SOUTH PLAINS FINANCIAL, INC.

Lubbock · Main Branch · Plano · Branch

Lubbock · 4th Street Branch · Dallas · Uptown Branch

Lubbock · 50th and Indiana Branch · Forney · Branch

Lubbock · Kingsgate Branch · Arlington · LPO

Lubbock · Milwaukee Branch · Dallas · Hillcrest LPO

Lubbock · Overton Branch · Ft. Worth · LPO

Lubbock · University Branch · Grand Prairie · LPO

Morton · Branch · North Richland Hills · LPO

Idalou · Branch

Levelland · Branch

El Paso · Houston

El Paso · East Branch · Houston · Branch

El Paso · West Branch

El Paso · Mesa Hills LPO

Bryan/College Station · Ruidoso, New Mexico

College Station · Branch · Ruidoso · River Crossing Branch

The Permian Basin · Other Markets

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. We believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.

• Agricultural lending and volatility in commodity prices may adversely affect our financial condition and results of operations.
• 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.
• 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.
• Climate change and government action and societal responses may materially affect the Company’s business and results of operations.
• The amount of nonperforming assets may increase and can take significant time and resources to resolve.
• The properties that we own and certain foreclosed real estate assets could subject us to environmental risks and associated costs.
• 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.
• Our largest loan relationships make up a material percentage of our total loan portfolio.
• 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.
• Liquidity risk could impair our ability to fund operations and meet our obligations as they become due and could jeopardize our financial condition.
• Deposit outflows may increase reliance on borrowings and brokered deposits as sources of funds.
• Customers could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding.
• We continually encounter technological changes which could result in us having fewer resources than many of our competitors to continue to invest in technological improvements.
• We may be adversely impacted by an economic downturn or a natural disaster affecting one or more of our market areas.
• Mortgage originations have decreased due to higher interest rates and declines in refinance activity, and this trend may continue.
• Market conditions could have a material impact on our ability to sell originated mortgages in the secondary market.
• The value of our mortgage servicing rights can be volatile.
• Our risk management framework may not be effective in mitigating risks or losses to us.
• We are dependent on the use of data and modeling in our management’s decision-making and faulty data or modeling approaches could negatively impact our decision-making ability or possibly subject us to regulatory scrutiny in the future.
• There are investment performance, fiduciary and asset servicing risks associated with our trust operations.
• We are exposed to cybersecurity risks associated with our internet-based systems and online commerce security, and our information systems could experience an interruption, failure, breach in security, or cyber-attack.
• Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.
• 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.
• We rely heavily on our management team and the unexpected loss of key officers may adversely affect our operations.
• Our ability to develop, retain and recruit additional successful bankers is critical to the success of our business strategy, and any failure to do so could adversely affect our business, financial condition, results of operations and future prospects.
• Competition from other financial intermediaries may adversely affect our profitability.
• 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.
• The obligations associated with being a public company require significant resources and management attention.
• Our equity compensation plan will cause dilution and increase our costs, which will reduce our income.
• Negative public opinion could damage our reputation and adversely impact our earnings.
• We may be adversely affected by the soundness of other financial institutions.
• 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.
• We are subject to commercial real estate lending guidance issued by the federal banking regulators that impacts our operations and capital requirements.
• Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.
• Many of our new activities and expansion plans require regulatory approvals, and failure to obtain them may restrict our growth.
• The Federal Reserve may require the Company to commit capital resources to support the Bank.
• 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.
• Bank regulatory agencies periodically examine our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we become subject as a result of such examinations could materially and adversely affect us.
• If we fail to maintain sufficient capital under regulatory requirements, whether due to losses, an inability to raise additional capital or otherwise, that failure could adversely affect our financial condition, liquidity and results of operations, as well as our ability to maintain regulatory compliance.
• Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could 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.
• We face increased risk under the terms of the CRA, as we accept additional deposits in new geographic markets.
• We are subject to federal and state fair lending laws, and failure to comply with these laws could lead to material penalties.
• Our financial condition, earnings and asset quality could be adversely affected if our consumer facing operations do not operate in compliance with applicable regulations.
• Risks Related to Our Common Stock
• An active public trading market may not be sustained.
• The market price of our common stock could be volatile and may fluctuate significantly, which could cause the value of an investment in our common stock to decline, result in losses to our shareholders and litigation against us.
• 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.
• 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.
• Our directors and executive officers have significant control over our business.
• Our bylaws have an exclusive forum provision, which could limit a shareholder’s ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
• Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.
• We are a bank holding company and our only source of cash, other than issuances of securities, is distributions from the Bank.