HBT Financial, Inc. Announces Third Quarter 2020 Financial Results

October 26, 2020 at 7:05 AM EDT

Third Quarter Highlights

  • Net income of $10.6 million, or $0.38 per diluted share; return on average assets (ROAA) of 1.20%; return on average stockholders' equity (ROAE) of 11.83%; and return on average tangible common equity (ROATCE)(1) of 12.80%

  • Adjusted net income(1) of $10.8 million; or $0.39 per diluted share, adjusted ROAA(1) of 1.22%; adjusted ROAE(1) of 12.04%; and adjusted ROATCE(1) of 13.03%
  

(1)  See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.

BLOOMINGTON, Ill., Oct. 26, 2020 (GLOBE NEWSWIRE) -- HBT Financial, Inc. (NASDAQ: HBT) (the “Company” or “HBT Financial”), the holding company for Heartland Bank and Trust Company and State Bank of Lincoln, today reported net income of $10.6 million, or $0.38 diluted earnings per share, for the third quarter of 2020. This compares to net income of $7.4 million, or $0.27 diluted earnings per share, for the second quarter of 2020, and net income of $17.4 million, or $0.97 diluted earnings per share, for the third quarter of 2019.

Fred L. Drake, Chairman and Chief Executive Officer of HBT Financial, said, “We delivered solid results in the third quarter despite the challenges presented by the low interest rate environment and economic uncertainty. Our banks have long prioritized safety and soundness, disciplined growth, and consistent through-the-cycle profitability, and I am pleased to see this focus maintained as we completed our first year as a public company earlier this month. While we remain conservative in building our loan loss reserves to address possible credit deterioration as the pandemic continues, we are encouraged by the stability we are seeing in asset quality, which reflects the strength of our borrowers and our conservative approach to credit. Our nonperforming loans are down from a year ago and our annualized net charge-offs through the first nine months of 2020 amounted to just 0.04% of average loans. In addition, our COVID-19 loan modifications declined by 82% to $36 million, or just 1.6% of our total loans, at the end of the third quarter. With ample liquidity and capital levels, strong asset quality, and a stable deposit base, we are well positioned to continue supporting our customers and communities through this crisis while generating solid results for our shareholders.”

C Corp Equivalent Net Income

Prior to October 11, 2019, the Company operated as an S Corporation for U.S. federal and state income tax purposes. Effective October 11, 2019, the Company voluntarily revoked its S Corporation status and became a taxable entity (C Corporation). As such, any periods prior to October 11, 2019 only reflect state replacement taxes. To facilitate comparison, the Company reports its C Corp equivalent financial results, which do not reflect the additional shares issued in the initial public offering (the “IPO”) for periods prior to the IPO.

The Company reported C Corp equivalent net income of $13.1 million, or $0.73 diluted earnings per share, for the third quarter of 2019.

Adjusted Net Income

In addition to reporting C Corp equivalent results, the Company believes adjusted net income and adjusted earnings per share, which adjust for the additional C Corp equivalent tax expense for periods prior to October 11, 2019, net earnings (losses) from closed or sold operations, charges related to termination of certain employee benefit plans, realized gains (losses) on sales of securities, and mortgage servicing rights (“MSR”) fair value adjustments, provide investors with additional insight into its operational performance. The Company reported adjusted net income of $10.8 million, or $0.39 adjusted diluted earnings per share, for the third quarter of 2020. This compares to adjusted net income of $8.2 million, or $0.30 adjusted diluted earnings per share, for the second quarter of 2020, and adjusted net income of $14.3 million, or $0.80 adjusted diluted earnings per share, for the third quarter of 2019 (see "Reconciliation of Non-GAAP Financial Measures" tables).

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2020 was $28.9 million, nearly unchanged from the second quarter of 2020 as growth in average interest-earning assets was largely offset by lower yields on loans and securities.

Relative to the third quarter of 2019, net interest income decreased $4.3 million, or 12.9%. The decline was primarily attributable to lower yields on average interest-earning assets.

Net interest margin for the third quarter of 2020 was 3.39% compared to 3.51% for the second quarter of 2020. The decrease was primarily attributable to the decline in the average yield on earning assets, partially due to the addition of lower yielding Paycheck Protection Program (PPP) loans. The contribution of acquired loan discount accretion to net interest margin remained low at 2 basis points during the third quarter of 2020 compared to less than 1 basis point during the second quarter of 2020.

Relative to the third quarter of 2019, net interest margin decreased from 4.27%. The decrease was due primarily to the decline in the average yield on earning assets. The contribution of acquired loan discount accretion to net interest margin was 4 basis points during the third quarter of 2019.

Noninterest Income

Noninterest income for the third quarter of 2020 was $10.1 million, an increase of 24.7% from $8.1 million for the second quarter of 2020. The increase was primarily attributable to a $1.0 million increase in gains on sale of mortgage loans attributable to a strong mortgage refinancing environment and a $0.4 million increase in service charges on deposit accounts. Third quarter 2020 results included a negative $0.3 million mortgage servicing rights (“MSR”) fair value adjustment compared to a negative $0.5 million fair value adjustment in the second quarter of 2020.

Relative to the third quarter of 2019, noninterest income increased 32.6% from $7.6 million. The increase was primarily attributable to higher gains on sale of mortgage loans and a less negative MSR fair value adjustment. Partially offsetting these increases was a $0.6 million decline in service charges on deposit accounts.

Noninterest Expense

Noninterest expense for the third quarter of 2020 was $22.5 million, a decrease of 4.3% from $23.5 million for the second quarter of 2020. The decrease was primarily attributable to lower employee benefits expense as second quarter of 2020 results included a $0.6 million charge related to the termination of the supplemental executive retirement plan (SERP) that was paid out in June 2020.

Relative to the third quarter of 2019, noninterest expense increased 0.8% from $22.3 million. Lower employee benefits expense, due to the termination and liquidation of the SERP, was more than offset by increases in salaries, FDIC insurance, and other noninterest expenses. Higher salaries expense was driven by increases in mortgage lender commissions and overtime for mortgage support personnel, as a result of increased residential mortgage origination volume.

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.28 billion at September 30, 2020, compared with $2.28 billion at June 30, 2020 and $2.17 billion at September 30, 2019. The $3.8 million increase in loans from June 30, 2020 was primarily attributable to an $18.1 million increase in construction and land development loans and a $13.0 million increase in multi-family loans being largely offset by a $19.0 million reduction in commercial and industrial loans, a $3.5 million decline in agricultural and farmland loans and a $3.2 million reduction in commercial real estate - owner occupied loans. The $71.1 million decrease in total loans outstanding, net of PPP loans from September 30, 2019 was primarily due to a $65.7 million reduction in participation loan balances.

Deposits

Total deposits were $3.02 billion at September 30, 2020 and at June 30, 2020, compared with $2.70 billion at September 30, 2019. Increases in interest-bearing demand and savings balances were substantially offset by declines in noninterest-bearing, money market and time deposit balances in the third quarter.

Asset Quality

Nonperforming loans totaled $15.2 million, or 0.67% of total loans, at September 30, 2020, compared with $14.0 million, or 0.61% of total loans, at June 30, 2020, and $19.1 million, or 0.88% of total loans, at September 30, 2019. The increase in nonperforming loans from the end of the prior quarter was primarily attributable to the movement of one $4.1 million loan to nonaccrual partially offset by reductions from the pay-off or pay-down on three relationships combined with a charge-down of one relationship.

The Company recorded a provision for loan losses of $2.2 million for the third quarter of 2020, which was primarily due to adjustments to qualitative factors to reflect changes in the economic environment.

Net charge-offs for the third quarter of 2020 were $0.2 million, or 0.04% of average loans on an annualized basis compared to net recoveries of $63 thousand, or 0.01% of average loans on an annualized basis, for the second quarter of 2020, and net charge-offs of $0.5 million, or 0.08% of average loans on an annualized basis, for the third quarter of 2019.

The Company’s allowance for loan losses was 1.39% of total loans and 208.14% of nonperforming loans at September 30, 2020, compared with 1.31% of total loans and 213.04% of nonperforming loans at June 30, 2020.

Capital

At September 30, 2020, the Company exceeded all regulatory capital requirements under Basel III and was considered to be “well-capitalized,” as summarized in the following table:

     
  Well Capitalized
 September 30, Regulatory
 2020Requirements
Total capital to risk-weighted assets 16.81%   10.00%
Tier 1 capital to risk-weighted assets 13.98%   8.00%
Common equity tier 1 capital ratio 12.52%   6.50%
Tier 1 leverage ratio 10.04%   5.00%
Total stockholders' equity to total assets 10.05%N/A 
Tangible common equity to tangible assets (1) 9.36%  N/A 


 

(1)  See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.

Subordinated Note Issuance

To further enhance the Company’s strong capital and liquidity positions, HBT Financial successfully completed a private placement of $40.0 million 4.50% Fixed-to-Floating Rate Subordinated Notes due 2030 during the quarter. This issuance of subordinated notes, which qualify as Tier 2 regulatory capital, contributed to an increase in HBT Financial’s total risk based capital ratio, which was 16.81% at September 30, 2020, compared to 15.13% at June 30, 2020, while also significantly bolstering the cash reserves held at the holding company.

Annualization Factor

The method used to calculate annualization factors for interim period ratios has changed from financial information previously presented. The annualization factor is now calculated using the number of days in the year divided by the number of days in the interim period. Previously, annualization factors were calculated as 4 divided by the number of quarters in the interim period, or an annualization factor of 4 for a quarterly period. The change was applied retrospectively to all periods presented and did not have a material impact on the annualized interim ratios.

About HBT Financial, Inc.

HBT Financial, Inc. is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company and State Bank of Lincoln. The banks provide a comprehensive suite of business, commercial, wealth management, and retail banking products and services to individuals, businesses and municipal entities throughout Central and Northeastern Illinois through 63 branches. As of September 30, 2020, HBT had total assets of $3.5 billion, total loans of $2.3 billion, and total deposits of $3.0 billion. HBT is a longstanding Central Illinois company, with banking roots that can be traced back 100 years.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include net interest income (tax-equivalent basis), net interest margin (tax-equivalent basis), originated loans and acquired loans and any ratios derived therefrom, efficiency ratio (tax-equivalent basis), tangible common equity to tangible assets, tangible book value per share, adjusted net income, adjusted return on average assets, adjusted return on average stockholders' equity, and adjusted return on average tangible common equity. Our management uses these non-GAAP financial measures, together with the related GAAP financial measures, in its analysis of our performance and in making business decisions. Management believes that it is a standard practice in the banking industry to present these non-GAAP financial measures, and accordingly believes that providing these measures may be useful for peer comparison purposes. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP; nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures in the "Reconciliation of Non-GAAP Financial Measures" tables.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals, future earnings levels, and future loan growth. These statements are subject to many risks and 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 these forward-looking statements include, but are not limited to: the severity, magnitude and duration of the COVID-19 pandemic; the direct and indirect impacts of the COVID-19 pandemic and governmental responses to the pandemic on our operations and our customers’ businesses; the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect our capital levels and earnings, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses; our asset quality and any loan charge-offs; changes in interest rates and general economic, business and political conditions in the United States generally or in Illinois in particular, including in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe" or "continue," or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACT:
Matthew Keating
HBTIR@hbtbank.com
(310) 622-8230


HBT Financial, Inc.
Consolidated Financial Summary
Consolidated Statements of Income

                
  Three Months Ended  Nine Months Ended
  September 30,  June 30,  September 30,  September 30, 
     2020     2020     2019     2020     2019 
   
INTEREST AND DIVIDEND INCOME (dollars in thousands, except per share amounts)
Loans, including fees:               
Taxable $ 25,118  $ 25,337  $ 29,308  $ 77,396  $ 89,257 
Federally tax exempt   542    532    684    1,748    2,130 
Securities:               
Taxable   3,266    3,172    3,572    9,772    11,295 
Federally tax exempt   1,233    1,227    1,395    3,488    4,459 
Interest-bearing deposits in bank   65    79    662    873    1,948 
Other interest and dividend income   14    14    15    42    46 
Total interest and dividend income   30,238    30,361    35,636    93,319    109,135 
                
INTEREST EXPENSE               
Deposits   843    1,042    2,000    3,480    6,094 
Securities sold under agreements to repurchase   9    11    17    40    48 
Borrowings   1    1    —    2    7 
Subordinated notes   147    —    —    147    — 
Junior subordinated debentures issued to capital trusts   367    399    478    1,209    1,462 
Total interest expense   1,367    1,453    2,495    4,878    7,611 
Net interest income   28,871    28,908    33,141    88,441    101,524 
PROVISION FOR LOAN LOSSES   2,174    3,573    684    10,102    3,266 
Net interest income after provision for loan losses   26,697    25,335    32,457    78,339    98,258 
                
NONINTEREST INCOME               
Card income   2,146    1,998    1,985    5,936    5,813 
Service charges on deposit accounts   1,493    1,133    2,111    4,460    5,805 
Wealth management fees   1,646    1,507    1,676    4,967    4,916 
Mortgage servicing   724    727    795    2,175    2,342 
Mortgage servicing rights fair value adjustment   (268)   (508)   (860)   (2,947)   (2,982)
Gains on sale of mortgage loans   3,184    2,135    992    5,855    2,177 
Gains (losses) on securities   (2)   57    (73)   3    42 
Gains (losses) on foreclosed assets   27    58    (20)   120    132 
Gains (losses) on other assets   1    (69)   (29)   (71)   1,244 
Title insurance activity   —    —    —    —    167 
Other noninterest income   1,101    1,022    1,005    2,866    2,759 
Total noninterest income   10,052    8,060    7,582    23,364    22,415 
                
NONINTEREST EXPENSE               
Salaries   12,595    12,674    12,303    38,023    36,422 
Employee benefits   1,666    2,455    2,253    6,555    8,220 
Occupancy of bank premises   1,609    1,642    1,785    5,079    5,260 
Furniture and equipment   679    609    545    1,891    2,050 
Data processing   1,583    1,672    1,471    4,841    4,023 
Marketing and customer relations   690    817    801    2,551    2,837 
Amortization of intangible assets   305    305    335    927    1,087 
FDIC insurance   222    218    8    476    435 
Loan collection and servicing   450    494    547    1,292    1,901 
Foreclosed assets   226    88    196    403    525 
Other noninterest expense   2,460    2,525    2,059    7,253    6,316 
Total noninterest expense   22,485    23,499    22,303    69,291    69,076 
INCOME BEFORE INCOME TAX EXPENSE   14,264    9,896    17,736    32,412    51,597 
INCOME TAX EXPENSE   3,701    2,477    299    8,209    819 
NET INCOME $ 10,563  $ 7,419  $ 17,437  $ 24,203  $ 50,778 
                
EARNINGS PER SHARE - BASIC $ 0.38  $ 0.27  $ 0.97  $ 0.88  $ 2.82 
EARNINGS PER SHARE - DILUTED $ 0.38  $ 0.27  $ 0.97  $ 0.88  $ 2.82 
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING   27,457,306    27,457,306    18,027,512    27,457,306    18,027,512 
                
PRO FORMA C CORP EQUIVALENT INFORMATION               
Historical income before income tax expense       $ 17,736     $ 51,597 
Pro forma C Corp equivalent income tax expense         4,614       13,313 
Pro forma C Corp equivalent net income       $ 13,122     $ 38,284 
                
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - BASIC       $ 0.73     $ 2.12 
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - DILUTED       $ 0.73     $ 2.12 
 

 

HBT Financial, Inc.
Consolidated Financial Summary
Consolidated Balance Sheets

          
     September 30,  June 30,    September 30, 
     2020     2020     2019 
   
  (dollars in thousands)
ASSETS         
Cash and due from banks $ 22,347  $ 21,789  $ 19,969 
Interest-bearing deposits with banks   214,377    292,576    134,972 
Cash and cash equivalents   236,724    314,365    154,941 
          
Interest-bearing time deposits with banks   —    —    248 
Debt securities available-for-sale, at fair value   814,798    701,353    618,120 
Debt securities held-to-maturity   74,510    73,823    99,861 
Equity securities   4,814    4,815    4,436 
Restricted stock, at cost   2,498    2,498    2,425 
Loans held for sale   23,723    25,934    7,608 
          
Loans, before allowance for loan losses   2,279,639    2,275,795    2,171,014 
Allowance for loan losses   (31,654)   (29,723)   (22,761)
Loans, net of allowance for loan losses   2,247,985    2,246,072    2,148,253 
          
Bank premises and equipment, net   53,271    53,883    54,105 
Bank premises held for sale   121    121    121 
Foreclosed assets   3,857    4,450    6,574 
Goodwill   23,620    23,620    23,620 
Core deposit intangible assets, net   3,103    3,408    4,366 
Mortgage servicing rights, at fair value   5,571    5,839    7,936 
Investments in unconsolidated subsidiaries   1,165    1,165    1,165 
Accrued interest receivable   13,820    12,661    14,816 
Other assets   25,643    27,405    18,018 
Total assets $ 3,535,223  $ 3,501,412  $ 3,166,613 
          
LIABILITIES AND STOCKHOLDERS' EQUITY         
Liabilities         
Deposits:         
Noninterest-bearing $ 850,306  $ 856,030  $ 649,316 
Interest-bearing   2,166,355    2,159,083    2,054,742 
Total deposits   3,016,661    3,015,113    2,704,058 
          
Securities sold under agreements to repurchase   45,438    51,354    32,267 
Subordinated notes   39,218    —    — 
Junior subordinated debentures issued to capital trusts   37,632    37,616    37,566 
Other liabilities   40,980    49,489    43,786 
Total liabilities   3,179,929    3,153,572    2,817,677 
          
Stockholders' Equity         
Common stock   275    275    181 
Surplus   190,787    190,687    32,288 
Retained earnings   146,101    139,667    311,055 
Accumulated other comprehensive income   18,131    17,211    8,431 
Less cost of treasury stock held   —    —    (3,019)
Total stockholders’ equity   355,294    347,840    348,936 
Total liabilities and stockholders’ equity $ 3,535,223  $ 3,501,412  $ 3,166,613 
          
SHARE INFORMATION         
Ending number shares of common stock outstanding   27,457,306    27,457,306    18,027,512 
             

 

HBT Financial, Inc.
Consolidated Financial Summary

          
     September 30,  June 30,    September 30, 
     2020    2020    2019
   
  (dollars in thousands)
LOANS         
Commercial and industrial $ 389,231 $ 408,230 $ 340,650
Agricultural and farmland   235,597   239,101   205,041
Commercial real estate - owner occupied   225,345   228,506   239,805
Commercial real estate - non-owner occupied   532,454   535,339   552,262
Multi-family   199,441   186,440   191,646
Construction and land development   265,758   247,640   210,939
One-to-four family residential   308,365   308,133   321,947
Municipal, consumer, and other   123,448   122,406   108,724
Loans, before allowance for loan losses $ 2,279,639 $ 2,275,795 $ 2,171,014
          
PPP LOANS (included above)         
Commercial and industrial $ 168,466 $ 166,868 $ —
Agricultural and farmland   4,179   4,027   —
Municipal, consumer, and other   7,095   7,063   —
Total PPP Loans $ 179,740 $ 177,958 $ —


          
  September 30,  June 30,    September 30, 
     2020    2020    2019
   
  (dollars in thousands)
DEPOSITS         
Noninterest-bearing $ 850,306 $ 856,030 $ 649,316
Interest-bearing demand   885,719   880,007   800,471
Money market   475,047   480,497   463,444
Savings   497,682   487,761   426,707
Time   307,907   310,818   364,120
Total deposits $ 3,016,661 $ 3,015,113 $ 2,704,058
 

 

HBT Financial, Inc.
Consolidated Financial Summary

                          
  Three Months Ended  
  September 30, 2020 June 30, 2020 September 30, 2019 
     Average               Average               Average            
  Balance Interest Yield/Cost * Balance Interest Yield/Cost * Balance Interest Yield/Cost * 
    
  (dollars in thousands) 
ASSETS                         
Loans $ 2,277,826  $ 25,660  4.48%  $ 2,265,032  $ 25,869  4.59%  $ 2,191,230  $ 29,992  5.43%
Securities   831,120    4,499  2.15   721,817    4,399  2.45   745,532    4,967  2.64 
Deposits with banks   274,022    65  0.09   326,216    79  0.10   136,635    662  1.93 
Other   2,498    14  2.29   2,496    14  2.21   2,425    15  2.35 
Total interest-earning assets   3,385,466  $ 30,238  3.55%    3,315,561  $ 30,361  3.68%    3,075,822  $ 35,636  4.60%
Allowance for loan losses   (30,221)        (26,125)        (22,326)      
Noninterest-earning assets   157,446         163,713         149,146       
Total assets $ 3,512,691       $ 3,453,149       $ 3,202,642       
                          
LIABILITIES AND STOCKHOLDERS' EQUITY                         
Liabilities                         
Interest-bearing deposits:                         
Interest-bearing demand $ 888,941  $ 123  0.05%  $ 860,131  $ 162  0.08%  $ 812,526  $ 347  0.17%
Money market   479,314    96  0.08   477,441    118  0.10   468,139    497  0.42 
Savings   493,278    37  0.03   474,609    50  0.04   428,447    70  0.06 
Time   306,154    587  0.76   317,965    712  0.90   383,070    1,086  1.12 
Total interest-bearing deposits   2,167,687    843  0.15   2,130,146    1,042  0.20   2,092,182    2,000  0.38 
Securities sold under agreements to repurchase   51,686    9  0.06   53,867    11  0.08   35,757    17  0.18 
Borrowings   1,196    1  0.47   2,582    1  0.03   33    —  2.40 
Subordinated notes   11,976    147  4.87   —    —  —   —    —  — 
Junior subordinated debentures issued to capital trusts   37,621    367  3.89   37,605    399  4.26   37,561    478  5.05 
Total interest-bearing liabilities   2,270,166  $ 1,367  0.24%    2,224,200  $ 1,453  0.26%    2,165,533  $ 2,495  0.46%
Noninterest-bearing deposits   846,808          824,232           651,085         
Noninterest-bearing liabilities   40,421          58,177           37,274         
Total liabilities   3,157,395          3,106,609           2,853,892         
Stockholders' Equity   355,296          346,540           348,750         
Total liabilities and stockholders’ equity $ 3,512,691        $ 3,453,149         $ 3,202,642         
                          
Net interest income/Net interest margin (3)    $ 28,871  3.39%     $ 28,908  3.51%     $ 33,141  4.27%  
Tax-equivalent adjustment (2)      495  0.06      483  0.06      559  0.08 
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)    $ 29,366  3.45%     $ 29,391  3.57%     $ 33,700  4.35%  
Net interest rate spread (4)        3.31%           3.42%           4.14%  
Net interest-earning assets (5) $ 1,115,300        $ 1,091,361         $ 910,289         
Ratio of interest-earning assets to interest-bearing liabilities   1.49          1.49           1.42         
Cost of total deposits        0.11%           0.14%           0.29%  


 

*  Annualized measure.
(1)  See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.
(2)  On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3)  Net interest margin represents net interest income divided by average total interest-earning assets.
(4)  Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5)  Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.


HBT Financial, Inc.
Consolidated Financial Summary

                  
  Nine Months Ended  
  September 30, 2020 September 30, 2019 
     Average              Average           
  Balance Interest Yield/Cost * Balance Interest Yield/Cost * 
   
  (dollars in thousands)
ASSETS                 
Loans $ 2,228,145  $ 79,144  4.74%  $ 2,184,263  $ 91,387  5.59%
Securities   740,834    13,260  2.39   779,375    15,754  2.70 
Deposits with banks   283,730    873  0.41   131,209    1,948  1.99 
Other   2,473    42  2.29   2,527    46  2.42 
Total interest-earning assets   3,255,182  $ 93,319  3.83%    3,097,374  $ 109,135  4.71%
Allowance for loan losses   (26,288)         (21,346)        
Noninterest-earning assets   156,121          147,972         
Total assets $ 3,385,015        $ 3,224,000         
                  
LIABILITIES AND STOCKHOLDERS' EQUITY                       
Liabilities                       
Interest-bearing deposits:                       
Interest-bearing demand $ 853,775  $ 536  0.08%  $ 821,848  $ 1,175  0.19%
Money market   473,647    608  0.17   455,469    1,356  0.40 
Savings   467,482    157  0.04   428,865    207  0.06 
Time   321,905    2,179  0.90   408,972    3,356  1.10 
Total interest-bearing deposits   2,116,809    3,480  0.22   2,115,154    6,094  0.39 
Securities sold under agreements to repurchase   49,183    40  0.11   39,542    48  0.16 
Borrowings   1,333    2  0.19   378    7  2.61 
Subordinated notes   4,021    147  4.87   —    —  — 
Junior subordinated debentures issued to capital trusts   37,605    1,209  4.30   37,544    1,462  5.21 
Total interest-bearing liabilities   2,208,951  $ 4,878  0.29%    2,192,618  $ 7,611  0.46%
Noninterest-bearing deposits   780,826          654,818         
Noninterest-bearing liabilities   47,426          31,720         
Total liabilities   3,037,203          2,879,156         
Stockholders' Equity   347,812          344,844         
Total liabilities and stockholders’ equity $ 3,385,015          3,224,000         
                  
Net interest income/Net interest margin (3)    $ 88,441  3.63%     $ 101,524  4.38%  
Tax-equivalent adjustment (2)      1,441  0.06      1,775  0.08 
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)    $ 89,882  3.69%     $ 103,299  4.46%  
Net interest rate spread (4)        3.54%           4.25%
Net interest-earning assets (5) $ 1,046,231        $ 904,756         
Ratio of interest-earning assets to interest-bearing liabilities   1.47          1.41         
Cost of  total deposits        0.16%           0.29%  


 

*  Annualized measure.
(1)  See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.
(2)  On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3)  Net interest margin represents net interest income divided by average total interest-earning assets.
(4)  Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5)  Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.


HBT Financial, Inc.
Consolidated Financial Summary

           
  September 30,  June 30,  September 30,  
     2020    2020    2019 
    
  (dollars in thousands) 
NONPERFORMING ASSETS          
Nonaccrual $ 15,191 $ 13,945 $ 18,977 
Past due 90 days or more, still accruing (1)   17   7   95 
Total nonperforming loans   15,208   13,952   19,072 
Foreclosed assets   3,857   4,450   6,574 
Total nonperforming assets $ 19,065 $ 18,402 $ 25,646 
           
NONPERFORMING ASSETS (Originated) (2)             
Nonaccrual $ 10,179 $ 9,059 $ 11,268 
Past due 90 days or more, still accruing   17   7   95 
Total nonperforming loans (originated)   10,196   9,066   11,363 
Foreclosed assets   939   1,092   1,048 
Total nonperforming (originated) $ 11,135 $ 10,158 $ 12,411 
           
NONPERFORMING ASSETS (Acquired) (2)             
Nonaccrual $ 5,012 $ 4,886 $ 7,709 
Past due 90 days or more, still accruing (1)   —   —   — 
Total nonperforming loans (acquired)   5,012   4,886   7,709 
Foreclosed assets   2,918   3,358   5,526 
Total nonperforming assets (acquired) $ 7,930 $ 8,244 $ 13,235 
           
Allowance for loan losses $ 31,654 $ 29,723 $ 22,761 
           
Loans, before allowance for loan losses $ 2,279,639 $ 2,275,795 $ 2,171,014 
Loans, before allowance for loan losses (originated) (2)   2,148,074   2,132,189   1,987,265 
Loans, before allowance for loan losses (acquired) (2)   131,565   143,606   183,749 
           
CREDIT QUALITY RATIOS             
Allowance for loan losses to loans, before allowance for loan losses   1.39%    1.31%    1.05%
Allowance for loan losses to nonperforming loans   208.14   213.04   119.34 
Nonperforming loans to loans, before allowance for loan losses   0.67   0.61   0.88 
Nonperforming assets to total assets   0.54   0.53   0.81 
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets   0.83   0.81   1.18 
           
CREDIT QUALITY RATIOS (Originated) (2)             
Nonperforming loans to loans, before allowance for loan losses   0.47%    0.43%    0.57%
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets   0.52   0.48   0.62 
           
CREDIT QUALITY RATIOS (Acquired) (2)             
Nonperforming loans to loans, before allowance for loan losses   3.81%    3.40%    4.20%
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets   5.90   5.61   6.99 


 

(1)  Excludes loans acquired with deteriorated credit quality that are past due 90 or more days, still accruing totaling $30 thousand, $0.1 million, and $0.7 million as of September 30, 2020, June 30, 2020, and September 30, 2019, respectively.
(2)  Originated loans and acquired loans along with the related credit quality ratios such as nonperforming loans to loans, before allowance for loan losses (originated and acquired) and nonperforming assets to loans, before allowance for loan losses and foreclosed assets (originated and acquired) are non-GAAP financial measures. Originated loans represent loans initially originated by the Company and acquired loans that were refinanced using the Company’s underwriting criteria. Acquired loans represent loans originated under the underwriting criteria used by a bank that was acquired by Heartland Bank and Trust Company or State Bank of Lincoln. We believe these non-GAAP financial measures provide investors with information regarding the credit quality of loans underwritten using the Company’s policies and procedures.


HBT Financial, Inc.
Consolidated Financial Summary

                 
  Three Months Ended  Nine Months Ended  
  September 30,  June 30,  September 30,  September 30,  
     2020     2020
    2019     2020
    2019  
    
ALLOWANCE FOR LOAN LOSSES (dollars in thousands) 
Beginning balance $ 29,723  $ 26,087  $ 22,542  $ 22,299  $ 20,509  
Provision   2,174    3,573    684    10,102    3,266  
Charge-offs   (1,078)   (160)   (937)   (2,459)   (2,436) 
Recoveries   835    223    472    1,712    1,422  
Ending balance $ 31,654  $ 29,723  $ 22,761  $ 31,654  $ 22,761  
                 
Net charge-offs (recoveries) $ 243  $ (63) $ 465  $ 747  $ 1,014  
Net charge-offs (recoveries) - (originated) (1)   (20)   3    224    155    182  
Net charge-offs (recoveries) - (acquired) (1)   263    (66)   241    592    832  
                 
Average loans, before allowance for loan losses $ 2,277,826  $ 2,265,032  $ 2,191,230  $ 2,228,145  $ 2,184,263  
Average loans, before allowance for loan losses (originated) (1)   2,140,376    2,117,131    2,001,803    2,080,668    1,979,383  
Average loans, before allowance for loan losses (acquired) (1)   137,450    147,901    189,427    147,477    204,880  
                 
Net charge-offs to average loans, before allowance for loan losses *   0.04 %  (0.01)%  0.08 %  0.04 %  0.06 %
Net charge-offs to average loans, before allowance for loan losses (originated) * (1)   —    —    0.04    0.01    0.01  
Net charge-offs to average loans, before allowance for loan losses (acquired) * (1)   0.76    (0.18)   0.50    0.54    0.54  


 

*  Annualized measure.
(1)  Originated loans and acquired loans along with the related credit quality ratios such as net charge-offs (originated and acquired), average loans, before allowance for loan losses (originated and acquired), and net charge-offs to average loans, before allowance for loan losses (originated and acquired) are non-GAAP financial measures. Originated loans represent loans initially originated by the Company and acquired loans that were refinanced using the Company’s underwriting criteria. Acquired loans represent loans originated under the underwriting criteria used by a bank that was acquired by Heartland Bank and Trust Company or State Bank of Lincoln. We believe these non-GAAP financial measures provide investors with information regarding the credit quality of loans underwritten using the Company’s policies and procedures.


HBT Financial, Inc.
Consolidated Financial Summary

                 
  As of or for the Three Months Ended  Nine Months Ended  
  September 30,  June 30,  September 30,  September 30,  
     2020    2020    2019    2020    2019 
    
  (dollars in thousands, except per share amounts) 
EARNINGS AND PER SHARE INFORMATION                
Net income $ 10,563 $ 7,419 $ 17,437 $ 24,203 $ 50,778 
Earnings per share - Basic   0.38   0.27   0.97   0.88   2.82 
Earnings per share - Diluted   0.38   0.27   0.97   0.88   2.82 
                 
C Corp equivalent net income (1)  N/A  N/A $ 13,122  N/A $ 38,284 
C Corp equivalent earnings per share - Basic (1)  N/A  N/A   0.73  N/A   2.12 
C Corp equivalent earnings per share - Diluted (1)  N/A  N/A   0.73  N/A   2.12 
                 
Book value per share $ 12.94 $ 12.67 $ 19.36       
                 
Ending number shares of common stock outstanding   27,457,306   27,457,306   18,027,512       
Weighted average shares of common stock outstanding   27,457,306   27,457,306   18,027,512   27,457,306   18,027,512 
                 
SUMMARY RATIOS                
Net interest margin *   3.39%  3.51%  4.27%  3.63%  4.38%
Efficiency ratio   56.98   62.74   53.94   61.15   54.86 
Loan to deposit ratio   75.57   75.48   80.29       
                 
Return on average assets *   1.20%  0.86%  2.16%  0.96%  2.11%
Return on average stockholders' equity *   11.83   8.61   19.84   9.30   19.69 
                 
C Corp equivalent return on average assets * (1)  N/A  N/A   1.63% N/A   1.59%
C Corp equivalent return on average stockholders' equity * (1)  N/A  N/A   14.93  N/A   14.84 
                 
NON-GAAP FINANCIAL MEASURES                
Adjusted net income (2) $ 10,755 $ 8,218 $ 14,343 $ 27,352 $ 43,010 
Adjusted earnings per share - Basic (2)   0.39   0.30   0.80   0.99   2.39 
Adjusted earnings per share - Diluted (2)   0.39   0.30   0.80   0.99   2.39 
                 
Tangible book value per share (2) $ 11.97 $ 11.68 $ 17.80       
                 
Net interest margin (tax equivalent basis) * (2)   3.45%  3.57%  4.35%  3.69%  4.46%
Efficiency ratio (tax equivalent basis) (2)   56.27   61.93   53.21   60.37   54.08 
                 
Adjusted return on average assets * (2)   1.22%  0.96%  1.78%  1.08%  1.78%
Adjusted return on average stockholders' equity * (2)   12.04   9.54   16.32   10.50   16.68 
                 
Return on average tangible common equity * (2)   12.80%  9.34%  21.58%  10.08%  21.46%
C Corp equivalent return on average tangible common equity * (1) (2)  N/A  N/A   16.24  N/A   16.18 
Adjusted return on average tangible common equity * (2)   13.03   10.35   17.75   11.40   18.18 


 

*  Annualized measure.
(1)  Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
(2)  See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.
N/A  Not applicable.


Reconciliation of Non-GAAP Financial Measures –
Adjusted Net Income and Adjusted Return on Average Assets

                 
  Three Months Ended  Nine Months Ended  
  September 30,  June 30,  September 30,  September 30,  
     2020    2020    2019     2020    2019  
    
  (dollars in thousands) 
Net income $ 10,563  $ 7,419  $ 17,437  $ 24,203  $ 50,778  
C Corp equivalent adjustment (2)   —    —    (4,315)   —    (12,494) 
C Corp equivalent net income (2)   10,563    7,419    13,122    24,203    38,284  
Adjustments:                
Net earnings (losses) from closed or sold operations, including gains on sale (1)   —    —    (3)   —    533  
Charges related to termination of certain employee benefit plans   —    (609)   (845)   (1,457)   (4,161) 
Mortgage servicing rights fair value adjustment   (268)   (508)   (860)   (2,947)   (2,982) 
Total adjustments   (268)   (1,117)   (1,708)   (4,404)   (6,610) 
Tax effect of adjustments   76    318    487    1,255    1,884  
Less adjustments after tax effect   (192)   (799)   (1,221)   (3,149)   (4,726) 
Adjusted net income $ 10,755  $ 8,218  $ 14,343  $ 27,352  $ 43,010  
                 
Average assets $ 3,512,691  $ 3,453,149  $ 3,202,642  $ 3,385,015  $ 3,224,000  
                 
Return on average assets *  1.20 % 0.86 % 2.16 % 0.96   2.11 %
C Corp equivalent return on average assets * (2)  N/A   N/A   1.63   N/A   1.59  
Adjusted return on average assets *  1.22   0.96   1.78   1.08   1.78  


 

*  Annualized measure.
(1)  Closed or sold operations include HB Credit Company, HBT Insurance, and First Community Title Services, Inc.
(2)  Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
N/A  Not applicable.


Reconciliation of Non-GAAP Financial Measures –
Adjusted Earnings Per Share

                
  Three Months Ended  Nine Months Ended
  September 30,  June 30,  September 30,  September 30, 
     2020
    2020
    2019    2020
    2019
   
  (dollars in thousands, except per share amounts)
Numerator:               
Net income $ 10,563  $ 7,419  $ 17,437 $ 24,203  $ 50,778
Earnings allocated to unvested restricted stock units (1)   (28)   (19)   —   (62)   —
Numerator for earnings per share - basic and diluted $ 10,535  $ 7,400  $ 17,437 $ 24,141  $ 50,778
                
C Corp equivalent net income (3)  N/A   N/A  $ 13,122  N/A  $ 38,284
Earnings allocated to unvested restricted stock units (1) (3)  N/A   N/A    —  N/A    —
Numerator for C Corp equivalent earnings per share - basic and diluted (3)  N/A   N/A  $ 13,122  N/A  $ 38,284
                
Adjusted net income $ 10,755  $ 8,218  $ 14,343 $ 27,352  $ 43,010
Earnings allocated to unvested restricted stock units (1)   (28)   (22)   —   (69)   —
Numerator for adjusted earnings per share - basic and diluted $ 10,727  $ 8,196  $ 14,343 $ 27,283  $ 43,010
                
Denominator:               
Weighted average common shares outstanding   27,457,306    27,457,306    18,027,512   27,457,306    18,027,512
Dilutive effect of outstanding restricted stock units (2)   —    —    —   —    —
Weighted average common shares outstanding, including all dilutive potential shares   27,457,306    27,457,306    18,027,512   27,457,306    18,027,512
                
Earnings per share - Basic $ 0.38  $ 0.27  $ 0.97 $ 0.88  $ 2.82
Earnings per share - Diluted $ 0.38  $ 0.27  $ 0.97 $ 0.88  $ 2.82
                
C Corp equivalent earnings per share - Basic (3)  N/A   N/A  $ 0.73  N/A  $ 2.12
C Corp equivalent earnings per share - Diluted (3)  N/A   N/A  $ 0.73  N/A  $ 2.12
                 
Adjusted earnings per share - Basic $ 0.39  $ 0.30  $ 0.80 $ 0.99  $ 2.39
Adjusted earnings per share - Diluted $ 0.39  $ 0.30  $ 0.80 $ 0.99  $ 2.39

 

(1)  The Company has granted restricted stock units that contain non-forfeitable rights to dividend equivalents. Such restricted stock units are considered participating securities. As such, we have included these restricted stock units in the calculation of basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.
(2)  Restricted stock units were anti-dilutive and excluded from the calculation of common stock equivalents during the three months ended September 30, 2020 and June 30, 2020 and during the nine months ended September 30, 2020. There were no restricted stock units outstanding during the three and nine months ended September 30, 2019.
(3)  Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
N/A  Not applicable.


Reconciliation of Non-GAAP Financial Measures –
Net Interest Margin (Tax Equivalent Basis)

                 
  Three Months Ended  Nine Months Ended  
  September 30,  June 30,  September 30,  September 30,  
     2020    2020    2019    2020    2019 
    
  (dollars in thousands) 
Net interest income (tax equivalent basis)                
Net interest income $ 28,871 $ 28,908 $ 33,141 $ 88,441 $ 101,524 
Tax-equivalent adjustment (1)   495   483   559   1,441   1,775 
Net interest income (tax equivalent basis) (1) $ 29,366 $ 29,391 $ 33,700 $ 89,882 $ 103,299 
                 
Net interest margin (tax equivalent basis)                
Net interest margin *   3.39%  3.51%  4.27%  3.63%  4.38%
Tax-equivalent adjustment * (1)   0.06   0.06   0.08   0.06   0.08 
Net interest margin (tax equivalent basis) * (1)   3.45%  3.57%  4.35%  3.69%  4.46%
                 
Average interest-earning assets $ 3,385,466 $ 3,315,561 $ 3,075,822 $ 3,255,182 $ 3,097,374 


 

*  Annualized measure.
(1)  On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.


Reconciliation of Non-GAAP Financial Measures –
Efficiency Ratio (Tax Equivalent Basis)

                 
  Three Months Ended  Nine Months Ended  
  September 30,  June 30,  September 30,  September 30,  
     2020    2020    2019    2020    2019 
    
  (dollars in thousands) 
Efficiency ratio (tax equivalent basis)                                                                                           
Total noninterest expense $ 22,485 $ 23,499 $ 22,303 $ 69,291 $ 69,076 
Less: amortization of intangible assets   305   305   335   927   1,087 
Adjusted noninterest expense $ 22,180 $ 23,194 $ 21,968 $ 68,364 $ 67,989 
                 
Net interest income $ 28,871 $ 28,908 $ 33,141 $ 88,441 $ 101,524 
Total noninterest income   10,052   8,060   7,582   23,364   22,415 
Operating revenue   38,923   36,968   40,723   111,805   123,939 
Tax-equivalent adjustment (1)   495   483   559   1,441   1,775 
Operating revenue (tax equivalent basis) (1) $ 39,418 $ 37,451 $ 41,282 $ 113,246 $ 125,714 
                 
Efficiency ratio   56.98%  62.74%  53.94%  61.15%  54.86%
Efficiency ratio (tax equivalent basis) (1)   56.27   61.93   53.21   60.37   54.08 


 

(1)  On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.


Reconciliation of Non-GAAP Financial Measures –
Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share

           
     September 30,  June 30,    September 30,  
     2020    2020    2019 
    
  (dollars in thousands) 
Tangible Common Equity          
Total stockholders' equity $ 355,294 $ 347,840 $ 348,936 
Less: Goodwill   23,620   23,620   23,620 
Less: Core deposit intangible assets, net   3,103   3,408   4,366 
Tangible common equity $ 328,571 $ 320,812 $ 320,950 
           
Tangible assets          
Total assets $ 3,535,223 $ 3,501,412 $ 3,166,613 
Less: Goodwill   23,620   23,620   23,620 
Less: Core deposit intangible assets, net   3,103   3,408   4,366 
Tangible assets $ 3,508,500 $ 3,474,384 $ 3,138,627 
           
Total stockholders' equity to total assets   10.05%  9.93%  11.02%
Tangible common equity to tangible assets   9.36   9.23   10.23 
           
Ending number shares of common stock outstanding   27,457,306   27,457,306   18,027,512 
           
Book value per share $ 12.94 $ 12.67 $ 19.36 
Tangible book value per share   11.97   11.68   17.80 
           

Reconciliation of Non-GAAP Financial Measures –
Adjusted Return on Average Stockholders' Equity and Adjusted Return on Tangible Common Equity

                 
  Three Months Ended  Nine Months Ended  
  September 30,  June 30,  September 30,  September 30,  
     2020    2020    2019    2020    2019 
    
  (dollars in thousands) 
Average Tangible Common Equity                
Total stockholders' equity $ 355,296 $ 346,540 $ 348,750 $ 347,812 $ 344,844 
Less: Goodwill   23,620   23,620   23,620   23,620   23,620 
Less: Core deposit intangible assets, net   3,284   3,589   4,561   3,589   4,924 
Average tangible common equity $ 328,392 $ 319,331 $ 320,569 $ 320,603 $ 316,300 
                 
Net income $ 10,563 $ 7,419 $ 17,437 $ 24,203 $ 50,778 
C Corp equivalent net income (1)  N/A  N/A   13,122  N/A   38,284 
Adjusted net income   10,755   8,218   14,343   27,352   43,010 
                 
Return on average stockholders' equity *   11.83%  8.61%  19.84%  9.30%  19.69%
C Corp equivalent return on average stockholders' equity * (1)  N/A  N/A   14.93  N/A   14.84 
Adjusted return on average stockholders' equity *   12.04   9.54   16.32   10.50   16.68 
                 
Return on average tangible common equity *   12.80%  9.34%  21.58%  10.08%  21.46%
C Corp equivalent return on average tangible common equity * (1)  N/A  N/A   16.24  N/A   16.18 
Adjusted return on average tangible common equity *   13.03   10.35   17.75   11.40   18.18 


 

*  Annualized measure.
(1)  Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
N/A  Not applicable.