SEC Filing | HBT Financial

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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 March 31, 2021

☐ 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 April 27, 2021, there were 27,366,459 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	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	80
Item 4.	Controls and Procedures	81
PART II. OTHER INFORMATION		82
Item 1.	Legal Proceedings	82
Item 1A.	Risk Factors	82
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	83
Item 5.	Other Information	83
Item 6.	Exhibits	83

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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, the economic impact of the COVID-19 pandemic and our future financial results, 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:

●

our asset quality and any loan charge-offs;

●

the composition of our loan portfolio;

●

time and effort necessary to resolve nonperforming assets and the loans modified or deferred as a result of the impact of the COVID-19 pandemic;

●

the length and severity of the COVID-19 pandemic, and the effects of the COVID-19 pandemic, including the impact of the pandemic on our operations and the operations of our customers and the communities that we serve;

●

environmental liability associated with our lending activities;

●

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

●

changes in and uncertainty related to benchmark interest rates used to price our loans, including the expected elimination of LIBOR;

●

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 attract and retain skilled employees or changes in our management personnel;

●

any failure or interruption of our information and communications systems;

●

our ability to identify and address cybersecurity risks;

●

the effects of the failure of any component of our business infrastructure provided by a third party;

●

our ability to keep pace with technological changes;

●

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 generally or in Illinois in particular;

●

the geographic concentration of our operations in the State of Illinois;

●

our ability to effectively compete with other financial services companies and the effects of competition in the financial services industry on our business;

●

our ability to attract and retain customer deposits;

●

our ability to maintain the Bank’s reputation;

●

severe weather, natural disasters, pandemics, acts of war or terrorism or other external events;

●

possible impairment of our goodwill and other intangible assets;

●

the impact of, and changes in applicable laws, regulations and accounting standards and policies;

●

our prior status as an S Corp;

●

possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations;

●

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 Sarbanes-Oxley; damage to our reputation from any of the factors described above; and

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●

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, 2020.

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

(dollars in thousands, except per share data)


	(Unaudited)
	March 31,		December 31,
	2021		2020
ASSETS
Cash and due from banks	$	22,976	$	24,912
Interest-bearing deposits with banks		406,760		287,539
Cash and cash equivalents		429,736		312,451

Debt securities available-for-sale, at fair value		856,835		922,869
Debt securities held-to-maturity (fair value of $195,608 in 2021 and $72,441 in 2020)		192,994		68,395
Equity securities with readily determinable fair value		3,332		3,292
Equity securities with no readily determinable fair value		1,552		1,552
Restricted stock, at cost		2,498		2,498
Loans held for sale		12,882		14,713
Loans, net of allowance for loan losses of $28,759 in 2021 and $31,838 in 2020		2,241,946		2,215,168
Bank premises and equipment, net		52,548		52,904
Bank premises held for sale		121		121
Foreclosed assets		4,748		4,168
Goodwill		23,620		23,620
Core deposit intangible assets, net		2,509		2,798
Mortgage servicing rights, at fair value		7,629		5,934
Investments in unconsolidated subsidiaries		1,165		1,165
Accrued interest receivable		12,718		14,255
Other assets		18,781		20,664
Total assets	$	3,865,614	$	3,666,567

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	968,991	$	882,939
Interest-bearing		2,386,975		2,247,595
Total deposits		3,355,966		3,130,534

Securities sold under agreements to repurchase		41,976		45,736
Subordinated notes		39,257		39,238
Junior subordinated debentures issued to capital trusts		37,665		37,648
Other liabilities		33,344		49,494
Total liabilities		3,508,208		3,302,650

COMMITMENTS AND CONTINGENCIES (Notes 7 and 18)

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 27,477,531 in 2021 and 27,457,306 in 2020; shares outstanding of 27,382,069 in 2021 and 27,457,306 in 2020		275		275
Surplus		191,004		190,875
Retained earnings		165,735		154,614
Accumulated other comprehensive income		1,906		18,153
Treasury stock at cost, 95,462 shares in 2021		(1,514)		—
Total stockholders’ equity		357,406		363,917
Total liabilities and stockholders’ equity	$	3,865,614	$	3,666,567

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 March 31,
	2021		2020

INTEREST AND DIVIDEND INCOME	(dollars in thousands, except per share data)
Loans, including fees:
Taxable	$	25,134	$	26,941
Federally tax exempt		610		674
Securities:
Taxable		3,633		3,334
Federally tax exempt		1,136		1,028
Interest-bearing deposits in bank		80		729
Other interest and dividend income		13		14
Total interest and dividend income		30,606		32,720

INTEREST EXPENSE
Deposits		644		1,595
Securities sold under agreements to repurchase		7		20
Borrowings		1		—
Subordinated notes		470		—
Junior subordinated debentures issued to capital trusts		355		443
Total interest expense		1,477		2,058
Net interest income		29,129		30,662
PROVISION FOR LOAN LOSSES		(3,405)		4,355
Net interest income after provision for loan losses		32,534		26,307

NONINTEREST INCOME
Card income		2,258		1,792
Service charges on deposit accounts		1,297		1,834
Wealth management fees		1,972		1,814
Mortgage servicing		685		724
Mortgage servicing rights fair value adjustment		1,695		(2,171)
Gains on sale of mortgage loans		2,100		536
Gains (losses) on securities		40		(52)
Gains (losses) on foreclosed assets		(76)		35
Gains (losses) on other assets		1		(3)
Other noninterest income		836		743
Total noninterest income		10,808		5,252

NONINTEREST EXPENSE
Salaries		12,596		12,754
Employee benefits		1,722		2,434
Occupancy of bank premises		1,938		1,828
Furniture and equipment		623		603
Data processing		1,688		1,586
Marketing and customer relations		565		1,044
Amortization of intangible assets		289		317
FDIC insurance		240		36
Loan collection and servicing		365		348
Foreclosed assets		143		89
Other noninterest expense		2,375		2,268
Total noninterest expense		22,544		23,307
INCOME BEFORE INCOME TAX EXPENSE		20,798		8,252
INCOME TAX EXPENSE		5,553		2,031
NET INCOME	$	15,245	$	6,221

EARNINGS PER SHARE - BASIC	$	0.55	$	0.23
EARNINGS PER SHARE - DILUTED	$	0.55	$	0.23
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING		27,430,912		27,457,306

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 March 31,
	2021		2020

	(dollars in thousands)
NET INCOME	$	15,245	$	6,221

OTHER COMPREHENSIVE (LOSS) INCOME
Unrealized (losses) gains on debt securities available-for-sale		(23,074)		7,602
Reclassification adjustment for amortization (accretion) of net unrealized gain (loss) on debt securities transferred to held-to-maturity		32		(9)
Unrealized gains (losses) on derivative instruments		219		(970)
Reclassification adjustment for net settlements on derivative instruments		99		2
Total other comprehensive (loss) income, before tax		(22,724)		6,625
Income tax (benefit) expense		(6,477)		1,888
Total other comprehensive (loss) income		(16,247)		4,737
TOTAL COMPREHENSIVE (LOSS) INCOME	$	(1,002)	$	10,958

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)


								Accumulated
								Other				Total
	Common Stock					Retained		Comprehensive		Treasury		Stockholders’
	Shares	Amount		Surplus		Earnings		Income (Loss)		Stock		Equity

	(dollars in thousands, except per share data)
Balance, December 31, 2020	27,457,306	$	275	$	190,875	$	154,614	$	18,153	$	—	$	363,917
Net income	—		—		—		15,245		—		—		15,245
Other comprehensive loss	—		—		—		—		(16,247)		—		(16,247)
Stock-based compensation	—		—		129		—		—		—		129
Issuance of common stock upon vesting of restricted stock units	20,225		—		—		—		—		—		—
Repurchase of common stock	(95,462)		—		—		—		—		(1,514)		(1,514)
Cash dividends and dividend equivalents ($0.15 per share)	—		—		—		(4,124)		—		—		(4,124)
Balance, March 31, 2021	27,382,069	$	275	$	191,004	$	165,735	$	1,906	$	(1,514)	$	357,406

Balance, December 31, 2019	27,457,306	$	275	$	190,524	$	134,287	$	7,832	$	—	$	332,918
Net income	—		—		—		6,221		—		—		6,221
Other comprehensive income	—		—		—		—		4,737		—		4,737
Stock-based compensation	—		—		67		—		—		—		67
Cash dividends and dividend equivalents ($0.15 per share)	—		—		—		(4,130)		—		—		(4,130)
Balance, March 31, 2020	27,457,306	$	275	$	190,591	$	136,378	$	12,569	$	—	$	339,813

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2021		2020

	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	15,245	$	6,221
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		774		690
Provision for loan losses		(3,405)		4,355
Net amortization of debt securities		1,732		790
Amortization of unrealized gain on dedesignated cash flow hedge		—		(32)
Deferred income tax expense (benefit)		685		(678)
Stock-based compensation		129		67
Net accretion of discount and deferred loan fees on loans		(2,562)		(922)
Net unrealized (gain) loss on equity securities		(40)		52
Net loss on sales of bank premises and equipment		—		3
Net loss (gain) on sales of foreclosed assets		3		(75)
Write-down of foreclosed assets		73		47
Amortization of intangibles		289		317
(Increase) decrease in mortgage servicing rights		(1,695)		2,171
Amortization of discount and issuance costs on subordinated notes and debentures		36		16
Mortgage loans originated for sale		(71,835)		(32,156)
Proceeds from sale of mortgage loans		75,766		32,418
Net gain on sale of mortgage loans		(2,100)		(536)
Decrease in accrued interest receivable		1,537		1,855
Decrease in other assets		875		887
Decrease in other liabilities		(9,032)		(2,971)
Net cash provided by operating activities		6,475		12,519

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in interest-bearing time deposits with banks		—		248
Proceeds from paydowns, maturities, and calls of debt securities		59,641		48,305
Purchase of securities		(142,980)		(56,349)
Net (increase) decrease in loans		(21,482)		31,210
Purchases of bank premises and equipment		(418)		(841)
Proceeds from sales of foreclosed assets		15		677
Net cash (used in) provided by investing activities		(105,224)		23,250

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		225,432		(46,552)
Net decrease in repurchase agreements		(3,760)		(3,622)
Repurchase of common stock		(1,514)		—
Cash dividends and dividend equivalents paid		(4,124)		(4,130)
Net cash provided by (used in) financing activities		216,034		(54,304)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		117,285		(18,535)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		312,451		283,971
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	429,736	$	265,436

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)


	Three Months Ended March 31,
	2021		2020

	(dollars in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	2,077	$	2,166
Cash paid for income taxes	$	—	$	985

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES
Transfers of loans to foreclosed assets	$	671	$	19

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. (the Company) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (the Bank or Heartland Bank). The Bank provides 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.

The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with generally accepted accounting principles (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 Securities and Exchange Commission. 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 filed with the Securities and Exchange Commission (SEC) on March 12, 2021.

The unaudited consolidated financial statements include all adjustments, consisting of 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 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.

Merger of State Bank of Lincoln into Heartland Bank

On October 20, 2020, Heartland Bank and State Bank of Lincoln, both wholly-owned bank subsidiaries of the Company on that date, entered into a Bank Merger Agreement providing for the merger of State Bank of Lincoln into Heartland Bank. The merger was consummated on December 31, 2020, resulting in Heartland Bank being our sole bank subsidiary, with the branch locations in Lincoln, Illinois operating as “State Bank of Lincoln, a division of Heartland Bank and Trust Company.”

Use of Estimates

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. 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 loan losses, goodwill, and income taxes.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Segment Reporting

The Company’s operations consist of one reportable segment called community banking.

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.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on debt securities available-for-sale and purchased financial assets with credit deterioration. ASU 2016-13 is effective for years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for years beginning after December 31, 2018, including interim periods within those years. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This ASU simplifies measurement of goodwill and eliminates Step 2 from the goodwill impairment test. Under the ASU, a company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for annual or any interim goodwill impairment tests in years beginning after December 15, 2022, including interim periods within those years. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. In January 2021, the FASB also issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope which refined the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. Entities may apply the provisions as of the beginning of the reporting period when the election is made and are available until December 31, 2022. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 – SECURITIES

The carrying balances of the securities were as follows:


	March 31,		December 31,
	2021		2020

	(dollars in thousands)
Debt securities available-for-sale	$	856,835	$	922,869
Debt securities held-to-maturity		192,994		68,395
Equity securities with readily determinable fair value		3,332		3,292
Equity securities with no readily determinable fair value		1,552		1,552
Total securities	$	1,054,713	$	996,108

There were no sales of securities during the three months ended March 31, 2021 and 2020. Gains (losses) on securities were as follows during the three months ended March 31:


	Three Months Ended March 31,
	2021		2020

	(dollars in thousands)
Net realized gains (losses) on sales	$	—	$	—
Net unrealized gains (losses) on equity securities:
Readily determinable fair value		40		(52)
No readily determinable fair value		—		—
Gains (losses) on securities	$	40	$	(52)

On March 31, 2021, the Company transferred certain debt securities from the available-for-sale category to the held-to-maturity category in order to better reflect the revised intentions of the Company due to possible market value volatility, resulting from a potential rise in interest rates. The following is a summary of the amortized cost and fair value of securities transferred to the held-to-maturity category:


	Amortized
	Cost		Fair Value

	(dollars in thousands)
U.S. government agency	$	7,593	$	7,323
Mortgage-backed:
Agency residential		8,776		8,536
Agency commercial		118,792		113,861
Total	$	135,161	$	129,720

The debt securities were transferred between categories at fair value, with the transfer date fair value becoming the new amortized cost for each security transferred. The unrealized gain (loss), net of tax, at the date of transfer remains a component of accumulated other comprehensive income, but will be amortized over the remaining life of the debt securities as an adjustment of yield in a manner consistent with amortization of any premium or discount. As a result, the amortization of an unrealized gain (loss) reported in accumulated other comprehensive income will offset or mitigate the effect on interest income of the amortization of the premium or discount for that held-to-maturity debt security.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Debt Securities

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


March 31, 2021	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. government agency	$	129,494	$	1,785	$	(3,341)	$	127,938
Municipal		280,212		6,479		(4,358)		282,333
Mortgage-backed:
Agency residential		164,942		4,366		(204)		169,104
Agency commercial		208,692		2,861		(3,556)		207,997
Corporate		67,959		1,950		(446)		69,463
Total available-for-sale		851,299		17,441		(11,905)		856,835
Held-to-maturity:
U.S. government agency		7,323		—		—		7,323
Municipal		21,067		1,188		—		22,255
Mortgage-backed:
Agency residential		20,335		388		—		20,723
Agency commercial		144,269		1,323		(285)		145,307
Total held-to-maturity		192,994		2,899		(285)		195,608
Total debt securities	$	1,044,293	$	20,340	$	(12,190)	$	1,052,443