KBRA Comments on South Plains Financial, Inc.'s Proposed Acquisition of BOH Holdings, Inc.
On December 1, 2025, Lubbock, Texas-based South Plains Financial, Inc. (NASDAQ:SPFI) ("South Plains" or "the company"), parent of City Bank, announced its entrance into a definitive merger agreement with Houston, Texas-based BOH Holdings, Inc. ("BOH"), the parent company of Bank of Houston. The all-stock transaction, valued at approximately $106 million (P/TBV 1.4x), is expected to close between 1Q26 and 2Q26, subject to customary and shareholder approvals. Under the agreement, Jim Stein, Chairman, President, and Chief Executive Officer of BOH, will join the company and continue leading his team in Houston, along with being appointed to the board of directors of South Plains and City Bank.
KBRA views the proposed acquisition as strategically well-aligned with South Plains' ongoing effort to build a scaled, relationship-focused franchise across high-growth Texas markets driving organic loan growth. The combination meaningfully expands the company's presence and commercial and private banking relationships in the Houston MSA – one of the fastest-growing major markets in the U.S. – and positions SPFI to capitalize on recent competitive disruptions. From a financial standpoint, the acquisition is expected to add approximately $772 million in assets to the company's balance sheet, with pro forma $5.4 billion in total assets, $3.8 billion in loans, and $4.6 billion in deposits. Financial projections include strong profitability metrics, in part, due to expected cost savings of roughly 25% of BOH's operating base, with the combined company estimating 100% of the savings to be recognized in 2027. Pro forma capital ratios—including ~10.2% TCE and ~13.9% CET1 at closing—remain solidly within a range appropriate for the company's current rating category in our view. Overall, we believe that the proposed acquisition complements SPFI's growth strategy, and while there is an inherent level of integration risk involved with any bank M&A transaction, such risk is somewhat mitigated by management's previous M&A integration experience.
Culturally, the transaction appears low-risk, with both organizations operating community-banking models focused on relationship lending and disciplined credit management. The pro forma loan portfolio is not expected to change materially as both institutions have complementary loan mixes, with commercial loans remaining the largest component at 66% of total loans, followed by residential mortgage and consumer loans at 20% and 15% of loans, respectively. KBRA views the due diligence process to be conservative, as South Plains conducted a review of the loan portfolio (65% of loans) - completed by internal and external teams including all watch and classified loans - and expects to record a gross credit mark of $7.6 million (1.2% of BOH's loans) and an interest rate mark of $1.6 million amortized over 5 years. With respect to deposit mix, pro forma deposit costs are expected to remain contained at 2.21% with NIB deposits representing 27% of total deposits. BOH contributes a high-quality deposit base and profitable loan portfolio, enhancing SPFI's earnings durability and enabling deeper penetration of commercial and private banking opportunities within Houston and surrounding counties. Overall, in our view, the acquisition would strengthen South Plains' strategic positioning in Texas, enhance long-term profitability through scale and synergies, and provide meaningful franchise benefits with limited execution risk.
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