South Plains Financial, Inc. (NASDAQ:SPFI) is a financial services company that provides a range of banking products and services. It operates primarily in Texas, offering personal and commercial banking, mortgage lending, and wealth management services. SPFI competes with other regional banks such as Red River Bancshares, Inc. (RRBI), RBB Bancorp (RBB), SmartFinancial, Inc. (SMBK), Business First Bancshares, Inc. (BFST), and MetroCity Bankshares, Inc. (MCBS).
In evaluating SPFI's financial performance, the Return on Invested Capital (ROIC) is a key metric. SPFI's ROIC is 3.93%, which is lower than its Weighted Average Cost of Capital (WACC) of 16.53%. This results in a ROIC to WACC ratio of 0.24, indicating that SPFI is not generating returns that exceed its cost of capital, suggesting inefficiencies in capital utilization.
Comparatively, Red River Bancshares, Inc. (RRBI) shows a slightly better performance with a ROIC of 4.39% and a WACC of 15.67%, resulting in a ROIC to WACC ratio of 0.28. This suggests RRBI is more efficient than SPFI in generating returns relative to its cost of capital, though both companies have room for improvement.
MetroCity Bankshares, Inc. (MCBS) stands out among the peers with a ROIC of 9.72% and a WACC of 10.77%, leading to a ROIC to WACC ratio of 0.90. This indicates that MCBS is highly efficient in utilizing its capital to generate returns, outperforming SPFI and other peers in this aspect.
Business First Bancshares, Inc. (BFST) have ROIC to WACC ratio of 0.03, highlighting significant challenges in generating returns above its cost of capital. This comparison underscores the varying levels of capital efficiency among SPFI and its peers, with MCBS leading the group.
