South Plains: The Pipeline Finally Catches Up With the Pitch

A CEO handoff, a cleaner Bank of Houston, and the first real evidence that South Plains' Texas lending build can outrun its payoffs.

SPFI · Earnings Call · 2026-10-22

The quarter the loan pipeline stopped being a promise

For several quarters South Plains has told investors that loan growth was coming. On the prior call, management was still hedging: “We're still very comfortable with our -- the guidance that we put out... low to mid-single-digit growth” — Cory Newsom, Executive (likely CEO or President) · 2026-04-28. In Q3 the bank did better than that. Loans held for investment rose roughly $60 million, or 6.3% annualized, to $3.83 billion — and that was after a $25 million deposit-secured credit paid off and a large relationship exited. “The increase was driven by healthy loan production across our markets and was achieved despite the early payoff of a $25 million loan that was fully secured by the borrower's deposit account” — Cory T. Newsom · 2026-10-22, CEO-in-waiting Cory Newsom said. The company's keyword set is dominated by exactly this story: loan pipeline, loan production, and organic loan growth are the top company themes this quarter, not acquisition accounting or cost cuts.

The more important detail is where the pipeline is coming from. Metro markets — Dallas, Houston, El Paso — were 44.6% of the loan book and now represent nearly half or more of total pipeline, versus roughly a third in prior years. Brent Bates put the shift plainly:

Our pipeline, over the second half of the year has been, much stronger than the first... our metro markets now are really nearly half or more of our pipeline in total. And, you know, in prior years, that was probably more close to 1/3.
Brent A. Bates · 2026-10-22

That is a mix change, not just a good quarter. It also explains why management can sound more confident about 2027 even while acknowledging that loan payoffs will continue in the normal course. The payoff headwind has been the recurring villain on prior calls; this quarter it was finally smaller than the production story.

A quieter handoff — and a cleaner Bank of Houston

Curtis Griffith is stepping down as CEO at year-end, with Cory Newsom moving up and Tyler Hayes joining the call. The transition itself is not new — it was a top-five company keyword last quarter under leadership transition — but the timing matters. Griffith leaves behind a balance sheet that has been transformed by the Bank of Houston deal and a management team that has now largely finished the messy part. “As I prepare to retire as chief executive officer at the end of this year, I have been reflecting on what we have built together and I could not be prouder of what Citibank and South Plains have become.” — Curtis C. Griffith · 2026-10-22Operationally, the BOH cost-save program is essentially in the run rate. “Pretty much pretty much everything's in place now with them.” — Steven Crockett · 2026-10-22 That is a shift from July, when CFO Steve Crockett expected BOH funding costs to improve in Q3. They did — but only marginally. Cost of deposits fell one basis point to 2.07%, and noninterest-bearing deposits edged up to 25.3% of total deposits. The funding base is better, not transformed. The bank let higher-cost noncore funding leave while still growing deposits by $20 million to $4.66 billion. The funding base is doing its job: NIM held at 4%, despite volatile rates and new loan yields in the upper sixes against deposit costs still above 2%.

This is where South Plains diverges from the broader regional-bank tape. Other reporters this week are still wrestling with Fed rate hike sensitivity and deposit beta. South Plains is unusually neutral: management said a 25- or 50-basis-point move would not have much effect. The company's own history shows why that matters. In January, Crockett warned investors to expect “a little bit of compression” — Steven Crockett, Chief Financial Officer · 2026-01-26 in NIM. Three quarters later, the margin is stable and the efficiency ratio improved to 58.1%. The rate backdrop has become a smaller variable, not a bigger one.

The things that did not change: M&A discipline, auto credit, expense shape

Management still talks about M&A as an important part of the long-term strategy, but the language has shifted toward patience. The company keyword list includes disciplined acquisition strategy, and Newsom repeated the line that any deal must fit culture, credit standards, and financial objectives. “We are not interested in growth for growth's sake and any acquisition must create long term value for shareholders.” — Cory T. Newsom · 2026-10-22After the BOH integration, that is the right posture: prove the organic engine first, then buy again. The market is unlikely to reward another deal until this one is visibly accretive.

The auto book also came up again. An analyst asked whether South Plains would sell its indirect auto portfolio, as other banks have done. Management said no, leaning on credit quality: roughly 99.9% of the portfolio is super-prime or prime, duration is short, and past-due levels remain low. “We like this piece of business for us.” — Cory T. Newsom · 2026-10-22 The keyword auto loans remains in the company's top-30, but it is a defense of an existing position rather than a new growth theme. Given the scrutiny on consumer credit, that is probably the right answer.

Expenses are following the promised path. Noninterest expense fell $1.8 million to $38.1 million in Q3, and Crockett guided Q4 lower before a 2027 build. That matches the July setup: “We should see that drop back down a little bit to hopefully Q1, Q2. Well, Q2 really being the high mark. The conversion expenses and those types should be largely behind us.” — Steve Crockett, Chief Operating Officer · 2026-07-17 The difference is that Q3 actually delivered the drop.

What to watch from here

The bull case is now less about cost saves and more about whether the metro pipeline can sustain mid-single-digit growth without giving back margin. New loan yields in the upper sixes are healthy relative to the portfolio, but CDs and money markets in the mid-fours make marginal funding math tight. South Plains is relying on exception-based pricing and relationship deposits to thread that needle. Credit is the other watch item: nonperforming loans rose to 40 basis points, mostly from acquired BOH credits, and the largest has already returned to performing. That is manageable, but it keeps the acquired portfolio in focus.

Fundamentally, the franchise is in better shape than the stock's modest recent move implies. Deposits reached $4.6 billion, up 24% year over year, and effective revenue was $89 million in the latest filed quarter, up 17% year over year. Common equity stood at $630 million, and the shares trade at 1.3x book. The stock is within 4.4% of its 52-week high, so the easy re-rating from BOH integration is largely done. What remains is the harder, more valuable work: proving that the loan pipeline is durable, that the margin can hold, and that the next CEO can convert Texas disruption into organic growth rather than another acquisition.