LEASES

Lessee Arrangements

The Company leases space, primarily for branch facilities and small equipment under operating leases. The Company’s leases often include one or more options to renew at the Company’s discretion, and some of the Company’s leases include options to terminate within one year. When it is reasonably certain that the Company will exercise the option to renew or extend the lease term, that option is included in estimating the value of the ROU asset and lease liability. The Company’s leases contain customary restrictions and covenants and do not contain any residual value guarantees. The Company has certain intercompany leases and subleases between its subsidiaries, and these transactions and balances have been eliminated in consolidation and are not reflected in the tables and information presented below. As of December 31, 2024 and 2023, the Company had no finance leases.

The balance sheet components of the Company’s leases at year-end are as follows (in thousands):

	December 31, 2024		December 31, 2023
Operating lease right of use assets (included in Other assets)	$	7,968	$	8,681
Operating lease liabilities (included in Accrued expenses and other liabilities)		8,906		9,630

The Company does not generally enter into leases which contain variable payments, other than due to the passage of time. Operating lease costs, including short-term lease costs were $2.4 million, $2.9 million and $2.9 million, respectively, for the years ended December 31, 2024, 2023 and 2022, respectively.

Supplemental cash flow information related to leases is as follows (in thousands):

	Year Ended December 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases	$	1,906	$	2,004
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	636	$	2,515

For operating leases, the Company’s weighted average remaining lease terms and weighted average discount rate was 9.22 years and 5.64%, respectively, as of December 31, 2024, and 9.90 years and 5.51%, respectively, as of December 31, 2023.

Future undiscounted lease payments at December 31, 2024, under operating lease agreements, are presented below (in thousands).

2025	$	1,637
2026		1,558
2027		1,435
2028		1,276
2029		1,107
Thereafter		4,499
Total minimum lease payments		11,512
Less: Amount representing interest		(2,606	)
Lease liabilities	$	8,906

As of December 31, 2024, the Company had no significant additional operating leases that have not yet commenced.

Lessor Arrangements

The Company leases certain facilities and office space under operating lease agreements to outside parties. Operating lease income for the years ended December 31, 2024, 2023, and 2022 was $883 thousand, $839 thousand, and $800 thousand, respectively, and is included in occupancy and equipment, net in the Consolidated Statements of Comprehensive Income (Loss).

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

SOUTH PLAINS FINANCIAL, INC. Leases Disclosure

About Leases Disclosures

Other Available Disclosures