hbt_Current_Folio_10Q

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2019

OR

 

     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

(888) 897-2276

(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      No  

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

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

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

 

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

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

As of November 20, 2019, there were 27,457,306 shares outstanding of the registrant’s common stock, $0.01 par value.

 

 

 

 

Table of Contents

TABLE OF CONTENTS
HBT Financial, Inc.

 

    

Page

 

 

 

PART I. FINANCIAL INFORMATION 

 

1

Item 1. 

Consolidated Financial Statements

 

1

 

Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

 

1

 

Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018.

 

2

 

Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2019 and 2018.

 

3

 

Consolidated Statement of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018.

 

4

 

Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

 

6

 

Notes to Consolidated Financial Statements

 

8

Item 2. 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

42

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

 

71

Item 4. 

Controls and Procedures

 

72

PART II. OTHER INFORMATION 

 

73

Item 1. 

Legal Proceedings.

 

73

Item 1A. 

Risk Factors

 

73

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

 

73

Item 3. 

Defaults Upon Senior Securities

 

74

Item 4. 

Mine Safety Disclosures

 

74

Item 5. 

Other Information

 

74

Item 6. 

Exhibits

 

74

 

 

 

 

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1.         CONSOLIDATED FINANCIAL STATEMENTS

HBT FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

    

(Unaudited) September 30, 2019

   

December 31, 2018

 

 

(dollars in thousands)

ASSETS

 

 

 

Cash and due from banks

 

$

19,969

 

$

21,343

Interest-bearing deposits with banks

 

 

134,972

 

 

165,536

Cash and cash equivalents

 

 

154,941

 

 

186,879

 

 

 

 

 

 

 

Interest-bearing time deposits with banks

 

 

248

 

 

248

Securities available-for-sale, at fair value

 

 

618,120

 

 

679,526

Securities held-to-maturity (fair value of $102,378 in 2019 and $121,506 in 2018)

 

 

99,861

 

 

121,715

Equity securities

 

 

4,436

 

 

3,261

Restricted stock, at cost

 

 

2,425

 

 

2,719

Loans held for sale

 

 

7,608

 

 

2,800

Loans, net of allowance for loan losses of $22,761 in 2019 and $20,509 in 2018

 

 

2,148,253

 

 

2,123,748

Bank premises and equipment, net

 

 

54,105

 

 

54,736

Bank premises held for sale

 

 

121

 

 

749

Foreclosed assets

 

 

6,574

 

 

9,559

Goodwill

 

 

23,620

 

 

23,620

Core deposit intangible assets, net

 

 

4,366

 

 

5,453

Mortgage servicing rights, at fair value

 

 

7,936

 

 

10,918

Investments in unconsolidated subsidiaries

 

 

1,165

 

 

1,165

Accrued interest receivable

 

 

14,816

 

 

15,300

Other assets

 

 

18,018

 

 

7,173

Total assets

 

$

3,166,613

 

$

3,249,569

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing

 

$

649,316

 

$

664,876

Interest-bearing

 

 

2,054,742

 

 

2,131,094

Total deposits

 

 

2,704,058

 

 

2,795,970

 

 

 

 

 

 

 

Securities sold under agreements to repurchase

 

 

32,267

 

 

46,195

Subordinated debentures

 

 

37,566

 

 

37,517

Other liabilities

 

 

43,786

 

 

29,491

Total liabilities

 

 

2,817,677

 

 

2,909,173

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Notes 8 and 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

Voting - $0.01 par value, 5,000,000 shares authorized, 315,780 shares issued,  268,312 shares outstanding

 

 

 3

 

 

 3

Series A nonvoting - $0.01 par value, 120,000,000 shares authorized, 17,835,960 shares issued,  17,759,200 shares outstanding

 

 

178

 

 

178

Surplus

 

 

32,288

 

 

32,288

Retained earnings

 

 

311,055

 

 

315,234

Accumulated other comprehensive income (loss)

 

 

8,431

 

 

(4,288)

Less cost of treasury stock held:

 

 

 

 

 

 

Voting - 47,468 shares

 

 

(1,667)

 

 

(1,667)

Series A nonvoting - 76,760 shares

 

 

(1,352)

 

 

(1,352)

Total stockholders’ equity

 

 

348,936

 

 

340,396

Total liabilities and stockholders’ equity

 

$

3,166,613

 

$

3,249,569

 

See accompanying Notes to Consolidated Financial Statements (Unaudited)

 

 

1

Table of Contents

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

    

2019

    

2018

    

2019

    

2018

INTEREST AND DIVIDEND INCOME

 

(dollars in thousands, except per share amounts)

Loans, including fees:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

$

29,308

 

$

28,226

 

$

89,257

 

$

82,724

Federally tax exempt

 

 

684

 

 

749

 

 

2,130

 

 

1,981

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

3,572

 

 

3,619

 

 

11,295

 

 

10,804

Federally tax exempt

 

 

1,395

 

 

1,758

 

 

4,459

 

 

5,484

Interest-bearing deposits in bank

 

 

662

 

 

362

 

 

1,948

 

 

1,137

Other interest and dividend income

 

 

15

 

 

18

 

 

46

 

 

54

Total interest and dividend income

 

 

35,636

 

 

34,732

 

 

109,135

 

 

102,184

 

 

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,000

 

 

1,619

 

 

6,094

 

 

4,215

Securities sold under agreements to repurchase

 

 

17

 

 

13

 

 

48

 

 

32

Borrowings

 

 

 —

 

 

29

 

 

 7

 

 

252

Subordinated debentures

 

 

478

 

 

470

 

 

1,462

 

 

1,319

Total interest expense

 

 

2,495

 

 

2,131

 

 

7,611

 

 

5,818

Net interest income

 

 

33,141

 

 

32,601

 

 

101,524

 

 

96,366

PROVISION FOR LOAN LOSSES

 

 

684

 

 

1,238

 

 

3,266

 

 

1,791

Net interest income after provision for loan losses

 

 

32,457

 

 

31,363

 

 

98,258

 

 

94,575

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

 

 

Card income

 

 

1,985

 

 

1,848

 

 

5,813

 

 

5,427

Service charges on deposit accounts

 

 

2,111

 

 

2,157

 

 

5,805

 

 

6,063

Wealth management fees

 

 

1,676

 

 

1,695

 

 

5,216

 

 

5,315

Mortgage servicing

 

 

795

 

 

755

 

 

2,342

 

 

2,400

Mortgage servicing rights fair value adjustment

 

 

(860)

 

 

(93)

 

 

(2,982)

 

 

274

Gains on sale of mortgage loans

 

 

992

 

 

855

 

 

2,177

 

 

2,206

Gains (losses) on securities

 

 

(73)

 

 

180

 

 

42

 

 

150

Gains (losses) on foreclosed assets

 

 

(20)

 

 

(251)

 

 

132

 

 

(858)

Gains (losses) on sales of other assets

 

 

(29)

 

 

(13)

 

 

944

 

 

207

Title insurance activity

 

 

 —

 

 

335

 

 

167

 

 

931

Other noninterest income

 

 

1,005

 

 

939

 

 

2,759

 

 

2,696

Total noninterest income

 

 

7,582

 

 

8,407

 

 

22,415

 

 

24,811

 

 

 

 

 

 

 

 

 

 

 

 

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

 

 

Salaries

 

 

12,335

 

 

12,264

 

 

36,339

 

 

36,572

Employee benefits

 

 

2,224

 

 

1,492

 

 

8,314

 

 

4,722

Occupancy of bank premises

 

 

1,785

 

 

1,822

 

 

5,260

 

 

5,576

Furniture and equipment

 

 

545

 

 

695

 

 

2,050

 

 

2,307

Data processing

 

 

1,471

 

 

1,265

 

 

4,023

 

 

3,935

Marketing and customer relations

 

 

801

 

 

974

 

 

2,837

 

 

3,086

Amortization of intangible assets

 

 

335

 

 

389

 

 

1,087

 

 

1,169

FDIC insurance

 

 

 8

 

 

241

 

 

435

 

 

728

Loan collection and servicing

 

 

547

 

 

625

 

 

1,901

 

 

1,990

Foreclosed assets

 

 

196

 

 

247

 

 

525

 

 

672

Other noninterest expense

 

 

2,056

 

 

1,923

 

 

6,305

 

 

6,120

Total noninterest expense

 

 

22,303

 

 

21,937

 

 

69,076

 

 

66,877

INCOME BEFORE INCOME TAX EXPENSE

 

 

17,736

 

 

17,833

 

 

51,597

 

 

52,509

INCOME TAX EXPENSE

 

 

299

 

 

241

 

 

819

 

 

630

NET INCOME

 

$

17,437

 

$

17,592

 

$

50,778

 

$

51,879

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - BASIC

 

$

0.97

 

$

0.98

 

$

2.82

 

$

2.87

EARNINGS PER SHARE - DILUTED

 

$

0.97

 

$

0.98

 

$

2.82

 

$

2.87

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING

 

 

18,027,512

 

 

18,027,512

 

 

18,027,512

 

 

18,054,011

 

 

 

 

 

 

 

 

 

 

 

 

 

PRO FORMA C CORP EQUIVALENT INFORMATION (Note 1)

 

 

 

 

 

 

 

 

 

 

 

 

Historical income before income tax expense

 

$

17,736

 

$

17,833

 

$

51,597

 

$

52,509

Pro forma C Corp equivalent income tax expense

 

 

4,614

 

 

4,605

 

 

13,313

 

 

13,406

Pro forma C Corp equivalent net income

 

$

13,122

 

$

13,228

 

$

38,284

 

$

39,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - BASIC

 

$

0.73

 

$

0.73

 

$

2.12

 

$

2.17

PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - DILUTED

 

$

0.73

 

$

0.73

 

$

2.12

 

$

2.17

 

See accompanying Notes to Consolidated Financial Statements (Unaudited)

 

 

2

Table of Contents

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 

 

Nine Months Ended September 30, 

 

    

2019

    

2018

    

2019

    

2018

 

 

(dollars in thousands)

NET INCOME

 

$

17,437

 

$

17,592

 

$

50,778

 

$

51,879

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains (losses) on securities available-for-sale

 

 

1,289

 

 

(3,196)

 

 

13,913

 

 

(12,458)

Reclassification adjustment for (gains) losses on securities available-for-sale realized in income

 

 

 —

 

 

(262)

 

 

 —

 

 

(262)

Reclassification adjustment for accretion of net unrealized gain on securities transferred to held-to-maturity

 

 

(62)

 

 

(99)

 

 

(221)

 

 

(287)

Unrealized losses on derivative instruments

 

 

(208)

 

 

(13)

 

 

(897)

 

 

(118)

Reclassification adjustment for net settlements on derivative instruments

 

 

(24)

 

 

(39)

 

 

(76)

 

 

(137)

Total other comprehensive income (loss)

 

 

995

 

 

(3,609)

 

 

12,719

 

 

(13,262)

TOTAL COMPREHENSIVE INCOME

 

$

18,432

 

$

13,983

 

$

63,497

 

$

38,617

 

See accompanying Notes to Consolidated Financial Statements (Unaudited)

 

3

Table of Contents

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Total

 

 

Common Stock

 

 

 

 

Retained

 

Comprehensive

 

Treasury

 

Stockholders’

 

    

Voting

    

Series A

    

Surplus

    

Earnings

    

Income (Loss)

    

Stock

    

Equity

 

 

(dollars in thousands, except per share data)

Balance, June 30, 2019

 

$

 3

 

$

178

 

$

32,288

 

$

302,984

 

$

7,436

 

$

(3,019)

 

$

339,870

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

17,437

 

 

 —

 

 

 —

 

 

17,437

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

995

 

 

 —

 

 

995

Cash dividends ($0.52 per share)

 

 

 —

 

 

 —

 

 

 —

 

 

(9,366)

 

 

 —

 

 

 —

 

 

(9,366)

Balance, September 30, 2019

 

$

 3

 

$

178

 

$

32,288

 

$

311,055

 

$

8,431

 

$

(3,019)

 

$

348,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2018

 

$

 3

 

$

178

 

$

32,288

 

$

305,730

 

$

(10,150)

 

$

(3,019)

 

$

325,030

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

17,592

 

 

 —

 

 

 —

 

 

17,592

Other comprehensive loss

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3,609)

 

 

 —

 

 

(3,609)

Cash dividends ($0.51 per share)

 

 

 —

 

 

 —

 

 

 —

 

 

(9,156)

 

 

 —

 

 

 —

 

 

(9,156)

Balance, September 30, 2018

 

$

 3

 

$

178

 

$

32,288

 

$

314,166

 

$

(13,759)

 

$

(3,019)

 

$

329,857

 

See accompanying Notes to Consolidated Financial Statements (Unaudited)

 

4

Table of Contents

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (CONTINUED)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Total

 

 

Common Stock

 

 

 

 

Retained

 

Comprehensive

 

Treasury

 

Stockholders’

 

    

Voting

    

Series A

    

Surplus

    

Earnings

    

Income (Loss)

    

Stock

    

Equity

 

 

(dollars in thousands, except per share data)

Balance, December 31, 2018

 

$

 3

 

$

178

 

$

32,288

 

$

315,234

 

$

(4,288)

 

$

(3,019)

 

$

340,396

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

50,778

 

 

 —

 

 

 —

 

 

50,778

Other comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

12,719

 

 

 —

 

 

12,719

Cash dividends ($3.05 per share)

 

 

 —

 

 

 —

 

 

 —

 

 

(54,957)

 

 

 —

 

 

 —

 

 

(54,957)

Balance, September 30, 2019

 

$

 3

 

$

178

 

$

32,288

 

$

311,055

 

$

8,431

 

$

(3,019)

 

$

348,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

$

 3

 

$

178

 

$

32,288

 

$

293,934

 

$

(375)

 

$

(2,112)

 

$

323,916

Adoption of ASU 2016-01

 

 

 —

 

 

 —

 

 

 —

 

 

122

 

 

(122)

 

 

 —

 

 

 —

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

51,879

 

 

 —

 

 

 —

 

 

51,879

Other comprehensive loss

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(13,262)

 

 

 —

 

 

(13,262)

Repurchase of common stock -Series A (43,180 shares)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(907)

 

 

(907)

Cash dividends ($1.76 per share)

 

 

 —

 

 

 —

 

 

 —

 

 

(31,769)

 

 

 —

 

 

 —

 

 

(31,769)

Balance, September 30, 2018

 

$

 3

 

$

178

 

$

32,288

 

$

314,166

 

$

(13,759)

 

$

(3,019)

 

$

329,857

 

See accompanying Notes to Consolidated Financial Statements (Unaudited)

 

5

Table of Contents

HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 

 

    

2019

    

2018

 

 

(dollars in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

50,778

 

$

51,879

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation expense

 

 

2,042

 

 

2,494

Provision for loan losses

 

 

3,266

 

 

1,791

Net amortization of securities

 

 

2,759

 

 

3,942

Net accretion of discount and deferred loan fees on loans

 

 

(3,150)

 

 

(4,107)

Net realized gain on sales of securities

 

 

 —

 

 

(262)

Net unrealized (gain) loss on equity securities

 

 

(42)

 

 

112

Net gain on sales of bank premises and equipment

 

 

(29)

 

 

(13)

Net gain on sales of bank premises held for sale

 

 

(448)

 

 

(136)

Impairment losses on bank premises held for sale

 

 

37

 

 

52

Net (gain) loss on sales of foreclosed assets

 

 

(240)

 

 

281

Gain on loan foreclosures

 

 

 —

 

 

(96)

Write-down of foreclosed assets

 

 

552

 

 

711

Amortization of intangibles

 

 

1,087

 

 

1,169

Decrease (increase) in mortgage servicing rights

 

 

2,982

 

 

(274)

Amortization of subordinated debt purchase accounting adjustment

 

 

49

 

 

50

Mortgage loans originated for sale

 

 

(106,885)

 

 

(103,983)

Proceeds from sale of mortgage loans

 

 

104,254

 

 

106,544

Net gain on sale of mortgage loans

 

 

(2,177)

 

 

(2,206)

Gain on sale of First Community Title Services, Inc.

 

 

(498)

 

 

 —

Decrease (increase) in accrued interest receivable

 

 

484

 

 

(1,429)

(Increase) decrease in other assets

 

 

(2,228)

 

 

1,329

Increase (decrease) in other liabilities

 

 

4,705

 

 

(1,475)

Net cash provided by operating activities

 

 

57,298

 

 

56,373

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Net change in interest-bearing time deposits with banks