Spirit of Texas Bancshares 8K Results of Operations and Financial Condition | STXB 24 Jul 19

Exhibit 99.1


		*NEWS RELEASE*
		Contacts:		Dennard Lascar Investor Relations Ken Dennard / Natalie Hairston (713)529-6600 STXB@dennardlascar.com

SPIRIT OF TEXAS BANCSHARES, INC. REPORTS

SECOND QUARTER 2019 FINANCIAL RESULTS

CONROE, TX – July 24, 2019 – Spirit of Texas Bancshares, Inc. (NASDAQ: STXB)(“Spirit” or the “Company”), the bank holding company for Spirit of Texas Bank, today reported its results as of and for the three months ended June 30, 2019.

Second Quarter 2019 Financial and Operational Highlights

•

Net income for the second quarter of 2019 increased to $5.8 million, compared to $2.7 million in the second quarter of 2018. Adjusted net income⁽¹⁾ for the second quarter of 2019 was $5.8 million, which excluded $997 thousand ofafter-tax, merger-related expenses and $1.1 million of gain on sale of investment securities.

•

Diluted earnings per share were $0.41 for the second quarter of 2019, compared to $0.29 for the second quarter of 2018. Adjusted diluted earnings per share⁽¹⁾ were also $0.41 for the second quarter of 2019, which excluded $997 thousand ofafter-tax, merger-related expenses and $1.1 million of gain on sale of investment securities.

•

Reported and tax equivalent net interest margin⁽¹⁾ were 4.61% and 4.64%, respectively.

•

Return on average assets was 1.26% annualized including $997 thousand ofafter-tax, merger-related expenses and $1.1 million of gain on sale of investment securities.

•

At June 30, 2019, book value per share was $17.70 and tangible book value per share⁽¹⁾ was $13.61.

•

At June 30, 2019, total stockholders’ equity to total assets was 12.86% and tangible equity to tangible assets⁽¹⁾ was 10.19%.

•

Completed the acquisition of First Beeville Financial Corporation and its subsidiary, The First National Bank of Beeville (together, “Beeville”), on April 2, 2019. The combined organization has 29 locations and total assets of $1.9 billion as of June 30, 2019.

Dean Bass, Spirit’s Chairman and Chief Executive Officer, stated, “We are proud to have reported record earnings in the second quarter of 2019. Adjusted diluted earnings per share for the quarter were $0.41, up 24% over the comparable sequential first quarter of 2019 and 41% higher than last year’s second quarter earnings per share. We are also very pleased to announce that we have signed a definitive agreement to acquire through a series of mergers Chandler Bancorp, Inc. and its subsidiary, Citizens State Bank (together, “Citizens”). This is our tenth acquisition since 2008 and the third acquisition since our May 2018 initial public offering. The transaction is expected to close in the fourth quarter of 2019, subject to the satisfaction of customary closing conditions, including regulatory approvals, and is expected to be accretive to earnings in 2020. For additional details regarding this transaction, please review the news releases disclosed today.”

First Beeville Financial Corporation Acquisition

On April 2, 2019, the Company closed its previously announced acquisition of Beeville in a cash and stock transaction (the “Beeville acquisition”). The closing consideration consisted of approximately $32.4 million in cash and 1,579,268 shares of Spirit’s common stock. Under the terms of the Agreement and Plan of Reorganization, each outstanding share of Beeville was converted into the right to receive $547.45 in cash and approximately 26.7048 shares of Spirit common stock, plus cash in lieu of any resulting fractional shares. Spirit and Beeville offices and services are expected to be integrated during the third quarter of 2019. The transaction added approximately $465.6 million in total assets, with three branches and two loan production offices in attractive markets.

Loan Portfolio and Composition

During the second quarter of 2019, gross loans grew to $1.41 billion as of June 30, 2019, an increase of 26.3% from $1.12 billion as of March 31, 2019, and an increase of 53.6% from $917.5 million as of June 30, 2018. Loan growth during the quarter was primarily driven by the $296.3 million of loans acquired in the Beeville acquisition.

Asset Quality

The provision for loan losses recorded for the second quarter of 2019 was $332 thousand. The allowance decreased to $6.3 million, or 0.45% of the $1.41 billion in loans outstanding as of June 30, 2019, primarily due to improvements in the assessed credit quality as represented by internal risk ratings. The nonperforming loans to loans held for investment ratio as of June 30, 2019 decreased to 0.40% from 0.52% as of March 31, 2019, and 0.44% at June 30, 2018. Annualized net charge-offs were 18 basis points for the second quarter of 2019.

Deposits and Borrowings

Deposits totaled $1.57 billion as of June 30, 2019, an increase of 30.6% from $1.20 billion as of March 31, 2019, and an increase of 86.0% from $844.7 million as of June 30, 2018. Noninterest-bearing demand deposits increased $109.4 million, or 42.3%, from March 31, 2019, and increased $184.3 million, or 100.4% from June 30, 2018. Noninterest-bearing demand deposits represented 23.4% of total deposits as of June 30, 2019, compared to 21.5% of total deposits as of March 31, 2019, and 21.7% of total deposits as of June 30, 2018. Deposit growth during the quarter was primarily driven by the $399.2 million obtained through the Beeville acquisition. The average cost of deposits was 1.01% for the second quarter of 2019, representing a four basis point decrease from the first quarter of 2019 and a nine basis point increase from the second quarter of 2018.

Net Interest Margin and Net Interest Income

The net interest margin for the second quarter of 2019 was 4.61%, a decrease of four basis points from the first quarter of 2019 and an increase of nine basis points from the second quarter of 2018. The tax equivalent net interest margin for the second quarter of 2019 was 4.64%, a decrease of five basis points from the first quarter of 2019 and an increase of seven basis points from the second quarter of 2018. The decrease from the first quarter of 2019 is due to the timing of selling and buying securities in conjunction with portfolio rebalancing and drawing $21 million on the line of credit with our third-party lender. The increase from the same quarter the prior year was due primarily to the impact of higher interest rates.

Net interest income totaled $19.8 million for the second quarter of 2019, an increase of 78.2% from $11.1 million for the second quarter of 2018. Interest income totaled $24.3 million for the second quarter of 2019, an increase of 80.2% from $13.5 million in the same period in 2018. Interest and fees on loans increased by $9.1 million, or 69.8%, from the second quarter of 2018 due to organic and acquired growth in the loan portfolio and the impact of an increase in interest rates. Interest expense was $4.5 million for the second quarter of 2019, an increase of 89.1% from $2.4 million for the same period in 2018. The increase from the second quarter of 2018 was due to an increase in the rate paid on interest-bearing liabilities of 13 basis points and the growth in the deposit base from the acquisition of Comanche National Corporation and its subsidiary, The Comanche National Bank (the “Comanche acquisition”), which closed on November 14, 2018, and the Beeville acquisition, which closed on April 2, 2019.

Noninterest Income and Noninterest Expense

Noninterest income totaled $3.8 million for the second quarter of 2019, compared to $2.3 million for the second quarter of 2018. The primary components of noninterest income for the second quarter of 2019 were a gain on sales of loans, net, a gain on sales of investment securities, and service charges and fees of $1.4 million, $1.1 million and $969 thousand, respectively. Noninterest expense totaled $15.8 million in the second quarter of 2019, an increase of 68.7% from $9.4 million in the prior year period. This increase was primarily driven by increased salaries and employee benefits and the amortization of core deposit intangibles related to the Comanche acquisition and the Beeville acquisition.

The efficiency ratio was 67.3% in the second quarter of 2019 compared to 70.1% in the second quarter of 2018.

(1)

Adjusted Net Income, Adjusted Basic and Diluted Earnings Per Share, Tax Equivalent Net Interest Margin, Tangible Book Value Per Share, and Tangible Equity to Tangible Assets Ratio are allnon-GAAP measures. Spirit believes that for Adjusted Net Income and Adjusted Basic and Diluted Earnings Per Share, the adjustments made to net income allow investors and analysts to better assess its basic and diluted earnings per common share by removing the volatility that is associated with merger-related expenses and gain on sale of investment securities that are unrelated to its core business. 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 andtax-exempt sources. Regarding Tangible Book Value Per Share and Tangible 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. Thenon-GAAP financial measures that we discuss in this news 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 thenon-GAAP financial measures that we discuss in this news 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 thenon-GAAP financial measures we have discussed in this news release when comparing suchnon-GAAP financial measures. Please see a reconciliation to the nearest respective GAAP measures at the end of this news release.

Conference Call

Spirit of Texas Bancshares has scheduled a conference call to discuss its second quarter 2019 results and its pending acquisition of Citizens, which will be broadcast live over the Internet, on Thursday, July 25, 2019 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial201-389-0867 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
http://ir.sotb.com/events-presentations. For those who cannot listen to the live call, a replay will be available through August 1, 2019 and may be accessed by dialing201-612-7415 and using pass code 13692563#. Also, an archive of the webcast will be available shortly after the call athttp://ir.sotb.com/events-presentations for 90 days.

About Spirit of Texas Bancshares, Inc.

Spirit, through its wholly-owned subsidiary, Spirit of Texas Bank, provides a wide range of relationship-driven commercial banking products and services tailored to meet the needs of businesses, professionals and individuals. Spirit of Texas Bank has 29 locations in the Houston, Dallas/Fort Worth, Bryan/College Station, SanAntonio-New Braunfels and Corpus Christi metropolitan areas, along with offices in North Central Texas. Please visithttps://www.sotb.com for more information.

No Offer or Solicitation

This press release does not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation or an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirement of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”).

Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities 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. 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. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: our ability to consummate the equity offering in the size and manner described herein; risks relating to our ability to timely complete, or complete at all, the pending acquisition of Citizens, including the possibility that the expected benefits and synergies and our projections related to the acquisitions may not materialize as expected; that prior to the completion of the pending acquisition of Citizens, the target’s businesses could experience disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with employees, customers, other business partners or governmental entities; difficulty retaining key employees; business and economic conditions generally and in the bank andnon-bank financial services industries, nationally and within our local market areas; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; risks related to the integration of acquired businesses (including our recent Beeville acquisition and our pending acquisition of Citizens) and any future acquisitions; our ability to successfully identify and address the risks associated with our recent, pending and possible future acquisitions; changes in management personnel; interest rate risk; credit risk associated with our loan portfolio; deteriorating asset quality and higher loan charge-offs; time and effort necessary to resolve nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates and projections; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; increased competition in the bank andnon-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of our financial statements and related disclosures and those of companies we acquire; our actual financial results for the three months ended June 30, 2019 may differ materially from the preliminary financial estimates we have provided as a result of the completion of our financial closing procedures, final adjustments and other developments arising between now and the time that our financial results for such periods are finalized; material weaknesses in our internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, and their application by our regulators; governmental monetary and fiscal policies; increases in our capital requirements; and other risks identified in Spirit’s Annual Report on Form10-K for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 15, 2019, its Quarterly Report on Form10-Q for the period ended March 31, 2019, filed with the SEC on May 10, 2019, and its 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 expressed in or contemplated by the particular forward-looking statement, 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.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Income

(Unaudited)


	For the Three Months Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
	(Dollars in thousands, except per share data)
Interest income:
Interest and fees on loans	$	22,204		$	17,118		$	15,817		$	13,901		$	13,078
Interest and dividends on investment securities		1,302			1,182			897			202			195
Other interest income		794			584			208			173			215

Total interest income		24,300			18,884			16,922			14,276			13,488

Interest expense:
Interest on deposits		3,938			3,071			2,613			2,197			1,941
Interest on FHLB advances and other borrowings		611			378			447			389			465

Total interest expense		4,549			3,449			3,060			2,586			2,406

Net interest income		19,751			15,435			13,862			11,690			11,082
Provision for loan losses		332			849			700			486			635

Net interest income after provision for loan losses		19,419			14,586			13,162			11,204			10,447

Noninterest income:
Service charges and fees		969			729			649			462			419
SBA loan servicing fees		40			264			1,026			529			548
Mortgage referral fees		198			110			97			160			208
Gain on sales of loans, net		1,384			804			1,236			1,369			1,041
Gain on sales of investment securities		1,053			1,081			—			—			—
Other noninterest income		131			69			23			47			87

Total noninterest income		3,775			3,057			3,031			2,567			2,303

Noninterest expense:
Salaries and employee benefits		8,765			7,124			7,988			6,623			6,043
Occupancy and equipment expenses		1,690			1,262			1,479			1,279			1,221
Professional services		1,022			1,041			1,806			624			314
Data processing and network		731			485			340			302			321
Regulatory assessments and insurance		315			98			307			266			266
Amortization of intangibles		1,006			603			390			176			175
Advertising		167			97			81			83			102
Marketing		132			139			154			115			121
Telephone expense		338			140			82			120			114
Conversion expense		453			1,151			160			—			—
Other operating expenses		1,206			864			789			693			704

Total noninterest expense		15,825			13,004			13,576			10,281			9,381

Income before income tax expense		7,369			4,639			2,617			3,490			3,369
Income tax expense		1,542			829			104			719			688

Net income	$	5,827		$	3,810		$	2,513		$	2,771		$	2,681

Earnings per common share:
Basic	$	0.42		$	0.31		$	0.23		$	0.28		$	0.30
Diluted	$	0.41		$	0.30		$	0.22		$	0.27		$	0.29

Weighted average common shares outstanding:
Basic		13,765,929			12,152,558			10,994,467			9,792,032			8,851,446
Diluted		14,236,244			12,607,445			11,450,552			10,360,301			9,306,029
Efficiency		67.3	%		70.3	%		80.4	%		72.1	%		70.1	%
Adjusted Efficiency		62.6	%		62.5	%		71.8	%		62.0	%		59.3	%

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Consolidated Balance Sheets

(Unaudited)


	As of
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
	(Dollars in thousands)
Assets:
Cash and due from banks	$	26,150		$	19,397		$	22,664		$	18,212		$	17,181
Interest-bearing deposits in other banks		137,008			103,265			66,351			25,926			35,805

Total cash and cash equivalents		163,158			122,662			89,015			44,138			52,986

Time deposits in other banks		1,225			—			—			245			245
Investment securities:
Available for sale securities, at fair value		171,058			131,068			179,461			33,449			34,519

Total investment securities		171,058			131,068			179,461			33,449			34,519

Loans held for sale		2,583			6,300			3,945			5,500			7,715
Loans:
Loans held for investment		1,409,338			1,115,995			1,092,940			954,074			917,521
Less: allowance for loan and lease losses		(6,277	)		(6,569	)		(6,286	)		(6,156	)		(6,015	)

Loans, net		1,403,061			1,109,426			1,086,654			947,918			911,506

Premises and equipment, net		62,815			55,237			53,877			46,135			44,945
Accrued interest receivable		7,039			4,849			4,934			3,715			3,195
Other real estate owned and repossessed assets		1,324			518			782			289			289
Goodwill		43,889			18,253			18,253			4,485			4,485
Core deposit intangible		12,583			7,954			8,558			2,959			3,135
SBA servicing asset		3,570			3,747			3,965			3,561			3,521
Deferred tax asset, net		48			—			328			1,667			1,616
Bank-owned life insurance		15,432			7,442			7,401			483			482
Federal Home Loan Bank and other bank stock, at cost		6,190			5,264			5,304			4,861			4,830
Other assets		4,485			4,464			4,276			2,806			3,207

Total assets	$	1,898,460		$	1,477,184		$	1,466,753		$	1,102,211		$	1,076,676

Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Transaction accounts:
Noninterest-bearing	$	367,892		$	258,440		$	256,784		$	207,727		$	183,618
Interest-bearing		569,839			363,326			378,822			222,245			220,087

Total transaction accounts		937,731			621,766			635,606			429,972			403,705
Time deposits		632,873			581,486			547,042			442,638			440,978

Total deposits		1,570,604			1,203,252			1,182,648			872,610			844,683
Accrued interest payable		1,134			737			702			475			431
Short-term borrowings		—			—			12,500			10,000			15,000
Long-term borrowings		80,525			65,676			67,916			64,961			66,191
Deferred tax liability, net		—			449			—			—			—
Other liabilities		2,087			3,094			4,191			3,272			2,385

Total liabilities		1,654,350			1,273,208			1,267,957			951,318			928,690

Stockholders’ Equity:
Common stock		204,974			171,159			169,939			127,541			127,344
Retained earnings		36,640			30,813			27,003			24,490			21,719
Accumulated other comprehensive income (loss)		2,496			2,004			1,854			(1,138	)		(1,077	)

Total stockholders’ equity		244,110			203,976			198,796			150,893			147,986

Total liabilities and stockholders’ equity	$	1,898,460		$	1,477,184		$	1,466,753		$	1,102,211		$	1,076,676

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Loan Composition

(Unaudited)


	As of
	June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018
	(Dollars in thousands)
Loans:
Commercial and industrial loans (1)	$	197,774	$	162,934	$	173,892	$	159,776	$	149,988
Real estate:
1-4 single family residential loans		277,560		280,788		275,644		244,633		238,606
Construction, land and development loans		176,567		169,919		159,734		155,778		152,558
Commercial real estate loans (including multifamily)		666,981		418,032		397,953		324,212		305,405
Consumer loans and leases		20,745		21,631		24,378		18,174		19,588
Municipal and other loans		69,711		62,691		61,339		51,501		51,376

Total loans held in portfolio	$	1,409,338	$	1,115,995	$	1,092,940	$	954,074	$	917,521

(1)	Balance includes $71.3 million, $73.5 million, $76.9 million, $75.9 million and $72.4 million of the unguaranteed portion of SBA loans as of June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018 and June 30, 2018, respectively.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Deposit Composition

(Unaudited)


	As of
	June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018
	(Dollars in thousands)
Deposits:
Noninterest-bearing demand deposits	$	367,892	$	258,440	$	256,784	$	207,727	$	183,618
Interest-bearing demand deposits		292,550		127,182		124,933		—		—
Interest-bearing NOW accounts		7,638		7,509		7,961		7,865		7,404
Savings and money market accounts		269,651		228,635		245,928		214,380		212,683
Time deposits		632,873		581,486		547,042		442,638		440,978

Total deposits	$	1,570,604	$	1,203,252	$	1,182,648	$	872,610	$	844,683

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Average Balances and Yields

(Unaudited)


	Three Months Ended June 30,
	2019							2018
	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	$	120,568	$	742		2.47	%	$	41,396	$	183		1.77	%
Loans, including loans held for sale (2)		1,419,004		22,204		6.28	%		901,103		13,078		5.82	%
Investment securities and other		177,227		1,354		3.06	%		40,005		227		2.28	%

Total interest-earning assets		1,716,799		24,300		5.68	%		982,504		13,488		5.51	%

Noninterest-earning assets		143,434							75,278

Total assets	$	1,860,233						$	1,057,782

Interest-bearing liabilities:
Interest-bearing demand deposits	$	295,274	$	394		0.54	%	$	—	$	—		0.00	%
Interest-bearing NOW accounts		7,619		3		0.16	%		8,102		3		0.15	%
Savings and money market accounts		267,357		588		0.88	%		221,792		337		0.61	%
Time deposits		634,700		2,953		1.87	%		431,666		1,601		1.49	%
FHLB advances and other borrowings		75,856		611		3.23	%		85,612		465		2.18	%

Total interest-bearing liabilities		1,280,806		4,549		1.42	%		747,172		2,406		1.29	%

Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits		359,559							188,628
Other liabilities		3,228							2,855
Stockholders’ equity		216,640							119,127

Total liabilities and stockholders’ equity	$	1,860,233						$	1,057,782

Net interest rate spread						4.26	%						4.22	%

Net interest income and margin			$	19,751		4.61	%			$	11,082		4.52	%

Net interest income and margin (tax equivalent)(3)			$	19,863		4.64	%			$	11,196		4.57	%

(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 ontax-exempt loans comparable to those on taxable loans, atax-equivalent adjustment has been computed using a federal tax rate of 21% for the three months ended June 30, 2019 and 2018, respectively.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Average Balances and Yields

(Unaudited)


	Three Months Ended
	June 30, 2019							March 31, 2019
	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	$	120,568	$	742		2.47	%	$	92,892	$	546		2.38	%
Loans, including loans held for sale (2)		1,419,004		22,204		6.28	%		1,105,177		17,118		6.28	%
Investment securities and other		177,227		1,354		3.06	%		148,035		1,220		3.34	%

Total interest-earning assets		1,716,799		24,300		5.68	%		1,346,104		18,884		5.69	%

Noninterest-earning assets		143,434							110,334

Total assets	$	1,860,233						$	1,456,438

Interest-bearing liabilities:
Interest-bearing demand deposits	$	295,274	$	394		0.54	%	$	128,059	$	167		0.53	%
Interest-bearing NOW accounts		7,619		3		0.16	%		7,354		3		0.15	%
Savings and money market accounts		267,357		588		0.88	%		235,148		442		0.76	%
Time deposits		634,700		2,953		1.87	%		561,435		2,459		1.78	%
FHLB advances and other borrowings		75,856		611		3.23	%		67,149		378		2.29	%

Total interest-bearing liabilities		1,280,806		4,549		1.42	%		999,145		3,449		1.40	%

Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits		359,559							250,204
Other liabilities		3,228							5,232
Stockholders’ equity		216,640							201,857

Total liabilities and stockholders’ equity	$	1,860,233						$	1,456,438

Net interest rate spread						4.26	%						4.29	%

Net interest income and margin			$	19,751		4.61	%			$	15,435		4.65	%

Net interest income and margin (tax equivalent)(3)			$	19,863		4.64	%			$	15,573		4.69	%

(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 ontax-exempt loans comparable to those on taxable loans, atax-equivalent adjustment has been computed using a federal tax rate of 21% for the three months ended June 30, 2019 and March 31, 2019, respectively.

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

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

(Unaudited)


	As of or for the Three Months Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
	(Dollars in thousands, except per share data)
Basic and diluted earnings per share - GAAP basis:
Net income available to common stockholders	$	5,827		$	3,810		$	2,513		$	2,771		$	2,681

Weighted average number of common shares - basic		13,765,929			12,152,558			10,994,467			9,792,032			8,851,446
Weighted average number of common shares - diluted		14,236,244			12,607,445			11,450,552			10,360,301			9,306,029
Basic earnings per common share	$	0.42		$	0.31		$	0.23		$	0.28		$	0.30

Diluted earnings per common share	$	0.41		$	0.30		$	0.22		$	0.27		$	0.29

Basic and diluted earnings per share -Non-GAAP basis:
Net income	$	5,827		$	3,810		$	2,513		$	2,771		$	2,681
Pre-tax adjustments:
Noninterest income Gain on sale of investment securities		(1,053	)		(1,081	)		—			—			—
Noninterest expense Merger related expenses		1,165			1,778			1,447			270			—
Taxes:
Tax effect of adjustments		(168	)		(373	)		(149	)		(55	)		—

Adjusted net income	$	5,771		$	4,134		$	3,811		$	2,986		$	2,681

Weighted average number of common shares - basic		13,765,929			12,152,558			10,994,467			9,792,032			8,851,446
Weighted average number of common shares - diluted		14,236,244			12,607,445			11,450,552			10,360,301			9,306,029
Basic earnings per common share -Non-GAAP basis	$	0.42		$	0.34		$	0.35		$	0.30		$	0.30

Diluted earnings per common share -Non-GAAP basis	$	0.41		$	0.33		$	0.33		$	0.29		$	0.29

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

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

(Unaudited)


	As of or for the Three Months Ended
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
	(Dollars in thousands, except per share data)
Net interest margin - GAAP basis:
Net interest income	$	19,751		$	15,435		$	13,862		$	11,690		$	11,082
Average interst-earning assets		1,716,799			1,346,104			1,199,125			1,007,492			982,504
Net interest margin		4.61	%		4.65	%		4.59	%		4.60	%		4.52	%
Net interest margin -Non-GAAP basis:
Net interest income	$	19,751		$	15,435		$	13,862		$	11,690		$	11,082
Plus:
Impact of fully taxable equivalent adjustment		112			138			114			113			114

Net interest income on a fully taxable equivalent basis	$	19,863		$	15,573		$	13,976		$	11,803		$	11,196

Average interst-earning assets		1,716,799			1,346,104			1,199,125			1,007,492			982,504
Net interest margin on a fully taxable equivalent basis -Non-GAAP basis		4.64	%		4.69	%		4.62	%		4.65	%		4.57	%

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Reconciliation ofNon-GAAP Financial Measures - Tangible Book Value Per Share

(Unaudited)


	As of
	June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018
	(Dollars in thousands, except per share data)
Total stockholders’ equity	$	244,110	$	203,976	$	198,796	$	150,893	$	147,986
Less:
Goodwill and other intangible assets		56,472		26,207		26,811		7,444		7,620

Tangible stockholders’ equity	$	187,638	$	177,769	$	171,985	$	143,449	$	140,366

Shares outstanding		13,790,332		12,195,891		12,103,753		9,812,481		9,786,611
Book value per share	$	17.70	$	16.72	$	16.42	$	15.38	$	15.12
Less:
Goodwill and other intangible assets per share		4.10		2.14		2.21		0.76		0.78

Tangible book value per share	$	13.61	$	14.58	$	14.21	$	14.62	$	14.34

SPIRIT OF TEXAS BANCSHARES, INC. AND SUBSIDIARY

Reconciliation ofNon-GAAP Financial Measures - Tangible Equity to Tangible Assets

(Unaudited)


	As of
	June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
	(Dollars in thousands)
Total stockholders’ equity to total assets - GAAP basis:
Total stockholders’ equity (numerator)	$	244,110		$	203,976		$	198,796		$	150,893		$	147,986
Total assets (denominator)		1,898,460			1,477,184			1,466,753			1,102,211			1,076,676
Total stockholders’ equity to total assets		12.86	%		13.81	%		13.55	%		13.69	%		13.74	%
Tangible equity to tangible assets -Non-GAAP basis:
Tangible equity:
Total stockholders’ equity	$	244,110		$	203,976		$	198,796		$	150,893		$	147,986
Less:
Goodwill and other intangible assets		56,472			26,207			26,811			7,444			7,620

Total tangible common equity (numerator)	$	187,638		$	177,769		$	171,985		$	143,449		$	140,366

Tangible assets:
Total assets		1,898,460			1,477,184			1,466,753			1,102,211			1,076,676
Less:
Goodwill and other intangible assets		56,472			26,207			26,811			7,444			7,620

Total tangible assets (denominator)	$	1,841,988		$	1,450,977		$	1,439,942		$	1,094,767		$	1,069,056

Tangible equity to tangible assets		10.19	%		12.25	%		11.94	%		13.10	%		13.13	%

Spirit of Texas Bancshares (STXB) 8-KResults of Operations and Financial Condition