Spirit of Texas Bancshares, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the assets and liabilities measured at fair value on a recurring basis:

	December 31, 2021
	Level 1		Level 2			Level 3		Total
	(Dollars in thousands)
Assets:
State and municipal obligations	$	—	$	35,270		$	—	$	35,270
Residential mortgage-backed securities		—		321,611			—		321,611
Corporate bonds		—		43,867			—		43,867
Equity securities at fair value		23,665		—			—		23,665
SBA servicing rights		—		—			2,244		2,244
Customer interest rate swaps		—		1,401			—		1,401
Cash flow hedge swap				1,728					1,728
Liabilities:
Correspondent interest rate swaps		—		(1,401	)		—		(1,401	)

	December 31, 2020
	Level 1		Level 2			Level 3		Total
	(Dollars in thousands)
Assets:
State and municipal obligations	$	—	$	37,185		$	—	$	37,185
Residential mortgage-backed securities		—		132,142			—		132,142
Corporate bonds		—		43,093			—		43,093
Equity securities at fair value		24,000		—			—		24,000
SBA servicing rights		—		—			2,953		2,953
Customer interest rate swaps		—		3,009			—		3,009
Liabilities:
Correspondent interest rate swaps		—		(3,009	)		—		(3,009	)

Schedule of Assets Measured at Fair Value on Non-Recurring Basis

The following tables provide information about certain assets measured at fair value on a non-recurring basis:

	Estimated Fair Value
	December 31,
	2021		2020
	(Dollars in thousands)
Assets (classified in Level 3)
Impaired loans	$	3,059	$	4,948
Other real estate owned and repossessed assets		188		133

Significant Unobservable Inputs Used in Recurring and Non-Recurring Fair Value Measurements

The following tables show significant unobservable inputs used in the recurring and non-recurring fair value measurements of Level 3 assets:

					Range/Weighted
Level 3 Asset	Fair Value		Valuation Technique	Unobservable Inputs	Average
December 31, 2021
Non-recurring:
Impaired loans	$	3,059	Third party appraisals	Collateral discounts	0.0% - 100.0% (77.23%)
Other real estate owned		188	Third party appraisals	Collateral discounts and estimated cost to sell		10.0	%
Recurring:
SBA servicing assets		2,244	Discounted cash flows	Conditional prepayment rate		13.7	%
				Discount rate		10.0	%
December 31, 2020
Non-recurring:
Impaired loans	$	4,948	Third party appraisals	Collateral discounts	0.0% - 100.0% (34.1%)
Other real estate owned		133	Third party appraisals	Collateral discounts and estimated cost to sell		10.0	%
Recurring:
SBA servicing assets		2,953	Discounted cash flows	Conditional prepayment rate		12.5	%
				Discount rate		10.0	%

Summary of Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial instruments are as follows:

	Carrying		Fair
December 31, 2021	Value		Value		Level 1		Level 2		Level 3
	(Dollars in thousands)
Financial Assets:
Cash and cash equivalents	$	305,788	$	305,788	$	305,788	$	—	$	—
Equity investments at fair value		23,665		23,665		23,665		—		—
Available for sale securities		400,748		400,748		—		400,748		—
FHLB and other bank stock		3,741		3,741		—		3,741		—
Loans, net		2,305,706		2,314,572		—		—		2,314,572
Loans held for sale		3,472		3,773		—		3,773		—
Accrued interest receivable		8,146		8,146		—		8,146		—
Bank-owned life insurance		36,644		36,644		—		36,644		—
SBA servicing rights		2,244		2,244		—		—		2,244
Customer interest rate swaps		1,401		1,401		—		1,401		—
Cash flow hedge swap		1,728		1,728		—		1,728		—
Financial Liabilities:
Deposits	$	2,782,391	$	2,641,624	$	—	$	2,641,624	$	—
Accrued interest payable		781		781		—		781		—
Short-term borrowings		—		—		—		—		—
Long-term borrowings		74,937		79,765		—		79,765		—
Correspondent interest rate swaps		1,401		1,401		—		1,401		—

	Carrying		Fair
December 31, 2020	Value		Value		Level 1		Level 2		Level 3
	(Dollars in thousands)
Financial Assets:
Cash and cash equivalents	$	263,034	$	263,034	$	236,034	$	—	$	—
Equity investments at fair value	$	24,000		24,000		24,000		—		—
Available for sale securities		212,420		212,420		—		212,420		—
FHLB and other bank stock		5,718		5,718		—		5,718		—
Loans, net		2,372,506		2,364,646		—				2,364,646
Loans held for sale		1,470		1,598		—		1,598		—
Accrued interest receivable		11,199		11,199		—		11,199		—
Bank-owned life insurance		15,969		15,969		—		15,969		—
SBA servicing rights		2,953		2,953		—		—		2,953
Customer interest rate swaps		3,009		3,009		—		3,009		—
Financial Liabilities:
Deposits	$	2,459,135	$	2,427,412	$	—	$	2,427,412	$	—
Accrued interest payable		1,303		1,303		—		1,303		—
Short-term borrowings		10,000		10,136		—		10,136		—
Long-term borrowings		242,020		245,311		—		245,311		—
Correspondent interest rate swaps		3,009		3,009		—		3,009		—