SOUTH PLAINS FINANCIAL, INC.SPFI

SOUTH PLAINS FINANCIAL, INC. Leases Disclosure

10-KFiled Mar 5, 20262 min read
7.  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, 2025 and 2024, 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,
2025
    
December 31,
2024
  
Operating lease right of use assets (included in Other assets)
  
$
6,961
    
$
7,968
  
Operating lease liabilities (included in Accrued expenses and other liabilities)
    
7,933
      
8,906
  

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, $2.4 million and $2.9 million, respectively, for the years ended December 31, 2025, 2024 and 2023, respectively.

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

   
Year Ended December 31,
  
   
2025
    
2024
  
Cash paid for amounts included in the measurement of lease liabilities:
            
Operating cash flows used in operating leases
  
$
1,685
    
$
1,906
  
Right-of-use assets obtained in exchange for new lease obligations:
                
Operating leases
  
$
237
    
$
636
  

For operating leases, the Company’s weighted average remaining lease terms and weighted average discount rate was 8.79 years and 5.65%, respectively, as of December 31, 2025, and 9.22 years and 5.64%, respectively, as of December 31, 2024.

Future undiscounted lease payments at December 31, 2025, under operating lease agreements, are presented below (in thousands).

2026
  
$
1,621
  
2027
    
1,498
  
2028
    
1,320
  
2029
    
1,151
  
2030
    
844
  
Thereafter
    
3,669
  
Total minimum lease payments
    
10,103
  
Less: Amount representing interest
    
(2,170
)
Lease liabilities
  
$
7,933
  
As of December 31, 2025, 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, 2025, 2024, and 2023 was $895 thousand, $883 thousand, and $839 thousand, respectively, and is included in occupancy and equipment, net in the Consolidated Statements of Comprehensive Income.
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Historical Timeline

Fiscal YearFiled
2025Mar 5, 2026Showing above
2024Mar 7, 2025
2023Mar 15, 2024
2022Mar 13, 2023

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.

Other Available Disclosures

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