loan losses to total gross loans 1.80 1.44 1.27 1.17 1.18 Net loan charge-offs to average
loans 0.12 0.27 0.30 0.21 0.27 Capital Ratios: Total shareholders’ equity to total assets 7.29% 7.30% 7.99% 8.37% 7.84% Tangible common equity to tangible assets 7.29 7.30 7.99 8.37 7.84 Common equity tier 1 capital ratio NA 9.96 10.91 10.78 9.91
Tier 1 leverage ratio 9.16 9.34 9.56 10.06 9.63 Tier 1 risk-based capital ratio 13.07 12.41 13.38 13.02 11.98 Total risk-based capital ratio 15.61 14.79 15.69 15.15 14.28
