South Plains Financial, Inc. (SPFI): Business Model Canvas [Dec-2025 Updated]

You're trying to map out the real engine behind a regional bank's growth, and honestly, the Business Model Canvas for South Plains Financial, Inc. (SPFI) shows a clear strategy: leverage a deep community presence-backed by 24 branch locations-to generate solid Net Interest Income of $43.0 million (Q3 2025), all while maintaining fortress-like stability with a total risk-based capital ratio of 17.34% (Q3 2025). This model is clearly set up to integrate that pending merger while keeping credit quality tight at just 0.26% in nonperforming assets. Want to see the precise partnerships and activities that make this engine run? Check out the full nine-block breakdown below.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Key Partnerships

You're looking at the relationships that power South Plains Financial, Inc. (SPFI) as of late 2025, especially with that big merger announcement shaking things up. These partnerships are critical for scale and compliance in the regional banking space.

Definitive merger agreement with BOH Holdings, Inc. (Bank of Houston)

South Plains Financial, Inc. entered into a definitive merger agreement to acquire BOH Holdings, Inc., the parent of Bank of Houston, effective December 1, 2025. This is an all-stock transaction valued at approximately $105.9 million. The deal is priced at 6.8 times estimated 2027 earnings.

The transaction is expected to issue approximately 2.8 million South Plains Financial shares, meaning former BOH shareholders will own about 14.5% of the combined company. The closing is targeted for the second quarter of 2026, pending regulatory and shareholder approvals.

As of September 30, 2025, BOH reported $772 million in assets, $633 million in loans, and $629 million in deposits. Upon closing, the pro forma company is projected to have approximately $5.4 billion in assets, $3.8 billion in loans, and $4.6 billion in deposits. This combination will grow the company's Texas footprint to 26 branches. The transaction is expected to be 11% accretive to South Plains Financial's earnings per share in 2027, with a tangible book value per share earnback of less than 3.0 years.

Here's a quick look at the key deal metrics:

Professional advisors for M&A and regulatory compliance

For this significant M&A activity, Raymond James & Associates served as the financial advisor to South Plains Financial. Hillworth Bank Partners advised BOH Holdings, Inc..

Institutional investors like American Century Companies Inc.

Institutional investors held a significant stake in South Plains Financial, Inc. as of the September 2025 reporting cycle. They collectively held 40.8% of the total shares outstanding, totaling 6.63 million shares.

American Century Companies Inc. is one of these key institutional partners. As of September 30, 2025, they held 347.64K shares. In the second quarter of 2025, American Century Companies Inc. increased its position by 29,420 shares, bringing their total holding to 306,343 shares, representing about a 1.89% stake valued around $11.04 million.

Other major institutional holders as of September 2025 included:

• BlackRock, Inc.: 1.21Mn shares, representing 7.47%
• VANGUARD GROUP INC: 706.33K shares
• DIMENSIONAL FUND ADVISORS LP: 480.84K shares
• JPMORGAN CHASE & CO: 380.99K shares

The stock traded with a P/E ratio of 11.22 and a market capitalization of $638.3M as of early December 2025. South Plains Financial, Inc. declared a quarterly dividend of $0.16 per share, which translates to an annualized yield of about 1.6%.

Finance: draft pro-forma capital structure impact analysis by next Tuesday.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Key Activities

You're looking at the core engine of South Plains Financial, Inc. (SPFI) as of late 2025, focusing on what they actually do to generate revenue and maintain their market position. It's about the day-to-day execution that underpins the financial statements you see.

Commercial and retail loan origination and servicing

The Bank's principal business is commercial and retail banking, which centers on originating and servicing loans. As of September 30, 2025, loans held for investment stood at $3.05 billion. This figure was essentially unchanged compared to September 30, 2024. The activity involves managing the credit quality of this portfolio; for instance, the ratio of allowance for credit losses to loans held for investment was 1.45% at September 30, 2025.

The focus is on organic growth, though loan portfolio size can fluctuate due to payoffs. For example, the decrease in loans held for investment from $3.10 billion on June 30, 2025, to $3.05 billion on September 30, 2025, was primarily due to the payoff of two multi-family property loans totaling $39.6 million.

Here are some key metrics related to the loan and credit quality activity as of the third quarter of 2025:

Maintaining a low-cost, community-based deposit franchise

A critical activity is securing funding through deposits, which directly impacts the Net Interest Margin (NIM). South Plains Financial emphasizes its community-based deposit franchise. Total deposits reached $3.88 billion as of the end of the third quarter of 2025, an increase of $142.2 million during that quarter.

The cost of this funding is managed tightly. The average cost of deposits for the third quarter of 2025 was 210 basis points, down from 247 basis points in the third quarter of 2024. Furthermore, noninterest-bearing deposits were a significant component of the funding base, accounting for 26.7% of total deposits as of June 30, 2025, which helps keep overall funding costs low.

Managing investment, trust, and mortgage services

Beyond core lending, South Plains Financial manages other fee-based services. These activities contribute to Total Noninterest Income. For the third quarter of 2025, Total Noninterest Income was reported at $11.17 million.

The company's principal business activities explicitly include investment, trust, and mortgage services. This diversification helps stabilize revenue streams against fluctuations in pure lending income.

Strategic M&A integration and organic market expansion

The strategy balances growth through acquisition with expansion within existing markets. In December 2025, South Plains Financial announced an all-stock merger agreement to acquire BOH Holdings, Inc. for approximately $105.9 million. This transaction is expected to be 11% accretive to SPFI's earnings per share in 2027.

Based on the September 30, 2025, balance sheets, the pro forma combined entity is projected to have:

• Assets of approximately $5.4 billion.
• Loans of approximately $3.8 billion.
• Deposits of approximately $4.6 billion.

This acquisition will increase the branch network to 26 across Texas and enhance the geographic footprint in the Houston MSA. Organically, management has focused on expanding its commercial lending platform by recruiting across Texas markets, such as Dallas.

Investing in technology platform to efficiently scale operations

While specific capital expenditure figures for technology investment aren't detailed in the immediate earnings releases, the operational efficiency metrics suggest ongoing platform management. The efficiency ratio for the third quarter of 2025 was 60.7%, an improvement from the 63.2% estimated by analysts on average. This focus on efficiency supports the ability to scale operations, whether through organic growth or the integration of acquired entities like BOH Holdings, Inc.

The company's ability to generate solid earnings growth, with Q3 2025 diluted EPS at $0.96 compared to $0.66 in Q3 2024, is supported by these operational activities.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Key Resources

The Key Resources for South Plains Financial, Inc. center on its strong financial footing, established regional brand presence, physical infrastructure, and human capital, all supported by a cost-effective funding base.

The capital base is a primary asset, demonstrated by the consolidated total risk-based capital ratio of 17.34% as of September 30, 2025. This strength is further evidenced by the common equity tier 1 risk-based capital ratio of 14.41% and the tier 1 leverage ratio at 12.37% on the same date. Tangible book value per share stood at $28.14 as of September 30, 2025.

The City Bank brand is recognized as a large independent West Texas bank. This brand supports a physical network essential for local relationship banking.

The lending team is a critical resource, with plans to increase its size by up to 20% to accelerate asset growth. The bank's market presence is geographically diverse across Texas and New Mexico, which underpins its resource base.

The core deposit base provides stable, low-cost funding, with an average cost of deposits for the third quarter of 2025 registered at 210 basis points. This low cost helped support a net interest income of $43 million in the third quarter of 2025.

The geographic reach of City Bank, which is the principal operating subsidiary, includes key markets:

• Lubbock, Texas (Headquarters)
• Dallas, Texas market
• El Paso, Texas market
• Greater Houston, Texas market
• Permian Basin, Texas market
• College Station, Texas market
• Ruidoso, New Mexico market

Further detail on the balance sheet strength supporting these resources includes:

• Net Interest Margin (Tax-Equivalent, Q3 2025): 4.05%
• Return on Average Assets (Q3 2025): 1.47%
• Loans Held for Investment (9/30/2025): Essentially unchanged from 9/30/2024

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Value Propositions

You're looking at what South Plains Financial, Inc. offers its customers and the market, which is built on a deep, localized banking foundation. The core value is providing full-service commercial and consumer financial services for local markets, primarily through its subsidiary, City Bank.

The company emphasizes a deep community banking presence with local decision-making. City Bank is one of the largest independent banks in West Texas, with operations extending into the Dallas, El Paso, Greater Houston, Permian Basin, and College Station, Texas markets, plus Ruidoso, New Mexico. This local focus helps them serve small and medium-sized businesses and individuals effectively.

The breadth of offerings is a key proposition, covering a wide range of services: banking, investment, trust, and mortgage. Specifically, you see:

• Deposit products like demand, interest-bearing, and savings accounts, plus certificates of deposit.
• Traditional trust services, including real estate and family trust administration.
• Investment services such as self-directed IRAs, mutual funds, and various bonds.
• A full suite of lending, including commercial real estate, general commercial, residential construction, 1-4 family residential, and auto loans.
• Mortgage banking services.

The financial health underpinning these services is a major value driver. South Plains Financial, Inc. maintains solid credit quality with nonperforming assets to total assets at 0.26% (Q3 2025). That low ratio, reported as of September 30, 2025, shows excellent asset management compared to the 0.59% seen in Q3 2024.

For shareholders, the commitment is clear through strong shareholder returns with seven consecutive years of dividend increases. The latest declared quarterly dividend was $0.16 per share, with an ex-date of October 27, 2025. The one-year dividend growth was reported at 10.71%.

Here's a quick look at some key financial metrics that back up the stability of these value propositions as of the third quarter of 2025:

Also, consider the capital strength; the consolidated total risk-based capital ratio stood at 17.34%, and the tier 1 leverage ratio was 12.37% at September 30, 2025. These figures significantly exceed regulatory minimums, which is a value proposition of safety for depositors and stability for investors. Finance: draft the pro forma asset quality impact of the BOH Holdings merger by next Tuesday.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Customer Relationships

South Plains Financial, Inc. (SPFI) centers its model on a relationship-driven, community-focused banking model. This is evidenced by management's stated focus on recruiting experienced lenders to bring in high-quality customer relationships to support loan and deposit growth. The bank's organic growth strategy is key, even while considering mergers. As of the second quarter of 2025, the company was actively working to accelerate loan origination capacity through strategic hiring, particularly in the Dallas market. The full-year 2025 loan growth guidance was set at the lower end of the company's low to mid-single-digit range. This approach prioritizes deep, established connections over purely transactional volume.

The structure supporting this relationship focus involves dedicated commercial and retail lending officers. While the exact count of dedicated officers isn't public, the overall employee count for South Plains Financial, Inc. as of late 2025 was reported as 600 employees. The bank provides a wide range of services that require specialized relationship managers, including commercial real estate loans, general and specialized commercial loans (covering agriculture, energy, retail, etc.), residential construction loans, and 1-4 family residential loans.

For high-touch service for trust and investment clients, South Plains Financial, Inc., through City Bank, offers traditional trust products and services. This includes specialized administration for family trusts, revocable and irrevocable trusts, and charitable trusts for both individuals and corporations. Investment services provided directly to clients include self-directed IRAs, money market funds, mutual funds, and various fixed-income securities like treasury bills and tax-exempt municipal bonds.

The bank integrates digital self-service options via the technology platform to complement its high-touch service. As of September 30, 2025, the bank maintained a significant base of low-cost funding, with noninterest-bearing deposits totaling $1.05 billion. These noninterest-bearing deposits represented 27.0% of the total deposits, which stood at $3.88 billion at that date. The company directs customers to its technology platform via its website, spfi.bank.

The commitment to proactive communication during M&A transitions was clearly demonstrated with the December 1, 2025, announcement of the definitive merger agreement with BOH Holdings, Inc. The communication strategy explicitly sought to limit customer attrition risk by stressing continuity. For Bank of Houston customers, the messaging confirmed that until the data migration on May 8, 2026, account numbers, cards, routing numbers, branch and ATM access, and hours were expected to remain unchanged. This proactive stability messaging is crucial for maintaining customer relationships during structural change.

Here's a look at the scale and expected pro forma footprint following the announced acquisition:

The relationship focus is also supported by the bank's overall financial health, which provides the capital base to support client expansion:

• Tangible book value (non-GAAP) per share was $28.14 as of September 30, 2025.
• The consolidated common equity tier 1 risk-based capital ratio was 13.86% at June 30, 2025.
• The tier 1 leverage ratio was 12.12% at June 30, 2025.
• The allowance for credit losses to loans held for investment ratio was 1.45% as of September 30, 2025.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Channels

You're looking at how South Plains Financial, Inc. (SPFI), through its City Bank operations, physically and digitally connects with its customers as of late 2025. The channel strategy is clearly anchored in a physical footprint across key Southwestern markets, supplemented by specialized lending offices and digital access.

The core physical network, as reported just before the BOH Holdings, Inc. merger finalization, included a substantial presence in Texas and New Mexico.

Physical branch network across Texas and New Mexico

City Bank operates a network of physical locations designed to serve its community bank base. As of the end of 2025, before the full integration of the BOH Holdings, Inc. acquisition, the network stood at:

• The existing City Bank network comprised 24 branch locations.
• These branches are situated across Texas and Eastern New Mexico.

The announced merger with BOH Holdings, Inc., effective December 1, 2025, is set to expand this physical reach. The pro forma entity is projected to have 26 branches across Texas upon closing, expected in April 2026, which includes the addition of the Bank of Houston locations.

Mortgage and lending offices for specialized services

For focused credit origination, South Plains Financial, Inc. maintains dedicated offices separate from the main branch structure. These offices handle specialized lending needs, particularly mortgages.

• The company operates seven mortgage locations across Texas and New Mexico.
• The services offered through these channels include commercial real estate loans and 1-4 family residential loans.

Here's a quick look at the physical channel scale, incorporating the near-term merger impact:

Digital banking platform (online and mobile)

South Plains Financial, Inc. supports its physical presence with digital access points. The bank offers both online and mobile banking modes for customers to manage their accounts, which include demand deposit accounts, savings, and certificates of deposit.

• Digital channels facilitate ongoing customer interaction and transaction processing.
• The bank provides debit and credit card services, which are integral to digital channel use.

Direct sales force for commercial and private banking

For higher-value commercial and private banking relationships, SPFI relies on a direct engagement model. The strategy mentioned involves adding experienced lenders to drive organic loan growth, which points to a dedicated sales/relationship management team.

• This channel targets small and medium-sized businesses and individuals for complex financial products.
• Services delivered via this force include general and specialized commercial loans, and trust products.

ATM network and indirect lending channels

Customer access extends to automated teller machines and through third-party arrangements. The merger announcement confirmed that ATM access for the acquired Bank of Houston customers is expected to remain unchanged until May 8, 2026, indicating integration of ATM networks is a planned step.

• City Bank offers indirect lending as one of its additional banking services.
• ATM access continuity is maintained for acquired customers during the transition period.

Finance: draft the pro forma branch map update based on the BOH acquisition by next Tuesday.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Customer Segments

You're mapping out the core customer base for South Plains Financial, Inc. (SPFI), the holding company for City Bank, right as they finalize a major strategic move. Honestly, their customer segments are deeply rooted in the Texas community banking model, serving both the Main Street businesses and the folks who bank there.

The primary audience is split between commercial clients and retail consumers across their footprint, which, as of late 2025, spans Texas and Eastern New Mexico. Following the announced merger with BOH Holdings, Inc., the pro forma entity is set to have a significantly expanded presence, particularly in the high-growth Houston MSA.

Here's a look at the scale and reach across these segments, based on the latest reported figures as of September 30, 2025, reflecting the combined entity's projected size:

Small and medium-sized businesses (SMBs) in core markets are a bedrock for South Plains Financial. They are the recipients of the commercial loan growth that has been broad across the portfolio. The bank provides a wide array of commercial financial services tailored to these local enterprises in its established markets like Lubbock, Dallas, and El Paso.

Individuals and consumers are the base for the retail banking side. They use the standard deposit products-demand accounts, savings, and certificates of deposit-alongside debit and credit cards. As of September 30, 2025, noninterest-bearing deposits totaled $1.05 billion, which is 27.0% of all deposits, showing a solid core of transactional customer money.

For high-net-worth individuals utilizing trust and investment services, South Plains Financial offers traditional trust products. These services include real estate administration, family trust administration, and both revocable and irrevocable trusts. While specific asset under management figures aren't immediately available, the offering confirms this segment is served.

Customers in high-growth Texas markets are a key focus for near-term strategy. The acquisition of BOH Holdings specifically deepens the commitment to the Houston MSA, a fast-growing area. Post-merger, the combined entity is projected to hold the 11th most deposits of any Texas-headquartered bank in Houston, which is a clear indicator of targeting scale in this market.

Residential mortgage borrowers are served through the bank's seven mortgage locations and the loan portfolio itself. While the bank focuses on commercial and CRE, the loan book as of March 31, 2025, shows specific allocation to housing-related lending within its Non-Owner Occupied CRE (NOO CRE) portfolio:

• Residential Construction loans represented 8% of the NOO CRE portfolio.
• Multi-family loans accounted for 25% of the NOO CRE portfolio.

The NOO CRE portfolio itself was 40.0% of total Loans Held for Investment as of March 31, 2025, broken down further into income-producing loans of $878.0 million and construction/development loans of $350.9 million.

Finance: draft the Key Partners section based on the BOH merger details by Monday.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Cost Structure

You're looking at the core expenses South Plains Financial, Inc. (SPFI) manages to run City Bank across its markets in Texas and New Mexico. The cost structure is heavily weighted toward funding costs and personnel, which is typical for a community bank focused on lending and relationship building.

The most significant recurring cost is the expense associated with funding their balance sheet. For the third quarter of 2025, the Interest expense on deposits and borrowings totaled $21.5 million. This figure reflects the cost of the deposits they hold-which totaled $3.88 billion as of September 30, 2025-and any other borrowings used to support lending activities. Honestly, managing that cost of funds is key, especially when deposit costs are fluctuating.

Overall operational costs are tracked under Noninterest expense. For the second quarter of 2025, this category was reported at $33.5 million. This number is a composite of several key areas that drive the bank's day-to-day operations and strategic growth initiatives.

Here's a breakdown of the major components of that noninterest expense structure, using the latest available quarterly figures:

Personnel expenses are a substantial part of the operating cost. For the third quarter of 2025, Salaries and employee benefits amounted to $19,413 thousand. Management has been clear about their strategy here; they are actively investing in human capital. South Plains Financial, Inc. noted they have 'added exceptional talent across the Bank' and expect to further increase their lending team by up to 20% to drive organic growth. This focus on adding experienced commercial lenders is a deliberate investment in future revenue generation.

The bank is also making specific investments in its operational backbone, which shows up in professional fees and technology spending. Management has stated they are making 'necessary investments in our technology platform that positions South Plains to efficiently scale our operations.' This is a forward-looking cost. We see evidence of this in the quarterly movements; for instance, professional service expenses in the second quarter of 2025 increased by $144 thousand from the first quarter, with some of the prior year's consulting tied to technology projects. You can expect these costs to remain elevated as they integrate new systems and support expansion, such as the planned acquisition of BOH Holdings, Inc.

Finally, the cost set aside to cover potential loan defaults is the Provision for credit losses. This was a relatively small figure in Q3 2025 at $500 thousand. This low provision, alongside a nonperforming asset ratio of 0.26% as of September 30, 2025, suggests credit quality is currently stable, which helps keep this specific cost component down. The key cost drivers you need to watch are:

• Interest expense on deposits, tied to market rates.
• Salaries and benefits for the expanding lending team.
• Ongoing professional services for technology upgrades.
• The level of the provision for credit losses.

Finance: draft 13-week cash view by Friday.

South Plains Financial, Inc. (SPFI) - Canvas Business Model: Revenue Streams

South Plains Financial, Inc. generates its revenue primarily through traditional banking activities, heavily weighted toward interest income, supplemented by various fee-based services. You're looking at the core drivers of the top line, which is what keeps the lights on and funds growth initiatives.

The primary measure of core earnings power is Net Interest Income (NII), which was $43.0 million in Q3 2025. This number reflects the difference between what South Plains Financial, Inc. earns on its assets, like loans, and what it pays out on its liabilities, like deposits and borrowings. For context, the Interest Expense for that same period was $21.5 million.

The total Interest income from loans and other earning assets, which represents the gross interest earned before deducting interest expense, totaled $64.5 million for Q3 2025. This figure is the foundation of the interest-based revenue stream, supported by an average yield on loans of 6.92% in the third quarter of 2025.

Beyond the balance sheet spread, Noninterest income from fees, trust, and mortgage services provided a meaningful contribution, totaling $11.2 million in Q3 2025. This stream demonstrates the diversification of South Plains Financial, Inc.'s earnings base, moving beyond pure lending margins.

The overall revenue structure for Q3 2025 shows a clear reliance on interest earnings, but the fee income is a significant secondary component. Here is a breakdown of the key revenue elements for the third quarter of 2025:

The noninterest income segment is composed of several service-related charges, which you need to monitor for consistency. While the exact Q3 2025 dollar amounts for each sub-component aren't fully detailed in the latest reports, the business model relies on these specific fee categories:

• Loan fees and service charges on deposit accounts
• Investment and trust management fees
• Mortgage banking revenues (which saw a $1.0 million sequential decrease in Q3 2025)

The composition of the noninterest income is vital because it often carries a lower capital charge than loan growth. For example, historical data suggests that fees like Interchange Fees and Service Charges on Deposits are significant drivers of this segment.