stxb-10q_20210331.htm

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38484

Spirit of Texas Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Texas	90-0499552
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1836 Spirit of Texas Way Conroe, TX	77301
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (936) 521-1836

Former name, former address and former fiscal year, if changed since last report:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, no par value

STXB

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 26, 2021, the registrant had 17,145,575 shares of common stock, no par value, outstanding.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	58
PART II.	OTHER INFORMATION	59
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	60
Signatures		61

PART I. FINANCIAL INFORMATION

Item 1.Consolidated Financial Statements (Unaudited)

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except per share data)

	March 31, 2021			December 31, 2020
Assets:
Cash and due from banks	$	28,879		$	31,396
Interest-bearing deposits in other banks		40,687			231,638
Total cash and cash equivalents		69,566			263,034
Investment securities:
Available for sale securities, at fair value		442,576			212,420
Equity investments, at fair value		23,741			24,000
Total investment securities		466,317			236,420
Loans held for sale		1,192			1,470
Loans:
Loans held for investment		2,430,594			2,388,532
Less: allowance for loan and lease losses		(16,314	)		(16,026	)
Loans, net		2,414,280			2,372,506
Premises and equipment, net		81,379			83,348
Accrued interest receivable		10,588			11,199
Other real estate owned and repossessed assets		-			133
Goodwill		77,681			77,681
Core deposit intangible		6,995			7,818
SBA servicing asset		2,821			2,953
Deferred tax asset, net		2,213			1,085
Bank-owned life insurance		16,057			15,969
Federal Home Loan Bank and other bank stock, at cost		5,727			5,718
Right of use asset		6,058			—
Other assets		9,338			5,425
Total assets	$	3,170,212		$	3,084,759
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Transaction accounts:
Noninterest-bearing	$	800,233		$	727,543
Interest-bearing		1,149,781			1,092,934
Total transaction accounts		1,950,014			1,820,477
Time deposits		647,536			638,658
Total deposits		2,597,550			2,459,135
Accrued interest payable		1,160			1,303
Short-term borrowings		—			10,000
Long-term borrowings		191,686			242,020
Operating lease liability		6,231			—
Other liabilities		7,827			11,522
Total liabilities		2,804,454			2,723,980
Commitments and contingencies (Note 14)
Stockholders' Equity:
Common stock, no par value; 50 million shares authorized; 18,442,821 and 18,329,593 shares issued; 17,136,553 and 17,081,831 shares outstanding		300,591			298,850
Retained earnings		85,246			76,683
Accumulated other comprehensive income (loss)		(3,224	)		1,005
Treasury stock, 1,306,268 and 1,247,762 shares repurchased		(16,855	)		(15,759	)
Total stockholders' equity		365,758			360,779
Total liabilities and stockholders' equity	$	3,170,212		$	3,084,759

The accompanying notes are an integral part of these unaudited, consolidated financial statements

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended March 31,
	2021			2020
Interest income:
Interest and fees on loans	$	29,829		$	27,409
Interest and dividends on investment securities		1,115			504
Other interest income		225			900
Total interest income		31,169			28,813
Interest expense:
Interest on deposits		2,327			4,507
Interest on FHLB advances and other borrowings		1,003			508
Total interest expense		3,330			5,015
Net interest income		27,839			23,798
Provision for loan losses		1,086			1,171
Net interest income after provision for loan losses		26,753			22,627
Noninterest income:
Service charges and fees		1,434			1,311
SBA loan servicing fees		324			10
Mortgage referral fees		274			202
Swap referral fees		430			580
Gain on sales of loans, net		254			464
Gain on sales of investment securities		5			—
Other noninterest (loss) income		(102	)		145
Total noninterest income		2,619			2,712
Noninterest expense:
Salaries and employee benefits		9,220			11,789
Occupancy and equipment expenses		2,662			2,315
Professional services		524			895
Data processing and network		1,229			743
Regulatory assessments and insurance		535			402
Amortization of intangibles		823			946
Advertising		78			153
Marketing		93			160
Telephone expense		499			407
Conversion expense		-			1,477
Other operating expenses		971			1,673
Total noninterest expense		16,634			20,960
Income before income tax expense		12,738			4,379
Income tax expense		2,652			305
Net income	$	10,086		$	4,074
Earnings per common share:
Basic	$	0.59		$	0.22
Diluted	$	0.58		$	0.22
Weighted average common shares outstanding:
Basic		17,103,981			18,184,110
Diluted		17,518,029			18,441,977

The accompanying notes are an integral part of these unaudited, consolidated financial statements

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

	Three Months Ended March 31,
	2021			2020
Net income	$	10,086		$	4,074
Other comprehensive (loss) income:
Unrealized net holding gains (losses) on investment securities available for sale, net of (tax) and benefit of $1,460 and $(17), respectively		(5,490	)		65
Reclassification adjustment for realized (gains) losses on investment securities available for sale included in net income, net of taxes of $1 and $0, respectively		(4	)		—
Change in accumulated gain on effective cash flow hedge derivatives, net of tax of $(336)		1,265			—
Total other comprehensive (loss) income		(4,229	)		65
Total comprehensive income	$	5,857		$	4,139

The accompanying notes are an integral part of these unaudited, consolidated financial statements

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

(Dollars in thousands)

	Shares of Common			Common		Retained			Treasury			Accumulated Other Comprehensive			Total Stockholders'
	Stock			Stock		Earnings			Stock			Income			Equity
Three Months Ended March 31,
Balance as of January 1, 2020		18,258,222		$	297,188	$	48,139		$	(289	)	$	667		$	345,705
Net income		—			—		4,074			—			—			4,074
Exercise of stock options and warrants		32,000			401		—			—			—			401
Stock-based compensation		—			377		—			—			—			377
Treasury stock purchases		(321,210	)				—			(4,805	)					(4,805	)
Other comprehensive income		—			—		—			—			65			65
Balance as of March 31, 2020		17,969,012			297,966		52,213			(5,094	)		732		$	345,817

Balance as of January 1, 2021		17,081,831		$	298,850	$	76,683		$	(15,759	)	$	1,005		$	360,779
Net income		—			—		10,086			—			—			10,086
Common stock dividends declared ($0.09 per share)		—			—		(1,523	)		—			—			(1,523	)
Exercise of stock options and warrants		113,228			1,534		—			—			—			1,534
Stock-based compensation		—			207		—			—			—			207
Treasury stock purchases		(58,506	)		—		—			(1,096	)		—			(1,096	)
Other comprehensive loss		—			—		—			—			(4,229	)		(4,229	)
Balance as of March 31, 2021		17,136,553		$	300,591	$	85,246		$	(16,855	)	$	(3,224	)	$	365,758

The accompanying notes are an integral part of these unaudited, consolidated financial statements

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Three Months Ended March 31,
	2021			2020
Cash Flows From Operating Activities:
Net income	$	10,086		$	4,074
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,086			1,171
Depreciation and amortization		1,108			1,104
Net amortization (accretion) of premium (discount) on investment securities		532			(86	)
Amortization of core deposit intangible		823			946
Accretion of discount on retained SBA loans		(243	)		(333	)
Deferred tax expense		214			1,017
Originations of loans held for sale		(1,729	)		(9,380	)
Proceeds from loans held for sale		2,209			6,109
Net gains on sale of loans held for sale		(155	)		(464	)
Gain on sale of investment securities		(5	)		—
Loss on sale of other real estate owned		3			-
Fair value adjustment on SBA servicing asset		170			405
Stock-based compensation		207			377
Increase in cash surrender value of BOLI		(88	)		(89	)
Net change in operating assets and liabilities:
Net change in accrued interest receivable		595