Spirit of Texas Bancshares, Inc.

Greetings and welcome to the Spirit of Texas Bank Share's third quarter earnings conference call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jerry Goldman, Chief Operating Officer. Thank you, Mr. Goldman. You may begin.

Thank you, Operator, and good morning, everyone. We appreciate you joining us for the Spirit of Texas Bank Shares conference call and webcast to review 2020 third quarter results. With me today is Mr. Dean Bass, Chairman and Chief Executive Officer, Mr. David McGuire, President and Chief Lending Officer, and Ms. Allison Johnson, Interim Chief Financial Officer. Following my opening remarks, we will provide a high-level review and commentary on the financial details of the third quarter before opening the call for Q&A. I'd now like to cover a few housekeeping items. There will be a replay of today's call, and it will be available by webcast on our website at www.sotb.com. There will also be a telephonic replay available until October 28, 2020, and more information on how to access these replay features was included in yesterday's release. Please note that the information reported on this call speaks only as of today, October 21, 2020, and therefore you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening or transcript reading. In addition, the comments made by management during the conference call may contain certain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of management. However, various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener or reader is encouraged to read the company's annual report, Form 10-K, filed with the SEC for the year ended December 31, 2019, to understand certain of those risks, uncertainties, and contingencies. The comments today will also include certain non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures are included in yesterday's earnings release, which can be found on the Spirit of Texas website. Now I'd like to turn the call over to our Chairman and CEO, Mr. Dean Bass. Dean?

Thank you, Jerry, and good morning, everyone. I'm happy to report another strong quarterly performance. This quarter reflected improved earnings, a successful merger conversion, branch optimization, improving COVID-19 response results, and strong asset quality metrics. During the quarter, we have reached another important milestone in the history of our bank. We have thoroughly reviewed our capital needs and plans for future growth and determined that the time was right to authorize a quarterly cash dividend for our company. The dividend declared of $0.07 per common share is a solid starting point to share both our stable current earnings and future growth prospects. We have carefully chosen a dividend payout ratio that will reward our current investors for their continued support while enticing new investors with an attractive dividend yield. We'll also preserve a strong position and retain earnings to continue on the path of strong organic growth and revitalize our successful M&A program that has brought us to this milestone. We are pleased to announce net income of $7.1 million for the third quarter and dilutive earnings per share of 41 cents. Accretion of origination fees on PPP loans, net of deferred costs, continue to assist our financial performance and replace the reduction of interest income from the deep rate cuts experienced in the first quarter. As these loans are forgiven in the fourth quarter of 2020 and into the first and second quarters of 2021, we are actively finding new revenue sources and growth opportunities to further enhance profitability. Non-interest income for the third quarter, excluding gain on sale of securities, increased 48% over the second quarter. And we will continue to find growth opportunities and non-interest income given that we will likely be in a low interest rate environment for the immediate future. At the same time, we have been successfully optimizing our branch network by improving the bank's efficiencies by reducing non-interest expense. We have begun to see more clearly the impact of the COVID-19 pandemic and have made the strategic moves necessary to emerge stronger than ever, regardless of the shape of the recovery. We have a clear vision of the future of this great bank, and we'll continue to focus on serving the needs of our communities, generating stable core earnings for our investors, and maintaining a strong capital position to serve as a bedrock for future growth. Now I'd like to turn the call over to Mr. David McGuire, our president, and Chief Lending Officer to discuss the loan portfolio and asset quality. David? Thank you, Dean.