HBT Financial, Inc. [HBT] Filings

10-Q 1 hbt-20240630.htm 10-Q hbt-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2024

o 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: 001-39085

HBT Financial, Inc.

(Exact name of registrant as specified in its charter)


Delaware			37-1117216
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

401 North Hershey Rd Bloomington, Illinois 61704			(309) 662-4444
(Address of principal executive offices, including zip code)			(Registrant’s telephone number, including area code)

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, par value $0.01 per share	HBT	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 x No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.


Large accelerated filer	o	Accelerated filer	x

Non-accelerated filer	o	Smaller reporting company	x

Emerging growth company	x

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. o

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

As of July 24, 2024, there were 31,559,366 shares outstanding of the registrant’s common stock, $0.01 par value.

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TABLE OF CONTENTS

HBT Financial, Inc.


		Page

PART I. FINANCIAL INFORMATION		3
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statement of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	93
Item 4.	Controls and Procedures	95
PART II. OTHER INFORMATION		96
Item 1.	Legal Proceedings	96
Item 1A.	Risk Factors	96
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	96
Item 3.	Defaults Upon Senior Securities	96
Item 4.	Mine Safety Disclosures	96
Item 5.	Other Information	97
Item 6.	Exhibits	97

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report are forward-looking statements. Forward-looking statements may include statements relating to our plans, strategies and expectations, near-term loan growth, net interest margin, mortgage banking profits, wealth management fees, expenses, asset quality, capital levels, continued earnings, and liquidity. Forward-looking statements are generally identifiable by use of the words "believe," "may," "will," "should," "could," "expect," "estimate," "intend," "anticipate," "project," "plan" or similar expressions. Forward-looking statements are frequently based on assumptions that may or may not materialize and are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause actual results to differ materially from the results anticipated or projected and which could materially and adversely affect our operating results, financial condition or prospects include, but are not limited to:

•the strength of the local, state, national, and international economies (including effects of inflationary pressures and supply chain constraints);

•the economic impact of any future terrorist threats and attacks, widespread disease or pandemics, acts of war or other threats thereof (including the Israeli-Palestinian conflict and the Russian invasion of Ukraine), or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events;

•changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board;

•changes in state and federal laws, regulations and governmental policies concerning the Company’s general business and any changes in response to the failures of other banks or as a result of the upcoming 2024 presidential election;

•changes in interest rates and prepayment rates of the Company’s assets (including the effects of sustained, elevated interest rates);

•increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers;

•changes in technology and the ability to develop and maintain secure and reliable electronic systems;

•unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated;

•the loss of key executives or employees;

•changes in consumer spending;

•unexpected outcomes of existing or new litigation involving the Company;

•the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards;

•fluctuations in the value of securities held in our securities portfolio;

•concentrations within our loan portfolio (including commercial real estate loans), large loans to certain borrowers, and large deposits from certain clients above current FDIC limits who may withdraw deposits to diversify their exposure;

•the level of non-performing assets on our balance sheets;

•interruptions involving our information technology and communications systems or third-party servicers;

•breaches or failures of our information security controls or cybersecurity-related incidents;

•our asset quality and any loan charge-offs;

•the effects of changes in interest rates on our net interest income, net interest margin, our investments, our loan originations, and our modeling estimates relating to interest rate changes;

•our access to sources of liquidity and capital to address our liquidity needs;

•our inability to receive dividends from the Bank, pay dividends to our common stockholders or satisfy obligations as they become due;

•the effects of problems encountered by other financial institutions;

•our ability to achieve organic loan and deposit growth and the composition of such growth;

•our ability to successfully develop and commercialize new or enhanced products and services;

•current and future business, economic and market conditions in the United States ("U.S.") generally or in the States of Illinois and Iowa in particular;

•the geographic concentration of our operations in the States of Illinois and Iowa;

•our ability to attract and retain customer deposits;

•our ability to maintain the Bank’s reputation;

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•possible impairment of our goodwill and other intangible assets;

•the effectiveness of our risk management and internal disclosure controls and procedures;

•market perceptions associated with certain aspects of our business;

•our ability to meet our obligations as a public company, including our obligations under Section 404 of the Sarbanes-Oxley Act of 2002;

•our success at managing the risks involved in the foregoing items; and

•the factors discussed in "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" or elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange (“SEC”) Commission on March 6, 2024.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update any forward-looking statement in the future, or to reflect circumstances and events that occur after the date on which the forward-looking statement was made.

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(dollars in thousands, except per share data)	June 30, 2024		December 31, 2023
ASSETS
Cash and due from banks	$	22,604	$	26,256
Interest-bearing deposits with banks	172,636		114,996
Cash and cash equivalents	195,240		141,252

Interest-bearing time deposits with banks	520		509
Debt securities available-for-sale, at fair value	669,055		759,461
Debt securities held-to-maturity (fair value of $453,753 at 2024 and $466,496 at 2023)	512,549		521,439
Equity securities with readily determinable fair value	3,228		3,360
Equity securities with no readily determinable fair value	2,613		2,505
Restricted stock, at cost	5,086		7,160
Loans held for sale	858		2,318

Loans, before allowance for credit losses	3,385,483		3,404,417
Allowance for credit losses	(40,806)		(40,048)
Loans, net of allowance for credit losses	3,344,677		3,364,369

Bank owned life insurance	24,235		23,905
Bank premises and equipment, net	65,711		65,150
Bank premises held for sale	317		—
Foreclosed assets	320		852
Goodwill	59,820		59,820
Intangible assets, net	19,262		20,682
Mortgage servicing rights, at fair value	18,984		19,001
Investments in unconsolidated subsidiaries	1,614		1,614
Accrued interest receivable	22,425		24,534
Other assets	59,685		55,239
Total assets	$	5,006,199	$	5,073,170

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	1,045,697	$	1,072,407
Interest-bearing	3,272,996		3,329,030
Total deposits	4,318,693		4,401,437

Securities sold under agreements to repurchase	29,330		42,442
Federal Home Loan Bank advances	13,734		12,623
Subordinated notes	39,514		39,474
Junior subordinated debentures issued to capital trusts	52,819		52,789
Other liabilities	42,640		34,909
Total liabilities	4,496,730		4,583,674

COMMITMENTS AND CONTINGENCIES (Note 14)

Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding	—		—
Common stock, $0.01 par value; 125,000,000 shares authorized; shares issued of 32,827,039 at 2024 and 32,730,698 at 2023; shares outstanding of 31,559,366 at 2024 and 31,695,828 at 2023	328		327
Surplus	296,430		295,877
Retained earnings	290,386		269,051
Accumulated other comprehensive income (loss)	(54,656)		(57,163)
Treasury stock at cost, 1,267,673 shares at 2024 and 1,034,870 at 2023	(23,019)		(18,596)
Total stockholders’ equity	509,469		489,496
Total liabilities and stockholders’ equity	$	5,006,199	$	5,073,170

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands, except per share data)	2024		2023		2024		2023

INTEREST AND DIVIDEND INCOME
Loans, including fees:
Taxable	$	52,177	$	47,149	$	104,103	$	89,308
Federally tax exempt	1,097		1,040		2,191		1,992
Securities:
Taxable	6,386		6,518		12,636		13,134
Federally tax exempt	521		1,162		1,118		2,359
Interest-bearing deposits in bank	2,570		781		4,522		1,520
Other interest and dividend income	73		118		215		234
Total interest and dividend income	62,824		56,768		124,785		108,547

INTEREST EXPENSE
Deposits	14,133		4,323		27,726		6,697
Securities sold under agreements to repurchase	129		34		281		72
Borrowings	121		2,189		246		3,486
Subordinated notes	469		469		939		939
Junior subordinated debentures issued to capital trusts	944		881		1,877		1,644
Total interest expense	15,796		7,896		31,069		12,838
Net interest income	47,028		48,872		93,716		95,709
PROVISION FOR CREDIT LOSSES	1,176		(230)		1,703		5,980
Net interest income after provision for credit losses	45,852		49,102		92,013		89,729

NONINTEREST INCOME
Card income	2,885		2,905		5,501		5,563
Wealth management fees	2,623		2,279		5,170		4,617
Service charges on deposit accounts	1,902		1,919		3,771		3,790
Mortgage servicing	1,111		1,254		2,166		2,353
Mortgage servicing rights fair value adjustment	(97)		141		(17)		(483)
Gains on sale of mortgage loans	443		373		741		649
Realized gains (losses) on sales of securities	—		—		(3,382)		(1,007)
Unrealized gains (losses) on equity securities	(96)		7		(112)		(15)
Gains (losses) on foreclosed assets	(28)		(97)		59		(107)
Gains (losses) on other assets	—		109		(635)		109
Income on bank owned life insurance	166		147		330		262
Other noninterest income	701		877		1,644		1,620
Total noninterest income	9,610		9,914		15,236		17,351

NONINTEREST EXPENSE
Salaries	16,364		16,660		33,021		36,071
Employee benefits	2,860		2,707		5,665		5,042
Occupancy of bank premises	2,243		2,785		4,825		4,887
Furniture and equipment	548		809		1,098		1,468
Data processing	2,606		2,883		5,531		7,206
Marketing and customer relations	996		1,359		1,992		2,195
Amortization of intangible assets	710		720		1,420		1,230
FDIC insurance	565		630		1,125		1,193
Loan collection and servicing	475		348		927		626
Foreclosed assets	10		97		59		158
Other noninterest expense	3,132		4,975		6,114		9,830
Total noninterest expense	30,509		33,973		61,777		69,906
INCOME BEFORE INCOME TAX EXPENSE	24,953		25,043		45,472		37,174
INCOME TAX EXPENSE	6,883		6,570		12,144		9,493
NET INCOME	$	18,070	$	18,473	$	33,328	$	27,681

EARNINGS PER SHARE - BASIC	$	0.57	$	0.58	$	1.05	$	0.88
EARNINGS PER SHARE - DILUTED	$	0.57	$	0.58	$	1.05	$	0.88
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING	31,579,457		31,980,133		31,621,205		31,481,439

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2024		2023		2024		2023

NET INCOME	$	18,070	$	18,473	$	33,328	$	27,681

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on debt securities available-for-sale	1,524		(12,638)		(731)		(1,195)
Reclassification adjustment for losses on sale of debt securities available-for-sale realized in income	—		200		3,382		1,807
Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity	488		475		989		965
Unrealized gains on derivative instruments	14		201		78		161
Reclassification adjustment for net settlements on derivative instruments	(118)		(109)		(250)		(203)
Total other comprehensive income (loss), before tax	1,908		(11,871)		3,468		1,535
Income tax expense (benefit)	516		(3,384)		961		438
Total other comprehensive income (loss)	1,392		(8,487)		2,507		1,097
TOTAL COMPREHENSIVE INCOME	$	19,462	$	9,986	$	35,835	$	28,778

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)


	Common Stock							Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity
(dollars in thousands, except per share data)	Shares Outstanding	Amount		Surplus		Retained Earnings				Treasury Stock

Balance, March 31, 2024	31,612,888	$	328	$	296,054	$	278,353	$	(56,048)	$	(22,006)	$	496,681

Net income	—	—		—		18,070		—		—		18,070
Other comprehensive income	—	—		—		—		1,392		—		1,392
Stock-based compensation	—	—		376		—		—		—		376


Repurchase of common stock	(53,522)	—		—		—		—		(1,013)		(1,013)
Cash dividends and dividend equivalents ($0.19 per share)	—	—		—		(6,037)		—		—		(6,037)




Balance, June 30, 2024	31,559,366	$	328	$	296,430	$	290,386	$	(54,656)	$	(23,019)	$	509,469

Balance, March 31, 2023	32,095,370	$	327	$	294,441	$	228,782	$	(62,175)	$	(11,277)	$	450,098

Net income	—	—		—		18,473		—		—		18,473
Other comprehensive loss	—	—		—		—		(8,487)		—		(8,487)
Stock-based compensation	—	—		434		—		—		—		434


Repurchase of common stock	(229,502)	—		—		—		—		(4,188)		(4,188)
Cash dividends and dividend equivalents ($0.17 per share)	—	—		—		(5,478)		—		—		(5,478)




Balance, June 30, 2023	31,865,868	$	327	$	294,875	$	241,777	$	(70,662)	$	(15,465)	$	450,852

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)
(Unaudited)


	Common Stock							Accumulated Other Comprehensive Income (Loss)				Total Stockholders’ Equity
(dollars in thousands, except per share data)	Shares Outstanding	Amount		Surplus		Retained Earnings				Treasury Stock

Balance, December 31, 2023	31,695,828	$	327	$	295,877	$	269,051	$	(57,163)	$	(18,596)	$	489,496
Cumulative effect of change in accounting principle (ASU 2023-02)	—	—		—		116		—		—		116
Net income	—	—		—		33,328		—		—		33,328
Other comprehensive income	—	—		—		—		2,507		—		2,507
Stock-based compensation	—	—		885		—		—		—		885
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings	96,341	1		(332)		—		—		—		(331)

Repurchase of common stock	(232,803)	—		—		—		—		(4,423)		(4,423)
Cash dividends and dividend equivalents ($0.38 per share)	—	—		—		(12,109)		—		—		(12,109)




Balance, June 30, 2024	31,559,366	$	328	$	296,430	$	290,386	$	(54,656)	$	(23,019)	$	509,469

Balance, December 31, 2022	28,752,626	$	293	$	222,783	$	232,004	$	(71,759)	$	(9,689)	$	373,632
Cumulative effect of change in accounting principle (ASU 2016-13)	—	—		—		(6,922)		—		—		(6,922)
Net income	—	—		—		27,681		—		—		27,681
Other comprehensive income	—	—		—		—		1,097		—		1,097
Stock-based compensation	—	—		951		—		—		—		951
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings	43,607	—		(181)		—		—		—		(181)
Issuance of common stock in Town and Country acquisition	3,378,600	34		71,322		—		—		—		71,356
Repurchase of common stock	(308,965)	—		—		—		—		(5,776)		(5,776)
Cash dividends and dividend equivalents ($0.34 per share)	—	—		—		(10,986)		—		—		(10,986)




Balance, June 30, 2023	31,865,868	$	327	$	294,875	$	241,777	$	(70,662)	$	(15,465)	$	450,852

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


	Six Months Ended June 30,
(dollars in thousands)	2024		2023

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	33,328	$	27,681
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	1,462		1,609
Provision for credit losses	1,703		5,980
Net amortization of debt securities	1,998		2,999
Deferred income tax expense	722		802
Stock-based compensation	885		951
Net accretion of discount and deferred loan fees on loans	(3,572)		(3,378)
Net realized loss on sales of securities	3,382		1,007
Net unrealized loss on equity securities	112		15
Net loss (gain) on disposals of bank premises and equipment	55		(32)
Net gain on sales of bank premises held for sale	—		(75)
Impairment losses on bank premises held for sale	580		—
Net gain on sales of foreclosed assets	(95)		(68)
Write-down of foreclosed assets	36		175
Amortization of intangibles	1,420		1,230
Decrease in mortgage servicing rights	17		483
Amortization of discount and issuance costs on subordinated notes and debentures	70		71
Amortization of discount on Federal Home Loan Bank advances	204		172

Amortization of premium on time deposits	(57)		(239)
Mortgage loans originated for sale	(28,101)		(35,682)
Proceeds from sale of mortgage loans	30,302		29,729
Net gain on sale of mortgage loans	(741)		(649)
Increase in cash surrender value of bank owned life insurance	(330)		(255)
Decrease in accrued interest receivable	2,109		2,719
Decrease (increase) in other assets	(4,937)		4,864
Increase (decrease) in other liabilities	6,017		(3,978)
Net cash provided by operating activities	46,569		36,131

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of interest-bearing time deposits with banks	—		249
Purchase of interest-bearing time deposits with banks	(11)		—
Proceeds from sales of debt securities	66,812		145,844
Proceeds from sales and redemptions of equity securities	58		—
Proceeds from paydowns, maturities, and calls of debt securities	58,497		50,540
Purchase of debt securities	(27,753)		(2,640)
Purchase of equity securities	(146)		(345)
Purchase of loans	(4,448)		(36,964)
Net decrease in loans	26,101		51,609
Purchase of restricted stock	—		(11,622)
Proceeds from redemption of restricted stock	2,074		11,064
Purchases of bank premises and equipment	(2,975)		(1,495)
Proceeds from sales of bank premises and equipment	—		151
Proceeds from sales of bank premises held for sale	—		310
Proceeds from sales of foreclosed assets	965		284

Net cash paid for acquisition of Town and Country	—		(14,454)

Net cash provided by investing activities	119,174		192,531

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)


	Six Months Ended June 30,
(dollars in thousands)	2024		2023

CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits	(82,687)		(142,679)
Net decrease in repurchase agreements	(13,112)		(4,352)
Net increase (decrease) in Federal Home Loan Bank advances	907		(69,039)
Taxes paid related to the vesting of restricted stock units	(331)		(181)
Repurchase of common stock	(4,423)		(5,776)
Cash dividends and dividend equivalents paid	(12,109)		(10,986)
Net cash used in financing activities	(111,755)		(233,013)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	53,988		(4,351)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	141,252		114,159
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	195,240	$	109,808

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	31,206	$	11,815
Net cash paid for income taxes	$	9,801	$	8,997

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES
Transfers of loans to foreclosed assets	$	374	$	170

Transfers of bank premises and equipment to bank premises held for sale	$	317	$	35

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – ACCOUNTING POLICIES

Basis of Presentation

HBT Financial, Inc. (“HBT Financial” or the “Company”) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (“Heartland Bank” or the “Bank”). The Bank provides a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. Additionally, the Company is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) interim reporting requirements. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to rules and regulations of the SEC. These interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 6, 2024.

The unaudited consolidated financial statements include all normal, recurring adjustments necessary for a fair presentation of the results for the interim periods. The results for interim periods are not necessarily indicative of results for a full year.

The Company qualifies as an "emerging growth company" as defined by the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act permits emerging growth companies an extended transition period for complying with new or revised accounting standards affecting public companies. The Company may remain an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which is December 31, 2024, (2) the last day of the fiscal year in which the Company has $1.235 billion or more in annual revenues, (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or (4) the date on which the Company has, during the previous three year period, issued, publicly or privately, more than $1.0 billion in non-convertible debt securities. The Company has elected to use the extended transition period until the Company is no longer an emerging growth company or until the Company chooses to affirmatively and irrevocably opt out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies.

Use of Estimates

The accompanying consolidated financial statements have been prepared in conformity with GAAP. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and the reported results of operations for the periods then ended.

Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for credit losses.

Low Income Housing Tax Credits

The Company holds an ownership interest in a limited liability company, as a limited partner, that invests in affordable housing projects. This investment is designed to generate a return primarily through the realization of federal tax credits and deductions, which may be subject to recapture by taxing authorities if compliance requirements are not met. The Company accounts for its low income housing investments using the proportional amortization method.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The Company’s investment in the qualified affordable housing project meets the definition of a variable interest entity ("VIE") as the entity is structured such that the limited partner investors lack substantive voting rights. The managing member has both the power to direct the activities that most significantly impact the economic performance of the entity and the obligation to absorb losses or the right to receive benefits that could be significant to the entity. Accordingly, the Company is not the primary beneficiary and is not required to consolidate this entity. The Company's maximum exposure to loss is limited to the carrying amount of the investment, which was $7.3 million as of June 30, 2024.

Segment Reporting

The Company’s operations consist of one reportable segment. The Company’s chief operating decision maker evaluates the operations of the Company using consolidated information for purposes of allocating resources and assessing performance.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation without any impact on the reported amounts of net income or stockholders’ equity.

Subsequent Events

In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.

Impact of Recently Adopted Accounting Standards

On January 1, 2024, the Company adopted ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323). ASU 2023-02 permits an election to use the proportional amortization method to account for equity investments made primarily for the purpose of receiving income tax credits and other income tax benefits, regardless of the tax credit program from which the income tax credits are received, provided that certain conditions are met. The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the income statement as a component of income tax expense. The Company adopted ASU 2023-02 using the modified retrospective method. The Company recorded a $0.1 million increase to retained earnings and decrease to deferred tax liability, as well as a $7.2 million increase to other assets and other liabilities, as a result of the adoption.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that contractual sale restrictions cannot be recognized and measured as a separate unit of account. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. This standard did not have an impact on the Company’s consolidated results of operations or financial position.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. ASU 2022-01 replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. ASU 2022-01 also provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted. This standard did not have an impact on the Company’s consolidated results of operations or financial position.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 expands disclosure requirements for significant segment expenses under Topic 280. The amendments require public entities to disclose significant expense categories for each reportable segment, other segment items, the title and position of the chief operating decision-maker, and interim disclosures of certain segment-related information previously required only on an annual basis. The amendments clarify that entities reporting single segments must disclose both the new and existing segment disclosures under Topic 280, and a public entity is permitted to disclose multiple measures of segment profit or loss if certain criteria are met. The amendments in this update are effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024. ASU 2023-07 must be applied on a retrospective basis. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 expands income tax disclosure requirements. The amendments require annual disclosure of certain information relating to the rate reconciliation, income taxes paid by jurisdiction, income (loss) from continuing operations before income tax expense (benefit) disaggregated between domestic and foreign, income tax expense (benefit) from continuing operations disaggregated by federal (national), state, and foreign. The amendments also eliminate certain requirements relating to unrecognized tax benefits and certain deferred tax disclosure relating to subsidiaries and corporate joint ventures. The amendments in this update are effective for years beginning after December 15, 2024. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 2 – ACQUISITIONS

Town and Country Financial Corporation

On February 1, 2023, HBT Financial acquired 100% of the issued and outstanding common stock of Town and Country Financial Corporation (“Town and Country”), the holding company for Town and Country Bank, pursuant to an Agreement and Plan of Merger dated August 23, 2022. Under the Agreement and Plan of Merger, Town and Country merged with and into HBT Financial, with HBT Financial as the surviving entity, immediately followed by the merger of Town and Country Bank with and into Heartland Bank, with Heartland Bank as the surviving entity.

At the effective time of the merger, each share of Town and Country was converted into the right to receive, subject to the election and proration procedures as provided in the Merger Agreement, one of the following: (i) 1.9010 shares of HBT Financial’s common stock, or (ii) $35.66 in cash, or (iii) a combination of cash and HBT Financial common stock. Total consideration consisted of 3,378,600 shares of HBT Financial’s common stock and $38.0 million in cash. In lieu of fractional shares, holders of Town and Country common stock received cash. Based upon the closing price of HBT Financial common stock of $21.12 on February 1, 2023, the aggregate transaction value was approximately $109.4 million.

This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the date of acquisition. Fair values are subject to refinement for up to one year after the closing date of February 1, 2023. Measurement period adjustments of $0.1 million were recorded in the third quarter of 2023 as more information became available regarding Town and Country's tax assets and liabilities. Goodwill of $30.5 million was recorded in the acquisition, which reflects expected synergies from combining the operations of HBT Financial and Town and Country, and is nondeductible for tax purposes.

The acquisition of Town and Country further enhanced HBT Financial’s footprint in central Illinois, and expanded our footprint into metro-east St. Louis. No expenses were incurred related to the acquisition of Town and Country for the three and six months ended June 30, 2024. During the three and six months ended June 30, 2023, HBT Financial incurred the following expenses related to the acquisition of Town and Country:


(dollars in thousands)	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023

PROVISION FOR CREDIT LOSSES	$	—	$	5,924
NONINTEREST EXPENSE
Salaries	66		3,584


Furniture and equipment	39		39
Data processing	176		2,031
Marketing and customer relations	10		24


Loan collection and servicing	125		125

Legal fees and other noninterest expense	211		1,964
Total noninterest expense	627		7,767
Total Town and Country acquisition-related expenses	$	627	$	13,691

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The fair value of the assets acquired and liabilities assumed from Town and Country on the acquisition date of February 1, 2023 were as follows (dollars in thousands):


	Fair Value
Assets acquired:
Cash and cash equivalents	$	23,542
Interest-bearing time deposits with banks	249
Debt securities	167,869
Equity securities	301
Restricted stock	2,822
Loans held for sale	1,612

Loans, before allowance for credit losses	635,376
Allowance for credit losses	(1,247)
Loans, net of allowance for credit losses	634,129

Bank owned life insurance	15,782
Bank premises and equipment	14,828
Foreclosed assets	271
Intangible assets	22,282
Mortgage servicing rights	10,469
Investments in unconsolidated subsidiaries	449
Accrued interest receivable	3,113
Other assets	8,940
Total assets acquired	906,658

Liabilities assumed:
Deposits	720,417
FHLB advances	86,439
Junior subordinated debentures	14,949
Other liabilities	5,999
Total liabilities assumed	827,804
Net assets acquired	$	78,854

Consideration paid:
Cash	$	37,996
Common stock	71,356
Total consideration paid	$	109,352

Goodwill	$	30,498

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Of the loans acquired, there were $89.8 million which exhibited more-than-insignificant credit deterioration on the acquisition date. The following table provides a summary of these PCD loans at acquisition (dollars in thousands):


Unpaid principal balance	$	89,822
Allowance for credit losses at acquisition	(1,247)
Non-credit discount	(2,218)
Purchase price	$	86,357

Additionally, subsequent to the Town and Country acquisition, HBT Financial recognized an allowance for credit losses on non-PCD loans of $5.2 million and an allowance for credit losses on unfunded commitments of $0.7 million through an increase to the provision for credit losses.

The following table provides the pro forma information for the results of operations for the three and six months ended June 30, 2023 as if the acquisition of Town and Country had occurred on January 1, 2022. The pro forma results combine the historical results of Town and Country into HBT Financial’s consolidated statements of income, including the impact of certain acquisition accounting adjustments, which include loan discount accretion, intangible assets amortization, deposit premium amortization, and borrowing premium amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2022. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for credit losses, expense efficiencies or asset dispositions. The acquisition-related expenses that have been recognized are included in net income in the following table.


	Pro Forma

(dollars in thousands, except per share data)	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Total revenues (net interest income and noninterest income)	$	58,786	$	116,556
Net income	18,185		28,200
Earnings per share - basic	0.57		0.89
Earnings per share - diluted	0.57		0.88

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 3 – SECURITIES

Debt Securities

The amortized cost and fair values of debt securities, with gross unrealized gains and losses and allowance for credit losses, are as follows:


	June 30, 2024
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value

Available-for-sale:
U.S. Treasury	$	139,693	$	—	$	(10,918)	$	—	$	128,775
U.S. government agency	57,308		—		(3,319)		—		53,989
Municipal	155,980		—		(21,852)		—		134,128
Mortgage-backed:
Agency residential	191,521		147		(14,946)		—		176,722
Agency commercial	136,367		2		(14,153)		—		122,216
Corporate	57,698		—		(4,473)		—		53,225
Total available-for-sale	$	738,567	$	149	$	(69,661)	$	—	$	669,055

	June 30, 2024
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Allowance for Credit Losses

Held-to-maturity:
U.S. government agency	$	88,460	$	—	$	(9,223)	$	79,237	$	—
Municipal	36,950		38		(601)		36,387		—
Mortgage-backed:
Agency residential	90,992		—		(6,689)		84,303		—
Agency commercial	296,147		—		(42,321)		253,826		—
Total held-to-maturity	$	512,549	$	38	$	(58,834)	$	453,753	$	—

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


	December 31, 2023
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value

Available-for-sale:
U.S. Treasury	$	159,715	$	—	$	(11,093)	$	—	$	148,622
U.S. government agency	55,359		—		(3,262)		—		52,097
Municipal	229,030		26		(23,499)		—		205,557
Mortgage-backed:
Agency residential

HBT Financial, Inc. [HBT] Filings
10-Q	[2024-08-01]
10-Q	[2024-05-01]
10-K	[2024-03-06]
10-Q	[2023-11-03]
10-Q	[2023-08-02]
10-Q	[2023-05-03]
10-K	[2023-03-08]
10-Q	[2022-11-08]
10-Q	[2022-08-03]
10-Q	[2022-05-06]
10-K	[2022-03-11]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-12]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-12]
10-K	[2020-03-27]
10-Q	[2019-11-20]
S-1	[2019-09-13]