SEC Filing | HBT Financial

Three Months Ended March 31,

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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, 2022

☐ 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, 2022, there were 28,920,011 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 (Loss)	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	76
Item 4.	Controls and Procedures	77
PART II. OTHER INFORMATION		78
Item 1.	Legal Proceedings	78
Item 1A.	Risk Factors	78
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 3.	Defaults Upon Senior Securities	78
Item 4.	Mine Safety Disclosures	78
Item 5.	Other Information	79
Item 6.	Exhibits	79

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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:

●

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

●

the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof, or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events;

●

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, 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 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 (“U.S.”) generally or in Illinois and Iowa in particular;

●

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

●

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;

●

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 Corporation;

●

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;

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●

market perceptions associated with certain aspects of our business;

●

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

●

damage to our reputation from any of the factors described above;

●

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

●

the factors discussed in “Risk Factors”, "Management's Discussion and Analysis of Financial Condition and Results of Operations" or elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange (“SEC”) Commission on March 11, 2022.

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,
	2022		2021
ASSETS
Cash and due from banks	$	30,761	$	23,387
Interest-bearing deposits with banks		328,218		385,881
Cash and cash equivalents		358,979		409,268

Interest-bearing time deposits with banks		487		490
Debt securities available-for-sale, at fair value		933,922		942,168
Debt securities held-to-maturity (fair value of $416,603 in 2022 and $336,027 in 2021)		438,054		336,185
Equity securities with readily determinable fair value		3,256		3,443
Equity securities with no readily determinable fair value		1,927		1,927
Restricted stock, at cost		2,739		2,739
Loans held for sale		1,777		4,942

Loans, before allowance for loan losses		2,487,785		2,499,689
Allowance for loan losses		(24,508)		(23,936)
Loans, net of allowance for loan losses		2,463,277		2,475,753

Bank owned life insurance		7,433		7,393
Bank premises and equipment, net		52,005		52,483
Bank premises held for sale		1,081		1,452
Foreclosed assets		3,043		3,278
Goodwill		29,322		29,322
Core deposit intangible assets, net		1,698		1,943
Mortgage servicing rights, at fair value		9,723		7,994
Investments in unconsolidated subsidiaries		1,165		1,165
Accrued interest receivable		13,527		14,901
Other assets		25,550		17,408
Total assets	$	4,348,965	$	4,314,254

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	1,069,231	$	1,087,659
Interest-bearing		2,746,838		2,650,526
Total deposits		3,816,069		3,738,185

Securities sold under agreements to repurchase		50,834		61,256
Subordinated notes		39,336		39,316
Junior subordinated debentures issued to capital trusts		37,731		37,714
Other liabilities		21,840		25,902
Total liabilities		3,965,810		3,902,373

COMMITMENTS AND CONTINGENCIES (Note 14)

Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding		—		—
Common stock, $0.01 par value; 125,000,000 shares authorized; shares issued of 29,308,491 at 2022 and 29,276,547 at 2021; shares outstanding of 28,967,943 at 2022 and 28,986,061 at 2021		293		293
Surplus		221,735		220,891
Retained earnings		203,076		194,132
Accumulated other comprehensive income (loss)		(36,100)		1,471
Treasury stock at cost, 340,548 shares at 2022 and 290,486 at 2021		(5,849)		(4,906)
Total stockholders’ equity		383,155		411,881
Total liabilities and stockholders’ equity	$	4,348,965	$	4,314,254

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,
	2022		2021

INTEREST AND DIVIDEND INCOME	(dollars in thousands, except per share data)
Loans, including fees:
Taxable	$	26,806	$	25,134
Federally tax exempt		662		610
Securities:
Taxable		4,649		3,633
Federally tax exempt		1,040		1,136
Interest-bearing deposits in bank		159		80
Other interest and dividend income		19		13
Total interest and dividend income		33,335		30,606

INTEREST EXPENSE
Deposits		569		644
Securities sold under agreements to repurchase		9		7
Borrowings		1		1
Subordinated notes		470		470
Junior subordinated debentures issued to capital trusts		358		355
Total interest expense		1,407		1,477
Net interest income		31,928		29,129
PROVISION FOR LOAN LOSSES		(584)		(3,405)
Net interest income after provision for loan losses		32,512		32,534

NONINTEREST INCOME
Card income		2,404		2,258
Wealth management fees		2,289		1,972
Service charges on deposit accounts		1,652		1,297
Mortgage servicing		658		685
Mortgage servicing rights fair value adjustment		1,729		1,695
Gains on sale of mortgage loans		587		2,100
Gains (losses) on securities		(187)		40
Gains (losses) on foreclosed assets		40		(76)
Gains (losses) on other assets		193		1
Income on bank owned life insurance		40		—
Other noninterest income		638		836
Total noninterest income		10,043		10,808

NONINTEREST EXPENSE
Salaries		12,992		12,596
Employee benefits		2,499		1,722
Occupancy of bank premises		2,060		1,938
Furniture and equipment		552		623
Data processing		1,653		1,688
Marketing and customer relations		851		565
Amortization of intangible assets		245		289
FDIC insurance		288		240
Loan collection and servicing		157		365
Foreclosed assets		132		143
Other noninterest expense		2,728		2,375
Total noninterest expense		24,157		22,544
INCOME BEFORE INCOME TAX EXPENSE		18,398		20,798
INCOME TAX EXPENSE		4,794		5,553
NET INCOME	$	13,604	$	15,245

EARNINGS PER SHARE - BASIC	$	0.47	$	0.55
EARNINGS PER SHARE - DILUTED	$	0.47	$	0.55
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING		28,986,593		27,430,912

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended March 31,
	2022		2021

	(dollars in thousands)
NET INCOME	$	13,604	$	15,245

OTHER COMPREHENSIVE LOSS
Unrealized losses on debt securities available-for-sale		(53,422)		(23,074)
Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity		181		32
Unrealized gains on derivative instruments		594		219
Reclassification adjustment for net settlements on derivative instruments		96		99
Total other comprehensive loss, before tax		(52,551)		(22,724)
Income tax benefit		(14,980)		(6,477)
Total other comprehensive loss		(37,571)		(16,247)
TOTAL COMPREHENSIVE LOSS	$	(23,967)	$	(1,002)

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

	(dollars in thousands, except per share data)
Balance, December 31, 2021	28,986,061	$	293	$	220,891	$	194,132	$	1,471	$	(4,906)	$	411,881
Net income	—		—		—		13,604		—		—		13,604
Other comprehensive loss	—		—		—		—		(37,571)		—		(37,571)
Stock-based compensation	—		—		901		—		—		—		901
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings	31,944		—		(57)		—		—		—		(57)
Repurchase of common stock	(50,062)		—		—		—		—		(943)		(943)
Cash dividends and dividend equivalents ($0.16 per share)	—		—		—		(4,660)		—		—		(4,660)
Balance, March 31, 2022	28,967,943	$	293	$	221,735	$	203,076	$	(36,100)	$	(5,849)	$	383,155

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

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,
	2022		2021

	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	13,604	$	15,245
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		763		774
Provision for loan losses		(584)		(3,405)
Net amortization of debt securities		1,763		1,732
Deferred income tax expense		566		685
Stock-based compensation		901		129
Net accretion of discount and deferred loan fees on loans		(1,608)		(2,562)
Net unrealized loss (gain) on equity securities		187		(40)
Net loss on disposals of bank premises and equipment		4		—
Net gain on sales of bank premises held for sale		(197)		—
Net (gain) loss on sales of foreclosed assets		(105)		3
Write-down of foreclosed assets		65		73
Amortization of intangibles		245		289
Increase in mortgage servicing rights		(1,729)		(1,695)
Amortization of discount and issuance costs on subordinated notes and debentures		37		36
Mortgage loans originated for sale		(20,440)		(71,835)
Proceeds from sale of mortgage loans		24,192		75,766
Net gain on sale of mortgage loans		(587)		(2,100)
Increase in cash surrender value of bank owned life insurance		(40)		—
Decrease in accrued interest receivable		1,374		1,537
Decrease in other assets		1,521		875
Decrease (increase) in other liabilities		1,379		(9,032)
Net cash provided by operating activities		21,311		6,475

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in interest-bearing time deposits with banks		3		—
Proceeds from paydowns, maturities, and calls of debt securities		41,117		59,641
Purchase of securities		(189,744)		(142,980)
Net decrease (increase) in loans		14,649		(21,482)
Purchases of bank premises and equipment		(289)		(418)
Proceeds from sales of bank premises held for sale		568		—
Proceeds from sales of foreclosed assets		294		15
Net cash used in investing activities		(133,402)		(105,224)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		77,884		225,432
Net decrease in repurchase agreements		(10,422)		(3,760)
Taxes paid related to the vesting of restricted stock units		(57)		—
Repurchase of common stock		(943)		(1,514)
Cash dividends and dividend equivalents paid		(4,660)		(4,124)
Net cash provided by financing activities		61,802		216,034

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(50,289)		117,285
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		409,268		312,451
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	358,979	$	429,736

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,
	2022		2021

	(dollars in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	1,890	$	2,077
Cash paid for income taxes	$	—	$	—

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

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – ACCOUNTING POLICIES

Basis of Presentation

HBT Financial, Inc. (“HBT Financial” or the “Company”) is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company (“Heartland Bank” or the “Bank”). The Bank provides a comprehensive suite of business, commercial, wealth management and retail banking products and services to individuals, businesses, and municipal entities throughout Central and Northeastern Illinois and Eastern Iowa. Additionally, the Company is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory agencies.

The unaudited consolidated financial statements, including the notes thereto, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) interim reporting requirements. Certain information in footnote disclosures normally included in financial statements prepared in accordance with GAAP has been condensed or omitted pursuant to rules and regulations of the SEC. These interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 11, 2022.

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 may remain an emerging growth company until the earliest to occur of: (1) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering, which is December 31, 2024, (2) the last day of the fiscal year in which the Company has $1.07 billion or more in annual revenues, (3) the date on which the Company is deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or (4) the date on which the Company has, during the previous three year period, issued, publicly or privately, more than $1.0 billion in non-convertible debt securities. The Company has elected to use the extended transition period until the Company is no longer an emerging growth company or until the Company chooses to affirmatively and irrevocably opt out of the extended transition period. As a result, the Company’s financial statements may not be comparable to companies that comply with new or revised accounting pronouncements applicable to public companies.

Use of Estimates

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

Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant changes in the near term relate to the determination of the allowance for loan losses and fair value of assets acquired and liabilities assumed in business combinations.

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

Reclassifications

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

Subsequent Events

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

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 has formed an implementation team to assess the impact that ASU 2016-13 will have on the Company’s consolidated financial statements. For the majority of loans evaluated on a pooled basis, the Company anticipates using a discounted cash flow method which considers instrument level cash flows adjusted for, among other factors, prepayment speeds, probability of default, and loss given default. The Company also anticipates using regression analysis of historical internal and peer data to determine which variables are best suited to be economic variables utilized when modeling lifetime probability of default and loss given default.

The ultimate impact to the Company’s financial condition and results of operations of ASU 2016-13, at both adoption and each subsequent reporting period, is highly dependent on credit quality, macroeconomic forecasts and conditions, the composition of our loan and securities portfolios, along with other management judgments.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies measurement of goodwill and eliminates Step 2 from the goodwill impairment test. Under ASU 2017-04, 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. ASU 2020-04 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.

NOTE 2 – ACQUISITIONS

NXT Bancorporation, Inc.

On October 1, 2021, HBT Financial acquired 100% of the issued and outstanding common stock of NXT Bancorporation, Inc. (“NXT”), the holding company for NXT Bank, pursuant to an Agreement and Plan of Merger dated June 7, 2021. Under the Agreement and Plan of Merger, NXT merged with and into HBT Financial, with HBT Financial as the surviving entity, on October 1, 2021. Additionally, NXT Bank was merged with and into Heartland Bank, with Heartland Bank as the surviving entity, in December 2021.

At the effective time of the merger, each share of NXT was converted into the right to receive 67.6783 shares of HBT Financial common stock, cash in lieu of fractional shares, and $400 in cash. There were 1,799,016 shares of HBT Financial common stock issued at the effective time of the acquisition with an aggregate market value of $29.3 million, based on the closing stock price of $16.27 on October 1, 2021. This transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the date of acquisition. Goodwill of $5.7 million was recorded in the acquisition, which reflects expected synergies from combining the operations of HBT Financial and NXT, and is nondeductible for tax purposes.

The acquisition of NXT provides an opportunity to utilize Heartland Bank’s existing excess liquidity to replace NXT Bank’s higher-cost funding. Additionally, Heartland Bank’s broader range of products and services, as well as a greater ability to meet larger borrowing needs, provides an opportunity to expand NXT Bank customer relationships.

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HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The fair value of the assets acquired and liabilities assumed from NXT on the acquisition date were as follows (dollars in thousands):


	Fair Value
Assets acquired:
Cash and cash equivalents	$	5,862
Interest-bearing time deposits with banks		739
Debt securities		18,295
Equity securities with readily determinable fair value		43
Restricted stock		796
Loans		194,576
Bank owned life insurance		7,352
Bank premises and equipment		3,667
Core deposit intangible assets		199
Mortgage servicing rights		370
Accrued interest receivable		886
Other assets		1,340
Total assets acquired		234,125

Liabilities assumed:
Deposits		181,586
Securities sold under agreements to repurchase		4,080
FHLB advances		12,625
Other liabilities		1,633
Total liabilities assumed		199,924
Net assets acquired	$	34,201

Consideration paid:
Cash	$	10,633
Common stock		29,270
Total consideration paid	$	39,903

Goodwill	$	5,702

The following table presents the acquired non-impaired loans as of the acquisition date (dollars in thousands):


Fair Value	$	194,576
Gross contractual amounts receivable		196,104
Estimate of contractual cash flows not expected to be collected		1,045

There were no loans acquired with deteriorated credit quality from NXT.

Table of Contents

HBT FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides the pro forma information for the results of operations for the three months ended March 31, 2021, as if the acquisition had occurred on January 1, 2020. The pro forma results combine the historical results of NXT into HBT Financial’s consolidated statements of income, including the impact of certain acquisition accounting adjustments, which include loan discount accretion, intangible assets amortization, deposit premium amortization, and borrowing premium amortization. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results that would have been obtained had the acquisition actually occurred on January 1, 2020. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, provision for loan losses, expense efficiencies or asset dispositions. The acquisition-related expenses that have been recognized are included in net income in the following table.


	Pro Forma
	Three Months Ended
(dollars in thousands, except per share data)	March 31, 2021
Total revenues (net interest income and noninterest income)	$	42,543
Net income		15,970
Earnings per share - basic		0.55
Earnings per share - diluted		0.55

NOTE 3 – SECURITIES

The carrying balances of the securities were as follows:


	March 31,		December 31,
	2022		2021

	(dollars in thousands)
Debt securities available-for-sale	$	933,922	$	942,168
Debt securities held-to-maturity		438,054		336,185
Equity securities with readily determinable fair value		3,256		3,443
Equity securities with no readily determinable fair value		1,927		1,927
Total securities	$	1,377,159	$	1,283,723

There were no sales of securities during the three months ended March 31, 2022 and 2021. Gains (losses) on securities were as follows during the three months ended March 31: