SPIRIT OF TEXAS BANCSHARES : REPORTS FOURTH QUARTER 2021 FINANCIAL RESULTS - Form 8-K

SPIRIT OF TEXAS BANCSHARES, INC. REPORTS

FOURTH QUARTER 2021 FINANCIAL RESULTS

CONROE, TX - January 26, 2022 - Spirit of Texas Bancshares, Inc. (NASDAQ: STXB) ("Spirit," the "Company," "we," "our," or "us"), reported net income of $9.1 million in the fourth quarter of 2021, representing diluted earnings per share of $0.51, compared to net income of $12.5 million in the fourth quarter of 2020, representing diluted earnings per share of $0.72. During the fourth quarter of 2020, net income was impacted by $3.7 million in gain on sale of Main Street Lending loans and $4.5 million in net accretion of deferred origination fees on Paycheck Protection Program ("PPP") loans forgiven by the U.S. Small Business Administration ("SBA"), compared to the fourth quarter of 2021 which only had $1.5 million in net accretion of deferred origination fees on PPP loans. Additionally, the fourth quarter of 2021 contained $800 thousand of expenses related to the proposed merger with Simmons First Financial Corporation ("Simmons") and $412 thousand of expenses related to normal bonus payments that will be accelerated to the proposed acquisition close date.

Fourth Quarter 2021 Financial and Operational Highlights

•

On November 19, 2021, Spirit announced its intention to merge with Simmons with expectations to close the transaction during the second quarter of 2022, subject to the receipt of Spirit shareholder approval, regulatory approvals and waivers and other customary closing conditions.

•

Excluding the impact of PPP loan forgiveness by the SBA during the period, loans held for investment increased 24.3% annualized for the three months ended December 31, 2021.

•

Net interest margin for the fourth quarter of 2021 as reported and on a tax equivalent basis(1) was 3.87% and 3.89%, respectively.

•

At December 31, 2021, return on average assets was 1.13% on an annualized basis.

•

Book value per share increased to $22.79 and tangible book value per share(1) increased to $18.02 at December 31, 2021, compared to $22.49 and $17.67, respectively, at September 30, 2021.

•

Total stockholders' equity to total assets was 12.06% and tangible stockholders' equity to tangible assets(1) was 9.78% at December 31, 2021.

•

Capital ratios remained strong with Common Equity Tier 1 ratio at the Company and the Bank of 10.64% and 10.65%, respectively, at December 31, 2021.

"As we continue to work toward the upcoming completion of the proposed merger with Simmons, I am pleased to report another exceptional quarter of financial and operational success." Dean Bass, Spirit's Chairman and Chief Executive Officer, stated. "While we have enjoyed seeing the return of loan demand over the past few quarters in the form of a larger loan pipeline, the fourth quarter of 2021 saw an impressive move in volume from the pipeline to closed and funded loans. We are also excited to see SBA loan sales during the quarter which translated into $811 thousand in gain on sale of loans during the fourth quarter of 2021. Both robust loan demand and the return of higher non-interest revenue streams represent great opening acts to the start of our anticipated next chapter merging with Simmons.

"I am exceptionally proud of what our team has been able to accomplish over the past twelve years and I'm excited to see what heights we can reach partnering with a best-in-class regional bank," Mr. Bass concluded.

Loan Portfolio and Composition

During the fourth quarter of 2021, gross loans increased to $2.32 billion as of December 31, 2021, an increase of 3.08% from $2.25 billion as of September 30, 2021, and a decrease of 2.78% from $2.39 billion as of December 31, 2020. PPP loan forgiveness, which has been the primary cause of the overall decrease in loans year over year, will not significantly impact loan growth going forward as only 237 PPP loans remain outstanding with a total recorded investment of $43.9 million as of December 31, 2021. Excluding the effect of PPP loan forgiveness, the loan portfolio as of December 31, 2021 increased by $131.6 million, or 24.3% annualized from September 30, 2021. Despite a large volume of loans moving from the pipeline to closed loans, the remaining pipeline is well over $1.0 billion and represents an exciting opportunity to fund additional projects in the coming quarters.

Asset Quality

Asset quality is strong with loans continuing to migrate into lower risk ratings during the fourth quarter of 2021 and with non-performing loans declining $855 thousand or 13.9% from the third quarter of 2021. We perceive the sentiment in the Texas economy to be optimistic despite continued labor and supply shortages and higher inflation that may persist longer than previously expected. The provision for loan losses recorded for the fourth quarter of 2021 was $970 thousand, which served to increase the allowance to $16.4 million, or 0.71% of the $2.32 billion in gross loans outstanding as of December 31, 2021. Provision expense for the fourth quarter of 2021 related primarily to the provisioning of new loans.

As of December 31, 2021, the nonperforming loans to loans held for investment ratio remains low at 0.22%, a decrease from 0.28% at September 30, 2021, and a decrease from 0.36% as of December 31, 2020. Annualized net charge-offs were 15 basis points for the fourth quarter of 2021 compared to 10 basis points for the third quarter of 2021.

Deposits and Borrowings

Deposits totaled $2.78 billion as of December 31, 2021, an increase of 4.2% from $2.67 billion as of September 30, 2021, and an increase of 13.2% from $2.46 billion as of December 31, 2020. Noninterest-bearing demand deposits increased $36.1 million, or 4.70%, from September 30, 2021, and increased $76.0 million, or 10.5%, from December 31, 2020. Noninterest-bearing demand deposits represented 28.9% of total deposits as of December 31, 2021, up from 28.7% of total deposits as of September 30, 2021, and down from 29.6% of total deposits as of December 31, 2020. Interest-bearing deposits, including money market and savings as of December 31, 2021 increased $96.6 million, or 29.1% annualized from September 30, 2021, primarily due to success in retaining and growing client relationships from COVID-19 related assistance programs. Growth in interest-bearing deposits was slightly offset by a decrease in time deposits of $20.9 million, or 3.6%, from September 30, 2021. The average cost of deposits was 0.22% for the fourth quarter of 2021, representing a 3 basis point decrease from the third quarter of 2021 and a 21 basis point decrease from the fourth quarter of 2020.

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Borrowings decreased by $4.3 million during the fourth quarter of 2021 to $74.9 million, due primarily to the repayment of maturing Federal Home Loan Bank ("FHLB") advances. At December 31, 2021, we did not have any remaining borrowings under the Paycheck Protection Program Liquidity Facility with the Board of Governors of the Federal Reserve System ("PPPLF"). Borrowings totaled 2.3% of total assets at December 31, 2021, compared to 2.5% at September 30, 2021 and 8.2% at December 31, 2020.

Net Interest Margin and Net Interest Income

The net interest margin for the fourth quarter of 2021 was 3.87%, a decrease of 5 basis points from the third quarter of 2021 and a decrease of 49 basis points from the fourth quarter of 2020. The tax equivalent net interest margin⁽¹⁾ for the fourth quarter of 2021 was 3.89%, a decrease of 11 basis points from the third quarter of 2021 and a decrease of 55 basis points from the fourth quarter of 2020. The decline in net interest margin is primarily due to the increase in average cash balances. Approximately $979 thousand of net deferred SBA fees related to PPP loans remain unamortized at December 31, 2021. The yield on loans for the fourth quarter of 2021 was 5.08% compared to 5.09% at September 30, 2021 and 5.42% at December 21, 2020.

Net interest income totaled $28.5 million for the fourth quarter of 2021, an increase of 1.3% from $28.1 million for the third quarter of 2021 and a decrease of 4.7% from $29.9 million for the fourth quarter of 2020. Interest income totaled $30.8 million for the fourth and third quarters of 2021, compared to $33.7 million for the fourth quarter of 2020. Interest and fees on loans increased $218 thousand, or 0.75%, compared to the third quarter of 2021, and decreased by $3.5 million, or 10.8%, from the fourth quarter of 2020. Interest expense was $2.4 million for the fourth quarter of 2021, a decrease of 10.8% from $2.7 million for the third quarter of 2021 and a decrease of 38.1% from $3.8 million for the fourth quarter of 2020.

Noninterest Income and Noninterest Expense

Noninterest income totaled $4.3 million for the fourth quarter of 2021, compared to $3.3 million for the third quarter of 2021 and $8.8 million for the fourth quarter of 2020. This increase from the third quarter of 2021 was primarily driven by higher SBA loan servicing fees and a gain on sale of loans.

Noninterest expense totaled $20.3 million in the fourth quarter of 2021, an increase of 12.6 % from $18.0 million in the third quarter of 2021, which was primarily due to increases in salaries and benefits expense and professional services. The increase in salaries and benefits expense for the quarter was due to $412 thousand of normal bonus payments that will be accelerated to the close date of the proposed merger with Simmons.

The efficiency ratio was 61.9% in the fourth quarter of 2021, compared to 57.5% in the third quarter of 2021, and 47.7% in the fourth quarter of 2020. The fourth quarter of 2021 efficiency ratio was negatively impacted during the quarter by the aforementioned additional salaries and benefits expense.

(1)

Tax Equivalent Net Interest Margin, Tangible Book Value Per Share, Tangible Stockholders' Equity to Tangible Assets Ratio and certain PPP-related figures are all non-GAAP measures. In Spirit's judgment, regarding Tax Equivalent Net Interest Margin, the fully tax equivalent basis is the preferred industry measurement basis for net interest margin and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. Regarding Tangible Book Value Per Share and Tangible Stockholders' Equity To Tangible Assets, Spirit believes that that these measures are important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing its tangible book value. Furthermore, Spirit believes that the PPP-related figures are important to investors due to the anticipated short-term nature of the PPP loans and the expected forgiveness in the coming quarters. The non-GAAP financial measures that we discuss in this earnings release should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures discussed in this earnings release may differ from that of other banking organizations reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures Spirit has discussed in this earnings release when comparing such non-GAAP financial measures. Please see a reconciliation to the nearest respective GAAP measures at the end of this earnings release.

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Conference Call

Spirit of Texas Bancshares, Inc. has scheduled a conference call to discuss its fourth quarter 2021 financial results, which will be broadcast live over the Internet, on Thursday, January 27, 2022 at 11:00 a.m., Eastern Time / 10:00 a.m., Central Time. To participate in the call, dial 201-389-0867 and ask for the "Spirit of Texas" call at least 10 minutes prior to the start time, or access it live over the Internet at https://ir.sotb.com/news-events/ir-calendar. For those who cannot listen to the live call, a replay will be available through February 3, 2022, and may be accessed by dialing 201-612-7415 and using pass code 13725940#. Also, an archive of the webcast will be available shortly after the call at https://ir.sotb.com/news-events/ir-calendar for 90 days.

About Spirit of Texas Bancshares, Inc.

Spirit, through its wholly-owned subsidiary, Spirit of Texas Bank SSB (the "Bank"), provides a wide range of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. The Bank has 35 locations in the Houston, Dallas/Fort Worth, Bryan/College Station, Austin, San Antonio-New Braunfels, Corpus Christi, Austin and Tyler metropolitan areas, along with offices in North Central and South Texas. Please visit https://www.sotb.com for more information.

Forward Looking Statements

Litigation Reform Act of 1995 that are subject to risks and uncertainties and are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended. Any statements about our expectations, beliefs, plans, predictions, protections, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements are typically, but not exclusively, identified by the use of forward-looking terminology such as "believes," "expects," "could," "may," "will," "should," "seeks," "likely," "intends" "plans," "pro forma," "projects," "estimates" or "anticipates" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include, among others: (i) disruption from the proposed merger with Simmons; (ii) the risk that the proposed merger with Simmons may not be completed in a timely manner or at all; (iii) the occurrence of any event, change, or other circumstances that could give rise to the termination of the proposed merger with Simmons, including under circumstances that would require Spirit to pay a termination fee; (iv) the failure to obtain necessary shareholder or regulatory approvals for the proposed merger with Simmons; (v) the ability to successfully integrate the combined business; (vi) the possibility that the amount of the costs, fees, expenses, and charges related to the proposed merger with

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Simmons may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities; (vii) the failure of the conditions to the proposed merger with Simmons to be satisfied; (viii) reputational risk and the reaction of the parties' customers to the proposed merger with Simmons; (xi) the risk of potential litigation or regulatory action related to the proposed merger with Simmons; (x) changes in general business, industry or economic conditions, or competition; (xi) the impact of the ongoing COVID-19 pandemic (or any current or future variant thereof) on the Bank's business, including the impact of actions taken by governmental and regulatory authorities in response to such pandemic, such as the CARES Act and the programs established thereunder, and the Bank's participation in such programs, (xii) changes in any applicable law, rule, regulation, policy, guideline, or practice governing or affecting bank holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise; (xiii) adverse changes or conditions in capital and financial markets; (xiv) changes in interest rates; (xv) higher-than-expected costs or other difficulties related to integration of combined or merged businesses; (xvi) the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions; (xvii) changes in the quality or composition of our loan and investment portfolios; (xviii) adequacy of loan loss reserves; (xix) increased competition; (xx) loss of certain key officers; (xxi) continued relationships with major customers; (xxii) deposit attrition; (xxiii) rapidly changing technology; (xxiv) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xxv) changes in the cost of funds, demand for loan products, or demand for financial services; (xxvi) other economic, competitive, governmental, or technological factors affecting our operations, markets, products, services, and prices; and (xxvii) our success at managing the foregoing items. For a discussion of additional factors that could cause our actual results to differ materially from those described in the forward-looking statements, please see the risk factors discussed in our most recent Annual Report on Form 10-K for the year ended December 31, 2020, filed with the U.S. Securities and Exchange Commission (the "SEC") on March 5, 2021, and our other filings with the SEC.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those contemplated, expressed in or implied by the particular forward-looking statement due to additional risks and uncertainties of which the Company is not currently aware or which it does not currently view as, but in the future may become, material to its business or operating results. Due to these and other possible uncertainties and risks, we can give no assurance that the results contemplated in the forward-looking statements will be realized and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. All forward-looking statements, express or implied, included in this press release are qualified in their entirety by this cautionary statement.

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SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)

		For the Three Months Ended
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands, except per share data)
Interest income:
Interest and fees on loans		$	29,158			$	28,940			$	30,995			$	29,829			$	32,682
Interest and dividends on investment securities			1,600				1,766				1,641				1,115				914
Other interest income			85				52				118				225				101
Total interest income			30,843				30,758				32,754				31,169				33,697
Interest expense:
Interest on deposits			1,520				1,798				2,081				2,327				2,726
Interest on FHLB advances and other borrowings			849				858				972				1,003				1,099
Total interest expense			2,369				2,656				3,053				3,330				3,825
Net interest income			28,474				28,102				29,701				27,839				29,872
Provision for loan losses			970				306				1,349				1,086				4,417
Net interest income after provision for loan losses			27,504				27,796				28,352				26,753				25,455
Noninterest income:
Service charges and fees			1,679				1,612				1,539				1,434				1,554
SBA loan servicing fees, net			543				165				203				324				307
Mortgage referral fees			358				337				384				274				347
Swap referral fees			344				400				127				430				614
Gain on sales of loans, net			812				-				-				254				4,026
Gain (loss) on sales of investment securities			-				-				-				5				-
Swap fees			482				687				1,411				121				1,746
Other noninterest income			91				84				194				(223	)			186
Total noninterest income			4,309				3,285				3,858				2,619				8,780
Noninterest expense:
Salaries and employee benefits			11,843				11,022				9,603				9,220				10,656
Occupancy and equipment expenses			2,493				2,360				2,354				2,662				2,749
Professional services			1,442				570				457				524				521
Data processing and network			1,007				910				931				1,229				1,379
Regulatory assessments and insurance			434				449				483				535				549
Amortization of intangibles			734				755				755				823				879
Advertising			139				103				47				78				74
Marketing			90				56				70				93				60
Telephone expense			552				600				599				499				560
Conversion expense			-				-				-				-				16
Other operating expenses			1,566				1,207				1,486				971				984
Total noninterest expense			20,300				18,032				16,785				16,634				18,427
Income before income tax expense			11,513				13,049				15,425				12,738				15,808
Income tax expense			2,413				2,593				3,015				2,652				3,353
Net income		$	9,100			$	10,456			$	12,410			$	10,086			$	12,455

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Unaudited)

		As of
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands)
Assets:
Cash and due from banks		$	87,176			$	74,258			$	57,651			$	28,879			$	31,396
Interest-bearing deposits in other banks			218,612				161,073				82,448				40,687				231,638
Total cash and cash equivalents			305,788				235,331				140,099				69,566				263,034
Time deposits in other banks			-				-				-				-				-
Investment securities:
Available for sale securities, at fair value			400,748				421,311				434,223				442,576				212,420
Equity investments, at fair value			23,665				23,830				23,877				23,741				24,000
Total investment securities			424,413				445,141				458,100				466,317				236,420
Loans held for sale			3,472				6,196				3,220				1,192				1,470
Loans:
Loans held for investment			2,322,101				2,252,734				2,272,089				2,430,594				2,388,532
Less: allowance for loan and lease losses			(16,395	)			(16,268	)			(16,527	)			(16,314	)			(16,026	)
Loans, net			2,305,706				2,236,466				2,255,562				2,414,280				2,372,506
Premises and equipment, net			77,291				78,513				79,408				81,379				83,348
Accrued interest receivable			8,146				7,819				9,071				10,588				11,199
Other real estate owned and repossessed assets			188				-				140				-				133
Goodwill			77,681				77,681				77,681				77,681				77,681
Core deposit intangible			4,751				5,485				6,240				6,995				7,818
SBA servicing asset			2,244				2,311				2,567				2,821				2,953
Deferred tax asset, net			1,172				1,893				1,962				2,213				1,085
Bank-owned life insurance			36,644				36,345				31,161				16,057				15,969
Federal Home Loan Bank and other bank stock, at cost			3,741				5,740				5,734				5,727				5,718
Right of use assets			4,539				5,085				5,569				6,058				-
Other assets			10,262				10,246				8,241				9,338				5,425
Total assets		$	3,266,038			$	3,154,252			$	3,084,755			$	3,170,212			$	3,084,759
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Transaction accounts:
Noninterest-bearing		$	803,546			$	767,445			$	772,032			$	800,233			$	727,543
Interest-bearing			1,415,000				1,318,432				1,192,067				1,149,781				1,092,934
Total transaction accounts			2,218,546				2,085,877				1,964,099				1,950,014				1,820,477
Time deposits			563,845				584,699				608,073				647,536				638,658
Total deposits			2,782,391				2,670,576				2,572,172				2,597,550				2,459,135
Accrued interest payable			781				776				860				1,160				1,303
Short-term borrowings			-				-				-				-				10,000
Long-term borrowings			74,937				79,260				119,052				191,687				242,020
Operating lease liability			4,720				5,228				5,730				6,231				-
Other liabilities			9,393				10,563				9,173				7,827				11,522
Total liabilities			2,872,222				2,766,403				2,706,987				2,804,455				2,723,980
Stockholders' Equity:
Common stock			303,227				302,392				301,202				300,591				298,850
Retained earnings			111,525				104,500				96,111				85,246				76,683
Accumulated other comprehensive income (loss)			(4,081	)			(2,188	)			(2,690	)			(3,225	)			1,005
Treasury stock			(16,855	)			(16,855	)			(16,855	)			(16,855	)			(15,759	)
Total stockholders' equity			393,816				387,849				377,768				365,757				360,779
Total liabilities and stockholders' equity		$	3,266,038			$	3,154,252			$	3,084,755			$	3,170,212			$	3,084,759

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Loan Composition

(Unaudited)

		As of
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands)
Loans:
Commercial and industrial loans (1)(2)		$	464,697			$	458,873			$	535,608			$	699,896			$	574,986
Real estate:
1-4 single family residential loans			362,155				364,896				356,503				348,908				364,139
Construction, land and development loans			400,952				364,513				345,420				344,557				415,488
Commercial real estate loans (including multifamily)			1,030,891				997,512				964,565				964,342				956,743
Consumer loans and leases			6,307				7,505				8,444				9,619				11,738
Municipal and other loans			57,099				59,435				61,549				63,272				65,438
Total loans held in portfolio		$	2,322,101			$	2,252,734			$	2,272,089			$	2,430,594			$	2,388,532

(1)	Balance includes $53.5 million, $58.0 million, $64.9 million, $67.4 million, and $70.8 million, of the unguaranteed portion of SBA loans as of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively.

(2)	Balance includes $43.9 million, $106.2 million, $188.3 million, $366.5 million, and $276.1 million, of PPP loans as of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020, respectively.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Deposit Composition

(Unaudited)

		As of
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
								(Dollars in thousands)
Deposits:
Noninterest-bearing demand deposits		$	803,546			$	767,445			$	772,032			$	800,233			$	727,543
Interest-bearing demand deposits			650,588				564,790				529,512				485,863				472,075
Interest-bearing NOW accounts			13,008				10,668				10,763				9,904				10,288
Savings and money market accounts			751,404				742,974				651,791				654,014				610,571
Time deposits			563,845				584,699				608,074				647,536				638,658
Total deposits		$	2,782,391			$	2,670,576			$	2,572,172			$	2,597,550			$	2,459,135

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Average Balances and Yields

(Unaudited)

		Three Months Ended
		December 31, 2021			December 31, 2020
		Average Balance (1)			Interest/ Expense			Annualized Yield/Rate			Average Balance (1)			Interest/ Expense			Annualized Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other banks		$	200,483			$	85				0.17	%		$	144,349			$	101				0.28	%
Loans, including loans held for sale (2)			2,275,497				29,158				5.08	%			2,394,431				32,682				5.42	%
Investment securities and other			442,093				1,600				1.44	%			177,816				914				2.04	%
Total interest-earning assets			2,918,073				30,843				4.19	%			2,716,596				33,697				4.92	%
Noninterest-earning assets			289,984						274,170
Total assets		$	3,208,057					$	2,990,766
Interest-bearing liabilities:
Interest-bearing demand deposits		$	605,317			$	183				0.12	%		$	413,956			$	156				0.15	%
Interest-bearing NOW accounts			11,015				1				0.04	%			9,510				2				0.08	%
Savings and money market accounts			727,849				503				0.27	%			580,216				648				0.44	%
Time deposits			572,818				833				0.58	%			657,726				1,920				1.16	%
FHLB advances and other borrowings			77,484				849				4.35	%			263,486				1,099				1.65	%
Total interest-bearing liabilities			1,994,483				2,369				0.47	%			1,924,894				3,825				0.79	%
Noninterest-bearing liabilities and shareholders' equity:
Noninterest-bearing demand deposits			809,179						702,250
Other liabilities			13,898						7,722
Stockholders' equity			390,497						355,900
Total liabilities and stockholders' equity		$	3,208,057					$	2,990,766
Net interest rate spread					3.72	%					4.13	%
Net interest income and margin			$	28,474				3.87	%			$	29,872				4.36	%
Net interest income and margin (tax equivalent)(3)			$	28,588				3.89	%			$	30,384				4.44	%

(1)	Average balances presented are derived from daily average balances.

(2)	Includes loans on nonaccrual status.

(3)	In order to make pretax income and resultant yields on tax-exempt loans comparable to those on taxable loans, a tax-equivalent adjustment has been computed using a federal tax rate of 21% for the three months ended December 31, 2021 and December 31, 2020, respectively.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Average Balances and Yields

(Unaudited)

		Three Months Ended
		December 31, 2021			September 30, 2021
		Average Balance (1)			Interest/ Expense			Annualized Yield/Rate			Average Balance (1)			Interest/ Expense			Annualized Yield/Rate
		(Dollars in thousands)			(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other banks			200,483			$	85				0.17	%		$	124,175			$	52				0.17	%
Loans, including loans held for sale (2)			2,275,497				29,158				5.08	%			2,257,297				28,940				5.09	%
Investment securities and other			442,093				1,600				1.44	%			463,467				1,766				1.51	%
Total interest-earning assets			2,918,073				30,843				4.19	%			2,844,939				30,758				4.29	%
Noninterest-earning assets			289,984						270,259
Total assets		$	3,208,057					$	3,115,198
Interest-bearing liabilities:
Interest-bearing demand deposits		$	605,317			$	183				0.12	%		$	546,530			$	166				0.12	%
Interest-bearing NOW accounts			11,015				1				0.04	%			10,869				1				0.05	%
Savings and money market accounts			727,849				503				0.27	%			715,338				612				0.34	%
Time deposits			572,818				833				0.58	%			596,378				1,019				0.68	%
FHLB advances and other borrowings			77,484				849				4.35	%			89,012				858				3.82	%
Total interest-bearing liabilities			1,994,483				2,369				0.47	%			1,958,127				2,656				0.54	%
Noninterest-bearing liabilities and shareholders' equity:
Noninterest-bearing demand deposits			809,179						757,683
Other liabilities			13,898						16,809
Stockholders' equity			390,497						382,579
Total liabilities and stockholders' equity		$	3,208,057					$	3,115,198
Net interest rate spread					3.72	%					3.75	%
Net interest income and margin			$	28,474				3.87	%			$	28,102				3.92	%
Net interest income and margin (tax equivalent)(3)			$	28,588				3.89	%			$	28,655				4.00	%

(1)	Average balances presented are derived from daily average balances.

(2)	Includes loans on nonaccrual status.

(3)	In order to make pretax income and resultant yields on tax-exempt loans comparable to those on taxable loans, a tax-equivalent adjustment has been computed using a federal tax rate of 21% for the three months ended December 31, 2021 and September 30, 2021, respectively.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Reconciliation of Non-GAAP Financial Measures - Adjusted Net Income and Adjusted Basic and Diluted Earnings Per Share

(Unaudited)

		As of or for the Three Months Ended
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands, except per share data)
Basic and diluted earnings per share-GAAP basis:
Net income available to common stockholders		$	9,100			$	10,456			$	12,410			$	10,086			$	12,455
Weighted average number of common shares - basic			17,262,221				17,200,611				17,152,217				17,103,981				17,168,091
Weighted average number of common shares - diluted			17,781,812				17,651,298				17,627,958				17,518,029				17,336,484
Basic earnings per common share		$	0.53			$	0.61			$	0.72			$	0.59			$	0.73
Diluted earnings per common share		$	0.51			$	0.59			$	0.70			$	0.58			$	0.72
Basic and diluted earnings per share - Non-GAAP basis:
Net income		$	9,100			$	10,456			$	12,410			$	10,086			$	12,455
Pre-tax adjustments:
Noninterest income
Gain on sale of investment securities			-				-				-				(5	)			-
Noninterest expense
Merger related expenses			800				-				-				-				24
Taxes:
NOL Carryback			-				-				-				-
Tax effect of adjustments			(118	)			-				-				1				(5	)
Adjusted net income		$	9,782			$	10,456			$	12,410			$	10,082			$	12,474
Weighted average number of common shares - basic			17,262,221				17,200,611				17,152,217				17,103,981				17,168,091
Weighted average number of common shares - diluted			17,781,812				17,651,298				17,627,958				17,518,029				17,336,484
Basic earnings per common share - Non-GAAP basis		$	0.57			$	0.61			$	0.72			$	0.59			$	0.73
Diluted earnings per common share - Non-GAAP basis		$	0.55			$	0.59			$	0.70			$	0.58			$	0.72

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Reconciliation of Non-GAAP Financial Measures - Net Interest Margin on a Fully Taxable Equivalent Basis

(Unaudited)

		As of or for the Three Months Ended
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands, except per share data)
Net interest margin - GAAP basis:
Net interest income		$	28,474			$	28,102			$	29,701			$	27,839			$	29,872
Average interst-earning assets			2,918,073				2,844,939				2,932,323				2,867,099				2,716,596
Net interest margin			3.87	%			3.92	%			4.06	%			3.94	%			4.36	%
Net interest margin - Non-GAAP basis:
Net interest income		$	28,474			$	28,102			$	29,701			$	27,839			$	29,872
Plus:
Impact of fully taxable equivalent adjustment			114				553				561				329				512
Net interest income on a fully taxable equivalent basis		$	28,588			$	28,655			$	30,262			$	28,168			$	30,384
Average interst-earning assets			2,918,073				2,844,939				2,932,323				2,867,099				2,716,596
Net interest margin on a fully taxable equivalent basis - Non-GAAP basis			3.89	%			4.00	%			4.14	%			3.98	%			4.44	%

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Reconciliation of Non-GAAP Financial Measures - Tangible Book Value Per Share

(Unaudited)

		As of
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands, except per share data)
Total stockholders' equity		$	393,816			$	387,849			$	377,768			$	365,757			$	360,779
Less:
Goodwill and other intangible assets			82,432				83,166				83,921				84,676				85,499
Tangible stockholders' equity		$	311,384			$	304,683			$	293,847			$	281,081			$	275,280
Shares outstanding			17,282,047				17,242,487				17,164,103				17,136,553				17,081,831
Book value per share		$	22.79			$	22.49			$	22.01			$	21.34			$	21.12
Less:
Goodwill and other intangible assets per share		$	4.77			$	4.82			$	4.89			$	4.94			$	5.01
Tangible book value per share		$	18.02			$	17.67			$	17.12			$	16.40			$	16.11

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Reconciliation of Non-GAAP Financial Measures - Tangible Equity to Tangible Assets

(Unaudited)

		As of
		December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
		(Dollars in thousands)
Total stockholders' equity to total assets - GAAP basis:
Total stockholders' equity (numerator)		$	393,816			$	387,849			$	377,768			$	365,757			$	360,779
Total assets (denominator)			3,266,038				3,154,252				3,084,755				3,170,212				3,084,759
Total stockholders' equity to total assets			12.06	%			12.30	%			12.25	%			11.54	%			11.70	%
Tangible equity to tangible assets - Non-GAAP basis:
Tangible equity:
Total stockholders' equity		$	393,816			$	387,849			$	377,768			$	365,757			$	360,779
Less:
Goodwill and other intangible assets			82,432				83,166				83,921				84,676				85,499
Total tangible common equity (numerator)		$	311,384			$	304,683			$	293,847			$	281,081			$	275,280
Tangible assets:
Total assets			3,266,038				3,154,252				3,084,755				3,170,212				3,084,759
Less:
Goodwill and other intangible assets			82,432				83,166				83,921				84,676				85,499
Total tangible assets (denominator)		$	3,183,606			$	3,071,086			$	3,000,834			$	3,085,536			$	2,999,260
Tangible equity to tangible assets			9.78	%			9.92	%			9.79	%			9.11	%			9.18	%