South Plains Financial, Inc. (NASDAQ:SPFI) Capital Efficiency Analysis

• South Plains Financial, Inc. (NASDAQ:SPFI) has a Return on Invested Capital (ROIC) of 3.93%, which is lower than its Weighted Average Cost of Capital (WACC) of 15.57%, indicating inefficiency in generating sufficient returns.
• Red River Bancshares (RRBI) and MetroCity Bankshares (MCBS) show more favorable ROIC to WACC ratios compared to SPFI, suggesting higher capital efficiency.
• RBB Bancorp (RBB) has a lower ROIC to WACC ratio than SPFI, while SmartFinancial (SMBK) and Business First Bancshares (BFST) slightly outperform SPFI in terms of capital efficiency.

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. In the competitive banking sector, SPFI's performance is often compared to peers like Red River Bancshares, RBB Bancorp, SmartFinancial, Business First Bancshares, and MetroCity Bankshares.

In evaluating SPFI's efficiency, the Return on Invested Capital (ROIC) is a key metric. SPFI's ROIC is 3.93%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 15.57%. This results in a ROIC to WACC ratio of 0.25, indicating that SPFI is not generating sufficient returns to cover its cost of capital.

Comparatively, Red River Bancshares (RRBI) shows a more favorable ROIC of 10.27% against a WACC of 15.10%, resulting in a ROIC to WACC ratio of 0.68. This suggests RRBI is more efficient in generating returns relative to its cost of capital than SPFI. Similarly, MetroCity Bankshares (MCBS) leads with a ROIC to WACC ratio of 0.92, highlighting its superior capital efficiency.

RBB Bancorp (RBB) has a ROIC of 2.41% and a WACC of 16.24%, resulting in a ROIC to WACC ratio of 0.15, which is lower than SPFI's. This indicates that RBB is even less efficient than SPFI in generating returns relative to its cost of capital. Meanwhile, SmartFinancial (SMBK) and Business First Bancshares (BFST) have ROIC to WACC ratios of 0.31 and 0.32, respectively, both outperforming SPFI in capital efficiency.