0001558370-23-003139 | 10-K | XBRL Viewer

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Standby letters of credit
COMMITMENTS AND CONTINGENCIES
Financial instruments off-balance sheet credit risks	$ 17,785	$ 12,960
Commitments to extend credit
COMMITMENTS AND CONTINGENCIES
Financial instruments off-balance sheet credit risks	$ 756,885	$ 609,947

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s goodwill and core deposit intangible assets for the years ended December 31:


	Year Ended December 31,
	2022				2021				2020
			Core Deposit				Core Deposit				Core Deposit
	Goodwill		Intangible		Goodwill		Intangible		Goodwill		Intangible

	(dollars in thousands)
Beginning balance	$	29,322	$	1,943	$	23,620	$	2,798	$	23,620	$	4,030
Additions		—		—		5,702		199		—		—
Amortization		—		(873)		—		(1,054)		—		(1,232)
Ending balance	$	29,322	$	1,070	$	29,322	$	1,943	$	23,620	$	2,798
Accumulated amortization	$	—	$	20,847	$	—	$	19,974	$	—	$	18,920

Amortization of core deposit intangible assets for the years subsequent to December 31, 2022 is expected to be as follows (dollars in thousands):


Year ended December 31,
2023	$	353
2024		337
2025		275
2026		20
2027		20
Thereafter		65
Total	$	1,070

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2022

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 17 – EARNINGS PER SHARE

The Company has granted certain 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.

Diluted earnings per share is computed using the treasury stock method and reflects the potential dilution from the Company’s outstanding restricted stock units and performance restricted stock units.

The following table sets forth the computation of basic and diluted earnings per share:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Numerator:
Net income	$	56,456	$	56,271	$	36,845
Earnings allocated to participating securities		(66)		(104)		(93)
Numerator for earnings per share - basic and diluted	$	56,390	$	56,167	$	36,752

Denominator:
Weighted average common shares outstanding		28,853,697		27,795,806		27,457,306
Dilutive effect of outstanding restricted stock units		65,619		15,487		—
Weighted average common shares outstanding, including all dilutive potential shares		28,919,316		27,811,293		27,457,306

Earnings per share - Basic	$	1.95	$	2.02	$	1.34
Earnings per share - Diluted	$	1.95	$	2.02	$	1.34

FORECLOSED ASSETS

12 Months Ended

Dec. 31, 2022

FORECLOSED ASSETS

FORECLOSED ASSETS

NOTE 7 – FORECLOSED ASSETS

Foreclosed assets activity is as follows for the years ended December 31:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Beginning balance	$	3,278	$	4,168	$	5,099
Transfers from loans		541		4,857		1,074
Capitalized improvements		—		—		6
Proceeds from sales		(475)		(5,805)		(2,079)
Sales through loan origination		—		(252)		(67)
Net gain on sales		118		505		348
Direct write-downs		(432)		(195)		(213)
Ending balance	$	3,030	$	3,278	$	4,168

Gains (losses) on foreclosed assets includes the following for the years ended December 31:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Direct write-downs	$	(432)	$	(195)	$	(213)
Net gain on sales		118		505		348
Guarantee reimbursements		—		—		7
Gains (losses) on foreclosed assets	$	(314)	$	310	$	142

The carrying value of foreclosed one-to-four family residential real estate property as of December 31, 2022 and 2021, was $20 thousand and $0.2 million, respectively. As of December 31, 2022, there were 4 one-to-four family residential real estate loans in the process of foreclosure totaling approximately $0.2 million. As of December 31, 2021, there were 4 residential real estate loans in the process of foreclosure totaling approximately $0.1 million.

SUBORDINATED NOTES - Summary (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Sep. 03, 2020
SUBORDINATED NOTES
Subordinated notes, at carrying value	$ 39,395	$ 39,316
Subordinated Notes
SUBORDINATED NOTES
Subordinated notes, at face value	40,000	40,000	$ 40,000
Unamortized issuance costs	(605)	(684)
Subordinated notes, at carrying value	$ 39,395	$ 39,316

FAIR VALUE OF FINANCIAL INSTRUMENTS - Carrying amount and estimated fair value (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Financial assets:
Debt securities held-to-maturity	$ 478,801	$ 336,027
Level 1 \| Carrying Amount
Financial assets:
Cash and cash equivalents	114,159	409,268
Level 1 \| Estimated Fair Value
Financial assets:
Cash and cash equivalents	114,159	409,268
Level 2 \| Carrying Amount
Financial assets:
Debt securities held-to-maturity	541,600	336,185
Accrued interest receivable	19,506	14,901
Financial liabilities:
Securities sold under agreements to repurchase	43,081	61,256
Accrued interest payable	1,363	1,043
Level 2 \| Estimated Fair Value
Financial assets:
Debt securities held-to-maturity	478,801	336,027
Accrued interest receivable	19,506	14,901
Financial liabilities:
Securities sold under agreements to repurchase	43,081	61,256
Accrued interest payable	1,363	1,043
Level 3 \| Carrying Amount
Financial assets:
Restricted stock	7,965	2,739
Loans, net	2,594,920	2,475,753
Investments in unconsolidated subsidiaries	1,165	1,165
Financial liabilities:
Time deposits	262,968	328,208
Level 3 \| Estimated Fair Value
Financial assets:
Restricted stock	7,965	2,739
Loans, net	2,566,930	2,494,686
Investments in unconsolidated subsidiaries	1,165	1,165
Financial liabilities:
Time deposits	253,619	327,779
Subordinated Notes \| Level 3 \| Carrying Amount
Financial liabilities:
Subordinated debt	39,395	39,316
Subordinated Notes \| Level 3 \| Estimated Fair Value
Financial liabilities:
Subordinated debt	37,205	41,602
Junior Subordinated Debentures Issued \| Level 3 \| Carrying Amount
Financial liabilities:
Subordinated debt	37,780	37,714
Junior Subordinated Debentures Issued \| Level 3 \| Estimated Fair Value
Financial liabilities:
Subordinated debt	$ 37,030	$ 33,640

DERIVATIVE FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2019
DERIVATIVE FINANCIAL INSTRUMENTS
Cash pledged	$ 0.6	$ 0.8
Debt Securities, Pledged Status [Extensible Enumeration]	us-gaap:AssetPledgedAsCollateralMember	us-gaap:AssetPledgedAsCollateralMember
Debt securities pledged		$ 7.5
Debt Securities, Pledged Status [Extensible Enumeration]	us-gaap:AssetPledgedAsCollateralMember	us-gaap:AssetPledgedAsCollateralMember
Interest rate swap \| Cash flow hedge \| Variable-rate borrowings
DERIVATIVE FINANCIAL INSTRUMENTS
Notional amount			$ 10.0

SECURITIES

12 Months Ended

Dec. 31, 2022

SECURITIES

SECURITIES

NOTE 3 – SECURITIES

Debt Securities

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


December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	169,860	$	—	$	(15,345)	$	154,515
U.S. government agency		59,291		—		(4,134)		55,157
Municipal		275,972		46		(32,189)		243,829
Mortgage-backed:
Agency residential		213,676		5		(18,240)		195,441
Agency commercial		150,060		—		(17,172)		132,888
Corporate		65,597		55		(3,958)		61,694
Total available-for-sale		934,456		106		(91,038)		843,524
Held-to-maturity:
U.S. government agency		88,424		—		(9,728)		78,696
Municipal		42,167		195		(314)		42,048
Mortgage-backed:
Agency residential		102,728		—		(6,470)		96,258
Agency commercial		308,281		—		(46,482)		261,799
Total held-to-maturity		541,600		195		(62,994)		478,801
Total debt securities	$	1,476,056	$	301	$	(154,032)	$	1,322,325


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

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	109,002	$	328	$	(354)	$	108,976
U.S. government agency		129,269		1,303		(2,467)		128,105
Municipal		293,837		6,144		(2,904)		297,077
Mortgage-backed:
Agency residential		178,236		2,149		(919)		179,466
Agency commercial		164,875		1,234		(2,048)		164,061
Corporate		63,141		1,638		(296)		64,483
Total available-for-sale		938,360		12,796		(8,988)		942,168
Held-to-maturity:
U.S. government agency		12,349		42		(51)		12,340
Municipal		15,666		809		—		16,475
Mortgage-backed:
Agency residential		20,555		196		(102)		20,649
Agency commercial		287,615		1,749		(2,801)		286,563
Total held-to-maturity		336,185		2,796		(2,954)		336,027
Total debt securities	$	1,274,545	$	15,592	$	(11,942)	$	1,278,195

On March 31, 2022, June 30, 2021 and 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 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:


	March 31, 2022				June 30, 2021				March 31, 2021
	Amortized				Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value

	(dollars in thousands)
U.S. government agency	$	78,841	$	71,048	$	—	$	—	$	7,593	$	7,323
Mortgage-backed:
Agency residential		8,175		7,651		—		—		8,776		8,536
Agency commercial		27,834		25,432		99,271		99,275		118,792		113,861
Total	$	114,850	$	104,131	$	99,271	$	99,275	$	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 (loss), 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 (loss) will offset or mitigate the effect on interest income of the amortization of the premium or discount for that held-to-maturity debt security.

As of December 31, 2022 and 2021, the Company had securities with a carrying value of $332.6 million and $353.3 million, respectively, which were pledged to secure public and trust deposits, securities sold under agreements to repurchase, and for other purposes required or permitted by law.

The Company has no direct exposure to the State of Illinois, but approximately 49% of the municipal portfolio consists of securities issued by municipalities located in Illinois as of December 31, 2022. Approximately 81% of such securities were general obligation issues as of December 31, 2022.

The amortized cost and fair value of debt securities by contractual maturity, as of December 31, 2022, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value

	(dollars in thousands)
Due in 1 year or less	$	19,501	$	19,127	$	2,288	$	2,290
Due after 1 year through 5 years		230,286		216,799		27,813		26,908
Due after 5 years through 10 years		251,203		217,722		83,181		76,214
Due after 10 years		69,730		61,547		17,309		15,332

Mortgage-backed:
Agency residential		213,676		195,441		102,728		96,258
Agency commercial		150,060		132,888		308,281		261,799
Total	$	934,456	$	843,524	$	541,600	$	478,801

The following tables present gross unrealized losses and fair value of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31:


	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
December 31, 2022	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	(8,401)	$	92,445	$	(6,944)	$	62,070	$	(15,345)	$	154,515
U.S. government agency		(2,980)		47,370		(1,154)		7,787		(4,134)		55,157
Municipal		(10,906)		149,261		(21,283)		87,794		(32,189)		237,055
Mortgage-backed:
Agency residential		(8,332)		127,288		(9,908)		65,692		(18,240)		192,980
Agency commercial		(4,764)		62,672		(12,408)		70,216		(17,172)		132,888
Corporate		(2,594)		52,190		(1,364)		5,600		(3,958)		57,790
Total available-for-sale		(37,977)		531,226		(53,061)		299,159		(91,038)		830,385
Held-to-maturity:
U.S. government agency		(1,754)		15,751		(7,974)		62,945		(9,728)		78,696
Municipal		(314)		23,433		—		—		(314)		23,433
Mortgage-backed:
Agency residential		(4,039)		78,452		(2,431)		17,806		(6,470)		96,258
Agency commercial		(16,716)		103,298		(29,766)		158,501		(46,482)		261,799
Total held-to-maturity		(22,823)		220,934		(40,171)		239,252		(62,994)		460,186
Total debt securities	$	(60,800)	$	752,160	$	(93,232)	$	538,411	$	(154,032)	$	1,290,571


	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
December 31, 2021	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	(354)	$	68,410	$	—	$	—	$	(354)	$	68,410
U.S. government agency		(2,183)		80,219		(284)		5,578		(2,467)		85,797
Municipal		(2,018)		89,424		(886)		17,327		(2,904)		106,751
Mortgage-backed:
Agency residential		(851)		91,703		(68)		4,305		(919)		96,008
Agency commercial		(1,921)		113,111		(127)		6,443		(2,048)		119,554
Corporate		(7)		2,737		(289)		4,671		(296)		7,408
Total available-for-sale		(7,334)		445,604		(1,654)		38,324		(8,988)		483,928
Held-to-maturity:
U.S. government agency		(51)		4,949		—		—		(51)		4,949
Mortgage-backed:
Agency residential		(102)		14,932		—		—		(102)		14,932
Agency commercial		(2,673)		174,428		(128)		2,776		(2,801)		177,204
Total held-to-maturity		(2,826)		194,309		(128)		2,776		(2,954)		197,085
Total debt securities	$	(10,160)	$	639,913	$	(1,782)	$	41,100	$	(11,942)	$	681,013

As of December 31, 2022, there were 261 securities in an unrealized loss position for a period of twelve months or more, and 519 securities in an unrealized loss position for a period of less than twelve months. These unrealized losses are primarily a result of fluctuations in interest rates in the bond market. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports. Management believes that all declines in value of these securities are deemed to be temporary.

There were no sales of debt securities during the years ended December 31, 2022, 2021, and 2020.

Equity Securities

Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the consolidated statements of income.

The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar securities of the same issuer.

The initial cost and carrying values of equity securities, with cumulative net unrealized gains and losses, are as follows:


	Readily		No Readily
	Determinable		Determinable
December 31, 2022	Fair Value		Fair Value

	(dollars in thousands)
Initial cost	$	3,142	$	2,142
Cumulative net unrealized losses		(113)		(165)
Carrying value	$	3,029	$	1,977


	Readily		No Readily
	Determinable		Determinable
December 31, 2021	Fair Value		Fair Value

	(dollars in thousands)
Initial cost	$	3,142	$	2,092
Cumulative net unrealized gains (losses)		301		(165)
Carrying value	$	3,443	$	1,927

As of December 31, 2022 and 2021, the cumulative net unrealized losses on equity securities with no readily determinable fair value reflect downward adjustments based on observable price changes of an identical investment. There have been no impairments or upward adjustments based on observable price changes to equity securities with no readily determinable fair value.

There were no sales of equity securities during the years ended December 31, 2022, 2021, and 2020. Unrealized gains (losses) on equity securities were as follows during the years ended December 31:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Readily determinable fair value		(414)		107		33
No readily determinable fair value		—		—		—
Unrealized gains (losses) on equity securities	$	(414)		107	$	33

SECURITIES - Equity securities (Details) - USD ($) $ in Thousands	36 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Equity Securities - Readily determinable fair value
Equity Securities, Readily determinable fair value, cost	$ 3,142	$ 3,142
Equity Securities, Readily determinable fair value, Cumulative Net Unrealized Gains (Losses)	(113)	301
Equity securities, Readily determinable fair value, Carrying Value	3,029	3,443
Equity Securities - No readily determinable fair value
Equity Securities, No readily determinable fair value, cost	2,142	2,092
Equity Securities, No readily determinable fair value, Cumulative Net Unrealized Gains (Losses)	(165)	(165)
Equity securities: No readily determinable fair value, Carrying Value	1,977	1,927
Impairment on equity securities with no readily determinable value	0	0
Upward adjustment on equity securities with no readily determinable fair value	0	$ 0
Proceeds from sale of equity securities	$ 0

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS - Interest rate and maturities (Details) - Junior Subordinated Debentures Issued	24 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Heartland Bancorp, Inc. Capital Trust B
SUBORDINATED NOTES
Interest Rate	6.83%	2.87%
Heartland Bancorp, Inc. Capital Trust B \| LIBOR
SUBORDINATED NOTES
Spread on interest rate basis	2.75%
Heartland Bancorp, Inc. Capital Trust C
SUBORDINATED NOTES
Interest Rate	6.30%	1.73%
Heartland Bancorp, Inc. Capital Trust C \| LIBOR
SUBORDINATED NOTES
Spread on interest rate basis	1.53%
Heartland Bancorp, Inc. Capital Trust D
SUBORDINATED NOTES
Interest Rate	6.12%	1.55%
Heartland Bancorp, Inc. Capital Trust D \| LIBOR
SUBORDINATED NOTES
Spread on interest rate basis	1.35%
FFBI Capital Trust I
SUBORDINATED NOTES
Interest Rate	6.88%	2.92%
FFBI Capital Trust I \| LIBOR
SUBORDINATED NOTES
Spread on interest rate basis	2.80%
National Bancorp Statutory Trust I
SUBORDINATED NOTES
Interest Rate	7.67%	3.10%
National Bancorp Statutory Trust I \| LIBOR
SUBORDINATED NOTES
Spread on interest rate basis	2.90%

BORROWINGS (Details) - USD ($) $ in Thousands	12 Months Ended
BORROWINGS (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
BORROWINGS
FHLB borrowings	$ 160,000	$ 0
Weighted average rate	4.29%
Maturity period	30 days
Securities pledged, served as collateral	$ 892,100	567,000
Loans pledged in association with Mortgage Partnership Finance Program	300	400
FRB Line of credit
BORROWINGS
Borrowings	0	0
Securities pledged, served as collateral	$ 0	$ 0

LOAN SERVICING

12 Months Ended

Dec. 31, 2022

LOAN SERVICING

LOAN SERVICING

NOTE 5 – LOAN SERVICING

Mortgage loans serviced for others, not included in the accompanying consolidated balance sheets, amounted to $955.8 million and $1.04 billion as of December 31, 2022 and 2021, respectively. Activity in mortgage servicing rights is as follows for years ended December 31:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Beginning balance	$	7,994	$	5,934	$	8,518
Acquired		—		370		—
Capitalized servicing rights		530		1,200		1,981
Fair value adjustment:
Attributable to payments and principal reductions		(1,343)		(1,788)		(2,364)
Attributable to changes in valuation inputs and assumptions		2,966		2,278		(2,201)
Total fair value adjustment		1,623		490		(4,565)
Ending balance	$	10,147	$	7,994	$	5,934

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 30
-Section 50
-Paragraph 1A
-Subparagraph (c)(3)
-URI https://asc.fasb.org/extlink&oid=109249958&loc=SL6224234-111729

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 30
-Section 50
-Paragraph 1A
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=109249958&loc=SL6224234-111729

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 20
-Section 50
-Paragraph 3
-Subparagraph (b)(2)(ii)
-URI https://asc.fasb.org/extlink&oid=121570589&loc=d3e107207-111719

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 20
-Section 50
-Paragraph 3
-Subparagraph (cc)
-URI https://asc.fasb.org/extlink&oid=121570589&loc=d3e107207-111719

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-SubTopic 50
-Section 50
-Paragraph 2
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=128311188&loc=d3e122596-111746

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

ACQUISITIONS - Assets Acquired and Liabilities (Details) - USD ($) $ in Thousands	Oct. 01, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Consideration paid:
Goodwill		$ 29,322	$ 29,322	$ 23,620	$ 23,620
NXT Bancorporation, Inc
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
Business Combination, Consideration Transferred, Total	39,903
Goodwill	5,702
Business Combination, Acquired Receivables [Abstract]
Fair Value	194,576
Gross contractual amounts receivable	196,104
Estimate of contractual cash flows not expected to be collected	1,045
Deteriorated credit quality loans	$ 0

DEFERRED COMPENSATION

12 Months Ended

Dec. 31, 2022

DEFERRED COMPENSATION

DEFERRED COMPENSATION

NOTE 18 – DEFERRED COMPENSATION

The Company maintained a supplemental executive retirement plan (SERP) for certain key executive officers. The SERP benefit payments were scheduled to be paid in equal monthly installments over 30 years. In June 2019, the Company approved the termination of the SERP, and a lump sum payment was made in June 2020 to each participant equal to the present value of any remaining installment payments. As of December 31, 2022 and 2021, there was no remaining deferred compensation liability for the SERP. During the year ended December 31, 2020, the Company recognized deferred compensation expense for the SERP of $1.7 million.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

12 Months Ended

Dec. 31, 2022

ACCUMULATED OTHER COMPREHENSIVE INCOME

Schedule of the activity and accumulated balances for components of other comprehensive income (loss)


	Unrealized Gains (Losses)
	on Debt Securities
	Available-for-Sale		Held-to-Maturity		Derivatives		Total

	(dollars in thousands)
Balance, December 31, 2019	$	8,659	$	(131)	$	(696)	$	7,832
Other comprehensive income (loss) before reclassifications		15,272		—		(1,084)		14,188
Reclassifications		—		18		238		256
Other comprehensive income (loss), before tax		15,272		18		(846)		14,444
Income tax expense (benefit)		4,353		5		(235)		4,123
Other comprehensive income (loss), after tax		10,919		13		(611)		10,321
Balance, December 31, 2020		19,578		(118)		(1,307)		18,153
Transfer from available-for-sale to held-to-maturity		3,887		(3,887)		—		—
Other comprehensive (loss) income before reclassifications		(24,798)		—		366		(24,432)
Reclassifications		—		687		412		1,099
Other comprehensive (loss) income, before tax		(24,798)		687		778		(23,333)
Income tax (benefit) expense		(7,069)		196		222		(6,651)
Other comprehensive (loss) income, after tax		(17,729)		491		556		(16,682)
Balance, December 31, 2021		5,736		(3,514)		(751)		1,471
Transfer from available-for-sale to held-to-maturity		7,664		(7,664)		—		—
Other comprehensive (loss) income before reclassifications		(105,459)		—		1,183		(104,276)
Reclassifications		—		1,723		126		1,849
Other comprehensive (loss) income, before tax		(105,459)		1,723		1,309		(102,427)
Income tax (benefit) expense		(30,061)		491		373		(29,197)
Other comprehensive (loss) income, after tax		(75,398)		1,232		936		(73,230)
Balance, December 31, 2022	$	(61,998)	$	(9,946)	$	185	$	(71,759)

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS

12 Months Ended

Dec. 31, 2022

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS

NOTE 13 – JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS

Five subsidiary business trusts of the Company have issued floating rate capital securities (“capital securities”) which are guaranteed by the Company.

The Company owns all of the outstanding stock of the five subsidiary business trusts. The trusts used the proceeds from the issuance of their capital securities to buy floating rate junior subordinated deferrable interest debentures (“junior subordinated debentures”) issued by the Company. These junior subordinated debentures are the only assets of the trusts and the interest payments from the junior subordinated debentures finance the distributions paid on the capital securities. The junior subordinated debentures are unsecured and rank junior and subordinate in the right of payment to all senior debt of the Company.

In accordance with GAAP, the trusts are not consolidated in the Company’s financial statements.

The carrying value of the junior subordinated debentures are summarized as follows:


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Heartland Bancorp, Inc. Capital Trust B	$	10,310	$	10,310
Heartland Bancorp, Inc. Capital Trust C		10,310		10,310
Heartland Bancorp, Inc. Capital Trust D		5,155		5,155
FFBI Capital Trust I		7,217		7,217
National Bancorp Statutory Trust I		5,773		5,773
Total junior subordinated debentures, at face value		38,765		38,765
National Bancorp Statutory Trust I unamortized discount		(985)		(1,051)
Total junior subordinated debentures, at carrying value	$	37,780	$	37,714

The interest rates on the junior subordinated debentures are variable, reset quarterly, and are equal to the three-month LIBOR, as determined on the LIBOR Determination Date immediately preceding the Distribution Payment Date specific to each junior subordinated debenture, plus a fixed percentage. The interest rates and maturities of the junior subordinated debentures are summarized as follows:


				Interest Rate at
	Variable			December 31,		December 31,		Maturity
	Interest Rate			2022		2021		Date
Heartland Bancorp, Inc. Capital Trust B	LIBOR plus	2.75	%	6.83	%	2.87	%	April 6, 2034
Heartland Bancorp, Inc. Capital Trust C	LIBOR plus	1.53		6.30		1.73		June 15, 2037
Heartland Bancorp, Inc. Capital Trust D	LIBOR plus	1.35		6.12		1.55		September 15, 2037
FFBI Capital Trust I	LIBOR plus	2.80		6.88		2.92		April 6, 2034
National Bancorp Statutory Trust I	LIBOR plus	2.90		7.67		3.10		December 15, 2037

The distribution rate payable on the debentures is cumulative and payable quarterly in arrears. The Company has the right, subject to events in default, to defer payments of interest on the junior subordinated debentures at any time by extending the interest payment period for a period not exceeding 20 quarterly periods with respect to each deferral period, provided that no extension period may extend beyond the redemption or maturity date of the junior subordinated debentures. The capital securities are subject to mandatory redemption upon payment of the junior subordinated debentures and carry an interest rate identical to that of the related debenture. The junior subordinated debentures maturity dates may be shortened if certain conditions are met, or at any time within 90 days following the occurrence and continuation of certain changes in either tax treatment or the capital treatment of the junior subordinated debentures or the capital securities. If the junior subordinated debentures are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The Company has the right to terminate each Capital Trust and cause the junior subordinated debentures to be distributed to the holders of the capital securities in liquidation of such trusts.

Under current banking regulations, bank holding companies are allowed to include qualifying trust preferred securities in their Tier 1 Capital for regulatory capital purposes, subject to a 25% limitation to all core (Tier 1) capital elements, net of goodwill and other intangible assets less any associated deferred tax liability. As of December 31, 2022 and 2021, 100% of the trust preferred securities qualified as Tier 1 capital under the final rule adopted in March 2005.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Surplus	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Total
Balance at Dec. 31, 2019	$ 275	$ 190,524	$ 134,287	$ 7,832		$ 332,918
Balance (in shares) at Dec. 31, 2019	27,457,306
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			36,845			36,845
Other comprehensive loss				10,321		10,321
Stock-based compensation		351				351
Cash dividends and dividend equivalents			(16,518)			(16,518)
Balance at Dec. 31, 2020	$ 275	190,875	154,614	18,153		363,917
Balance (in shares) at Dec. 31, 2020	27,457,306
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			56,271			56,271
Other comprehensive loss				(16,682)		(16,682)
Stock-based compensation		764				764
Issuance of common stock upon vesting of restricted stock units (in shares)	20,225
Issuance of common stock in NXT acquisition	$ 18	29,252				29,270
Issuance of common stock in NXT acquisition (in shares)	1,799,016
Repurchase of common stock					$ (4,906)	(4,906)
Repurchase of common stock (in shares)	(290,486)
Cash dividends and dividend equivalents			(16,753)			(16,753)
Balance at Dec. 31, 2021	$ 293	220,891	194,132	1,471	(4,906)	411,881
Balance (in shares) at Dec. 31, 2021	28,986,061
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income			56,456			56,456
Other comprehensive loss				(73,230)		(73,230)
Stock-based compensation		1,949				1,949
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings		(57)				(57)
Issuance of common stock upon vesting of restricted stock units (in shares)	31,944
Repurchase of common stock					(4,783)	(4,783)
Repurchase of common stock (in shares)	(265,379)
Cash dividends and dividend equivalents			(18,584)			(18,584)
Balance at Dec. 31, 2022	$ 293	$ 222,783	$ 232,004	$ (71,759)	$ (9,689)	$ 373,632
Balance (in shares) at Dec. 31, 2022	28,752,626

BANK PREMISES AND EQUIPMENT - Depreciation Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($) item	Dec. 31, 2020 USD ($)
BANK PREMISES AND EQUIPMENT
Total depreciation expense	$ 3,043	$ 3,074	$ 2,941
Number of branches closed or consolidated \| item		6
Bank premises held for sale total	200	$ 1,500
Impairment losses on bank premises held for sale	60	661	0
Building and improvements
BANK PREMISES AND EQUIPMENT
Total depreciation expense	1,623	1,694	1,761
Furniture, fixtures, and equipment
BANK PREMISES AND EQUIPMENT
Total depreciation expense	$ 1,420	$ 1,380	$ 1,180

BANK PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
BANK PREMISES AND EQUIPMENT
Bank premises and equipment	$ 102,381	$ 101,379
Less accumulated depreciation	51,912	48,896
Total bank premises and equipment, net	50,469	52,483
Land, buildings, and improvements
BANK PREMISES AND EQUIPMENT
Bank premises and equipment	77,869	77,180
Furniture, fixtures, and equipment
BANK PREMISES AND EQUIPMENT
Bank premises and equipment	$ 24,512	$ 24,199

REGULATORY CAPITAL (Details) $ in Thousands	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
REGULATORY MATTERS
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent).	0.025	0.025
Heartland Bank
REGULATORY MATTERS
Total Capital (to Risk Weighted Assets), Actual Amount	$ 489,316	$ 452,162
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount	253,643	226,950
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	317,054	283,688
Tier 1 Capital (to Risk Weighted Assets), Actual Amount	463,983	428,226
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount	190,233	170,213
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	253,643	226,950
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Amount	463,983	428,226
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount	142,674	127,659
Common Equity Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	206,085	184,397
Tier 1 Capital (to Average Assets), Actual Amount	463,983	428,226
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount	172,240	169,070
Tier 1 Capital (to Average Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 215,300	$ 211,337
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	0.1543	0.1594
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent).	0.0800	0.0800
Total Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)	0.1000	0.1000
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	0.1463	0.1509
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)	0.0600	0.0600
Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)	0.0800	0.0800
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	0.1463%	0.1509%
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)	0.045%	0.045%
Common Equity Tier 1 Capital (to Risk Weighted Assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)	0.065%	0.065%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)	0.1078	0.1013
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)	0.0400	0.0400
Tier 1 Capital (to Average Assets), To Be well Capitalized Under Prompt Corrective Action Provisions Ratio (as a percent)	0.0500	0.0500
Consolidated HBT
REGULATORY MATTERS
Total Capital (to Risk Weighted Assets), Actual Amount	$ 516,556	$ 479,320
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount	254,052	227,115
Tier 1 Capital (to Risk Weighted Assets), Actual Amount	451,828	416,068
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount	190,539	170,336
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Amount	415,213	379,519
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Amount	142,904	127,752
Tier 1 Capital (to Average Assets), Actual Amount	451,828	416,068
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Amount	$ 172,427	$ 169,171
Total Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	0.1627	0.1688
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent).	0.0800	0.0800
Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	0.1423	0.1466
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)	0.0600	0.0600
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Ratio (as a percent)	0.1307%	0.1337%
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes Ratio (as a percent)	0.045%	0.045%
Tier 1 Capital (to Average Assets), Actual Ratio (as a percent)	0.1048	0.0984
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes Ratio (as a percent)	0.0400	0.0400

ACCUMULATED OTHER COMPREHENSIVE INCOME

12 Months Ended

Dec. 31, 2022

ACCUMULATED OTHER COMPREHENSIVE INCOME

ACCUMULATED OTHER COMPREHENSIVE INCOME

NOTE 15 – ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table presents the activity and accumulated balances for components of other comprehensive income (loss) for the years ended December 31:


	Unrealized Gains (Losses)
	on Debt Securities
	Available-for-Sale		Held-to-Maturity		Derivatives		Total

	(dollars in thousands)
Balance, December 31, 2019	$	8,659	$	(131)	$	(696)	$	7,832
Other comprehensive income (loss) before reclassifications		15,272		—		(1,084)		14,188
Reclassifications		—		18		238		256
Other comprehensive income (loss), before tax		15,272		18		(846)		14,444
Income tax expense (benefit)		4,353		5		(235)		4,123
Other comprehensive income (loss), after tax		10,919		13		(611)		10,321
Balance, December 31, 2020		19,578		(118)		(1,307)		18,153
Transfer from available-for-sale to held-to-maturity		3,887		(3,887)		—		—
Other comprehensive (loss) income before reclassifications		(24,798)		—		366		(24,432)
Reclassifications		—		687		412		1,099
Other comprehensive (loss) income, before tax		(24,798)		687		778		(23,333)
Income tax (benefit) expense		(7,069)		196		222		(6,651)
Other comprehensive (loss) income, after tax		(17,729)		491		556		(16,682)
Balance, December 31, 2021		5,736		(3,514)		(751)		1,471
Transfer from available-for-sale to held-to-maturity		7,664		(7,664)		—		—
Other comprehensive (loss) income before reclassifications		(105,459)		—		1,183		(104,276)
Reclassifications		—		1,723		126		1,849
Other comprehensive (loss) income, before tax		(105,459)		1,723		1,309		(102,427)
Income tax (benefit) expense		(30,061)		491		373		(29,197)
Other comprehensive (loss) income, after tax		(75,398)		1,232		936		(73,230)
Balance, December 31, 2022	$	(61,998)	$	(9,946)	$	185	$	(71,759)

Reclassifications from accumulated other comprehensive income (loss) for unrealized gains (losses) on debt securities available-for-sale are included in gains (losses) on sales of securities in the accompanying consolidated statements of income.

Reclassifications from accumulated other comprehensive income (loss) for unrealized gains (losses) on debt securities held-to-maturity are included in securities interest income in the accompanying consolidated statements of income.

Reclassifications from accumulated other comprehensive income (loss) for the fair value of derivative financial instruments represent net interest payments received or made on derivatives designated as cash flow hedges. See Note 14 for additional information.

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2022

DERIVATIVE FINANCIAL INSTRUMENTS

Summary of fair values of Company's derivative instrument assets and liabilities related to interest rate swap contracts


	December 31, 2022				December 31, 2021
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value

	(dollars in thousands)
Fair value recorded in other assets	$	17,000	$	629	$	—	$	—
Fair value recorded in other liabilities		—		—		17,000		(680)

Schedule of the effect of interest rate contracts designated as cash flow hedges on the consolidated statements of income


Location of gross gain (loss) reclassified	Amounts of gross gain (loss)
from accumulated other	reclassified from accumulated
comprehensive income (loss) to income	other comprehensive income (loss)
	Year Ended December 31,
	2022		2021		2020

Designated as cash flow hedges:	(dollars in thousands)
Taxable loan interest income	$	—	$	—	$	64
Junior subordinated debentures interest expense		(126)		(412)		(302)
Total	$	(126)	$	(412)	$	(238)

Summary of interest rate swap agreements not designated as hedging instruments


	December 31, 2022				December 31, 2021
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value

	(dollars in thousands)
Fair value recorded in other assets:
Interest rate swaps with a commercial borrower counterparty	$	—	$	—	$	112,041	$	8,622
Interest rate swaps with a financial institution counterparty		106,995		6,981		3,880		75
Total fair value recorded in other assets	$	106,995	$	6,981	$	115,921	$	8,697

Fair value recorded in other liabilities:
Interest rate swaps with a commercial borrower counterparty	$	106,995	$	(6,981)	$	3,880	$	(75)
Interest rate swaps with a financial institution counterparty		—		—		112,041		(8,622)
Total fair value recorded in other liabilities	$	106,995	$	(6,981)	$	115,921	$	(8,697)

Summary of the effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income


	Year Ended December 31,
	2022		2021		2020

Not designated as hedging instruments:	(dollars in thousands)
Gross gains	$	16,002	$	13,773	$	24,758
Gross losses		(16,002)		(13,773)		(24,758)
Net gains (losses)	$	—	$	—	$	—

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Recorded investments in loans and the allowance for loan losses (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	$ 2,527,562	$ 2,392,000
Individually evaluated for impairment, Loans	71,715	78,619
Total	2,620,253	2,499,689
Collectively evaluated for impairment, Allowance for loan losses	18,984	18,271
Individually evaluated for impairment, Allowance for loan losses	6,320	5,598
Total investments in loans	25,333	23,936	$ 31,838	$ 22,299
Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	20,976	29,070
Individually evaluated for impairment, Allowance for loan losses	29	67
Commercial and industrial
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	261,833	272,064
Individually evaluated for impairment, Loans	4,818	14,744
Total	266,757	286,946
Collectively evaluated for impairment, Allowance for loan losses	3,121	2,253
Individually evaluated for impairment, Allowance for loan losses	158	187
Total investments in loans	3,279	2,440	3,929	4,441
Commercial and industrial \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	106	138
Agricultural and farmland
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	233,118	247,021
Individually evaluated for impairment, Loans	4,033	12
Total	237,746	247,796
Collectively evaluated for impairment, Allowance for loan losses	796	845
Total investments in loans	796	845	793	2,766
Agricultural and farmland \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	595	763
Commercial real estate - owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	203,558	216,794
Individually evaluated for impairment, Loans	11,366	12,332
Total	218,503	234,544
Collectively evaluated for impairment, Allowance for loan losses	1,008	1,480
Individually evaluated for impairment, Allowance for loan losses	168	327
Total investments in loans	1,193	1,840	3,141	1,779
Commercial real estate - owner occupied \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	3,579	5,418
Individually evaluated for impairment, Allowance for loan losses	17	33
Commercial real estate - non-owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	671,663	641,555
Individually evaluated for impairment, Loans	30,509	29,575
Total	713,202	684,023
Collectively evaluated for impairment, Allowance for loan losses	4,332	5,138
Individually evaluated for impairment, Allowance for loan losses	2,388	2,999
Total investments in loans	6,721	8,145	11,251	3,663
Commercial real estate - non-owner occupied \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	11,030	12,893
Individually evaluated for impairment, Allowance for loan losses	1	8
Multi-family
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	287,298	262,701
Total	287,865	263,911
Collectively evaluated for impairment, Allowance for loan losses	1,470	1,259
Total investments in loans	1,472	1,263	1,957	1,024
Multi-family \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	567	1,210
Individually evaluated for impairment, Allowance for loan losses	2	4
Construction and land development
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	359,892	293,548
Individually evaluated for impairment, Loans	82	2,018
Total	360,824	298,048
Collectively evaluated for impairment, Allowance for loan losses	4,221	4,895
Total investments in loans	4,223	4,914	4,232	2,977
Construction and land development \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	850	2,482
Individually evaluated for impairment, Allowance for loan losses	2	19
One-to-four family residential
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	325,621	314,807
Individually evaluated for impairment, Loans	8,399	6,897
Total	338,253	327,837
Collectively evaluated for impairment, Allowance for loan losses	1,709	1,099
Individually evaluated for impairment, Allowance for loan losses	44	210
Total investments in loans	1,759	1,311	1,801	2,540
One-to-four family residential \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	4,233	6,133
Individually evaluated for impairment, Allowance for loan losses	6	2
Municipal, consumer, and other
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Collectively evaluated for impairment, Loans	184,579	143,510
Individually evaluated for impairment, Loans	12,508	13,041
Total	197,103	156,584
Collectively evaluated for impairment, Allowance for loan losses	2,327	1,302
Individually evaluated for impairment, Allowance for loan losses	3,562	1,875
Total investments in loans	5,890	3,178	$ 4,734	$ 3,109
Municipal, consumer, and other \| Loans acquired with deteriorated credit quality
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	16	33
Individually evaluated for impairment, Allowance for loan losses	$ 1	$ 1

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2022

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

NOTE 25 – CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

Following are the condensed parent company only financial statements of HBT Financial.

Condensed Parent Company Only Balance Sheets


	December 31, 2022		December 31, 2021

ASSETS	(dollars in thousands)
Cash and cash equivalents	$	24,278	$	25,752
Investment in subsidiaries:
Bank		422,217		461,339
Non-bank		1,165		1,165
Other assets		5,338		1,283
Total assets	$	452,998	$	489,539

LIABILITIES
Subordinated notes	$	39,395	$	39,316
Junior subordinated debentures		37,780		37,714
Other liabilities		2,191		628
Total liabilities		79,366		77,658

STOCKHOLDERS' EQUITY		373,632		411,881
Total liabilities and stockholders' equity	$	452,998	$	489,539

Condensed Parent Company Only Statements of Income


	Years ended December 31
	2022		2021		2020

INCOME	(dollars in thousands)
Dividends received from subsidiaries:
Bank	$	28,000	$	20,000	$	17,600
Non-bank		—		—		36
Undistributed earnings from subsidiaries:
Bank		35,044		41,227		22,462
Non-bank		—		—		(36)
Other income		51		454		215
Total income		63,095		61,681		40,277

EXPENSES
Interest expense		3,666		3,305		2,189
Other expense		5,292		3,741		2,519
Total expenses		8,958		7,046		4,708
INCOME BEFORE INCOME TAX BENEFIT		54,137		54,635		35,569
INCOME TAX BENEFIT		(2,319)		(1,636)		(1,276)
NET INCOME	$	56,456	$	56,271	$	36,845

Condensed Parent Company Only Statements of Cash Flows


	Year ended December 31
	2022		2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES	(dollars in thousands)
Net income	$	56,456	$	56,271	$	36,845
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed earnings of consolidated subsidiaries		(35,044)		(41,227)		(22,426)
Stock-based compensation		1,949		764		351
Amortization of discount and issuance costs on subordinated notes and debentures		145		144		92
Net gain on sale of foreclosed assets		—		(74)		—
Changes in other assets and liabilities, net		769		(2,231)		1,633
Net cash provided by operating activities		24,275		13,647		16,495


CASH FLOWS FROM INVESTING ACTIVITIES
Capital contribution to bank subsidiary		—		—		—
Capital contribution to non-bank subsidiary		—		—		—
Purchase of securities		—		(48)		(17)
Purchase of foreclosed assets from Heartland Bank		(2,325)		—		—
Proceeds from sale of foreclosed assets		—		74		—
Net cash paid for acquisition of NXT Bancorporation, Inc.		—		(10,411)		—
Net cash used in investing activities		(2,325)		(10,385)		(17)


CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of subordinated notes, net of issuance costs		—		—		39,211
Issuance of common stock		—		—		—
Taxes paid related to the vesting of restricted stock units		(57)		—		—
Repurchase of common stock		(4,783)		(4,906)		—
Cash dividends and dividend equivalents paid		(18,584)		(16,753)		(16,518)
Net cash (used in) provided by financing activities		(23,424)		(21,659)		22,693

NET CHANGE IN CASH AND EQUIVALENTS		(1,474)		(18,397)		39,171
CASH AND CASH EQUIVALENTS
Beginning of year		25,752		44,149		4,978
End of year	$	24,278	$	25,752	$	44,149

FAIR VALUE OF FINANCIAL INSTRUMENTS - Mortgage Servicing Rights (Details) $ in Thousands	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value	$ 10,147	$ 7,994
Recurring
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value	10,147	7,994
Recurring \| Level 3
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value	$ 10,147	$ 7,994
Valuation Technique	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Recurring \| Level 3 \| Constant pre-payment rates (CPR)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value	$ 10,147	$ 7,994
Recurring \| Level 3 \| Constant pre-payment rates (CPR) \| Minimum
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	5.3	7.0
Recurring \| Level 3 \| Constant pre-payment rates (CPR) \| Maximum
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	59.7	88.9
Recurring \| Level 3 \| Constant pre-payment rates (CPR) \| Weighted average
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	(8.2)	(11.7)
Recurring \| Level 3 \| Discount rate \| Minimum
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	9.0	9.0
Recurring \| Level 3 \| Discount rate \| Maximum
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	11.7	11.0
Recurring \| Level 3 \| Discount rate \| Weighted average
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	(9.3)	(9.0)

COMMITMENTS AND CONTINGENCIES - Lease Commitments (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
COMMITMENTS AND CONTINGENCIES
Leases renewal options	true
Lease Commitments
2023	$ 191
2024	123
2025	42
Total	$ 356
Minimum
COMMITMENTS AND CONTINGENCIES
Lease renewal term	3 years
Maximum
COMMITMENTS AND CONTINGENCIES
Lease renewal term	5 years

LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Tables)

12 Months Ended

Dec. 31, 2022

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Summary of Loans


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Commercial and industrial	$	266,757	$	286,946
Agricultural and farmland		237,746		247,796
Commercial real estate - owner occupied		218,503		234,544
Commercial real estate - non-owner occupied		713,202		684,023
Multi-family		287,865		263,911
Construction and land development		360,824		298,048
One-to-four family residential		338,253		327,837
Municipal, consumer, and other		197,103		156,584
Loans, before allowance for loan losses		2,620,253		2,499,689
Allowance for loan losses		(25,333)		(23,936)
Loans, net of allowance for loan losses	$	2,594,920	$	2,475,753

Paycheck Protection Program (PPP) loans (included above)
Commercial and industrial	$	28	$	28,404
Agricultural and farmland		—		913
Municipal, consumer, and other		—		171
Total PPP loans	$	28	$	29,488

Schedule of activity in allowance for loan losses

The following tables detail activity in the allowance for loan losses for the years ended December 31:


					Commercial		Commercial								Municipal,
	Commercial		Agricultural		Real Estate		Real Estate				Construction		One-to-four		Consumer,
	and		and		Owner		Non-owner				and Land		Family		and
	Industrial		Farmland		Occupied		Occupied		Multi-Family		Development		Residential		Other		Total

	(dollars in thousands)
Balance, December 31, 2019	$	4,441	$	2,766	$	1,779	$	3,663	$	1,024	$	2,977	$	2,540	$	3,109	$	22,299
Provision for loan losses		677		(1,946)		961		7,862		933		1,032		(894)		1,907		10,532
Charge-offs		(1,784)		(27)		(39)		(349)		—		(27)		(155)		(587)		(2,968)
Recoveries		595		—		440		75		—		250		310		305		1,975
Balance, December 31, 2020		3,929		793		3,141		11,251		1,957		4,232		1,801		4,734		31,838
Provision for loan losses		(1,474)		52		(1,280)		(3,130)		(694)		340		(472)		(1,419)		(8,077)
Charge-offs		(668)		—		(30)		—		—		—		(267)		(449)		(1,414)
Recoveries		653		—		9		24		—		342		249		312		1,589
Balance, December 31, 2021		2,440		845		1,840		8,145		1,263		4,914		1,311		3,178		23,936
Provision for loan losses		88		(49)		(1,653)		(1,707)		209		(692)		146		2,952		(706)
Charge-offs		(23)		—		(25)		—		—		—		(67)		(569)		(684)
Recoveries		774		—		1,031		283		—		1		369		329		2,787
Balance, December 31, 2022	$	3,279	$	796	$	1,193	$	6,721	$	1,472	$	4,223	$	1,759	$	5,890	$	25,333

The following tables present the recorded investments in loans and the allowance for loan losses by category as of December 31:


					Commercial		Commercial								Municipal,
	Commercial		Agricultural		Real Estate		Real Estate				Construction		One-to-four		Consumer,
	and		and		Owner		Non-owner				and Land		Family		and
December 31, 2022	Industrial		Farmland		Occupied		Occupied		Multi-Family		Development		Residential		Other		Total

Loan balances:	(dollars in thousands)
Collectively evaluated for impairment	$	261,833	$	233,118	$	203,558	$	671,663	$	287,298	$	359,892	$	325,621	$	184,579	$	2,527,562
Individually evaluated for impairment		4,818		4,033		11,366		30,509		—		82		8,399		12,508		71,715
Acquired with deteriorated credit quality		106		595		3,579		11,030		567		850		4,233		16		20,976
Total	$	266,757	$	237,746	$	218,503	$	713,202	$	287,865	$	360,824	$	338,253	$	197,103	$	2,620,253

Allowance for loan losses:
Collectively evaluated for impairment	$	3,121	$	796	$	1,008	$	4,332	$	1,470	$	4,221	$	1,709	$	2,327	$	18,984
Individually evaluated for impairment		158		—		168		2,388		—		—		44		3,562		6,320
Acquired with deteriorated credit quality		—		—		17		1		2		2		6		1		29
Total	$	3,279	$	796	$	1,193	$	6,721	$	1,472	$	4,223	$	1,759	$	5,890	$	25,333

					Commercial		Commercial								Municipal,
	Commercial		Agricultural		Real Estate		Real Estate				Construction		One-to-four		Consumer,
	and		and		Owner		Non-owner				and Land		Family		and
December 31, 2021	Industrial		Farmland		Occupied		Occupied		Multi-Family		Development		Residential		Other		Total

Loan balances:	(dollars in thousands)
Collectively evaluated for impairment	$	272,064	$	247,021	$	216,794	$	641,555	$	262,701	$	293,548	$	314,807	$	143,510	$	2,392,000
Individually evaluated for impairment		14,744		12		12,332		29,575		—		2,018		6,897		13,041		78,619
Acquired with deteriorated credit quality		138		763		5,418		12,893		1,210		2,482		6,133		33		29,070
Total	$	286,946	$	247,796	$	234,544	$	684,023	$	263,911	$	298,048	$	327,837	$	156,584	$	2,499,689

Allowance for loan losses:
Collectively evaluated for impairment	$	2,253	$	845	$	1,480	$	5,138	$	1,259	$	4,895	$	1,099	$	1,302	$	18,271
Individually evaluated for impairment		187		—		327		2,999		—		—		210		1,875		5,598
Acquired with deteriorated credit quality		—		—		33		8		4		19		2		1		67
Total	$	2,440	$	845	$	1,840	$	8,145	$	1,263	$	4,914	$	1,311	$	3,178	$	23,936

Schedule of loans individually evaluated for impairment by category


	Unpaid
	Principal		Recorded		Related
December 31, 2022	Balance		Investment		Allowance

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	268	$	254	$	158
Agricultural and farmland		—		—		—
Commercial real estate - owner occupied		635		610		168
Commercial real estate - non-owner occupied		14,269		14,261		2,388
Multi-family		—		—		—
Construction and land development		—		—		—
One-to-four family residential		569		524		44
Municipal, consumer, and other		8,152		8,131		3,562
Total	$	23,893	$	23,780	$	6,320

With no related allowance:
Commercial and industrial	$	4,564	$	4,564	$	—
Agricultural and farmland		4,440		4,033		—
Commercial real estate - owner occupied		10,912		10,756		—
Commercial real estate - non-owner occupied		16,327		16,248		—
Multi-family		—		—		—
Construction and land development		92		82		—
One-to-four family residential		9,181		7,875		—
Municipal, consumer, and other		4,410		4,377		—
Total	$	49,926	$	47,935	$	—

Total loans individually evaluated for impairment:
Commercial and industrial	$	4,832	$	4,818	$	158
Agricultural and farmland		4,440		4,033		—
Commercial real estate - owner occupied		11,547		11,366		168
Commercial real estate - non-owner occupied		30,596		30,509		2,388
Multi-family		—		—		—
Construction and land development		92		82		—
One-to-four family residential		9,750		8,399		44
Municipal, consumer, and other		12,562		12,508		3,562
Total	$	73,819	$	71,715	$	6,320


	Unpaid
	Principal		Recorded		Related
December 31, 2021	Balance		Investment		Allowance

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	303	$	303	$	187
Agricultural and farmland		—		—		—
Commercial real estate - owner occupied		3,013		3,013		327
Commercial real estate - non-owner occupied		14,912		14,893		2,999
Multi-family		—		—		—
Construction and land development		—		—		—
One-to-four family residential		1,421		1,314		210
Municipal, consumer, and other		8,523		8,498		1,875
Total	$	28,172	$	28,021	$	5,598

With no related allowance:
Commercial and industrial	$	14,452	$	14,441	$	—
Agricultural and farmland		12		12		—
Commercial real estate - owner occupied		9,534		9,319		—
Commercial real estate - non-owner occupied		14,755		14,682		—
Multi-family		—		—		—
Construction and land development		2,112		2,018		—
One-to-four family residential		7,129		5,583		—
Municipal, consumer, and other		4,603		4,543		—
Total	$	52,597	$	50,598	$	—

Total loans individually evaluated for impairment:
Commercial and industrial	$	14,755	$	14,744	$	187
Agricultural and farmland		12		12		—
Commercial real estate - owner occupied		12,547		12,332		327
Commercial real estate - non-owner occupied		29,667		29,575		2,999
Multi-family		—		—		—
Construction and land development		2,112		2,018		—
One-to-four family residential		8,550		6,897		210
Municipal, consumer, and other		13,126		13,041		1,875
Total	$	80,769	$	78,619	$	5,598

The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans during the years ended December 31:


	Year Ended December 31,
	2022				2021				2020
	Average		Interest		Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized		Investment		Recognized

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	204	$	18	$	1,593	$	89	$	3,031	$	169
Agricultural and farmland		—		—		83		4		273		9
Commercial real estate - owner occupied		970		63		3,052		177		1,622		98
Commercial real estate - non-owner occupied		10,943		740		16,494		791		6,345		220
Multi-family		—		—		—		—		—		—
Construction and land development		—		—		554		27		2,441		116
One-to-four family residential		384		16		1,988		77		3,120		110
Municipal, consumer, and other		6,259		236		8,681		158		10,617		286
Total	$	18,760	$	1,073	$	32,445	$	1,323	$	27,449	$	1,008

With no related allowance:
Commercial and industrial	$	9,568	$	453	$	7,125	$	330	$	4,004	$	251
Agricultural and farmland		228		13		290		17		11,061		561
Commercial real estate - owner occupied		8,619		525		7,771		344		11,056		528
Commercial real estate - non-owner occupied		12,636		1,278		10,339		432		14,412		458
Multi-family		—		—		434		10		447		10
Construction and land development		1,505		106		2,107		28		892		23
One-to-four family residential		6,238		352		6,248		192		8,022		316
Municipal, consumer, and other		3,361		148		4,666		86		3,089		115
Total	$	42,155	$	2,875	$	38,980	$	1,439	$	52,983	$	2,262

Total loans individually evaluated for impairment:
Commercial and industrial	$	9,772	$	471	$	8,718	$	419	$	7,035	$	420
Agricultural and farmland		228		13		373		21		11,334		570
Commercial real estate - owner occupied		9,589		588		10,823		521		12,678		626
Commercial real estate - non-owner occupied		23,579		2,018		26,833		1,223		20,757		678
Multi-family		—		—		434		10		447		10
Construction and land development		1,505		106		2,661		55		3,333		139
One-to-four family residential		6,622		368		8,236		269		11,142		426
Municipal, consumer, and other		9,620		384		13,347		244		13,706		401
Total	$	60,915	$	3,948	$	71,425	$	2,762	$	80,432	$	3,270

Schedule of recorded investment on past due basis


	Accruing Interest
			30 - 89 Days		90+ Days				Total
December 31, 2022	Current		Past Due		Past Due		Nonaccrual		Loans

	(dollars in thousands)
Commercial and industrial	$	266,521	$	17	$	—	$	219	$	266,757
Agricultural and farmland		237,727		19		—		—		237,746
Commercial real estate - owner occupied		218,242		187		—		74		218,503
Commercial real estate - non-owner occupied		713,031		—		—		171		713,202
Multi-family		287,854		11		—		—		287,865
Construction and land development		360,763		61		—		—		360,824
One-to-four family residential		335,576		894		145		1,638		338,253
Municipal, consumer, and other		196,892		157		1		53		197,103
Total	$	2,616,606	$	1,346	$	146	$	2,155	$	2,620,253


	Accruing Interest
			30 - 89 Days		90+ Days				Total
December 31, 2021	Current		Past Due		Past Due		Nonaccrual		Loans

	(dollars in thousands)
Commercial and industrial	$	286,563	$	9	$	—	$	374	$	286,946
Agricultural and farmland		247,772		24		—		—		247,796
Commercial real estate - owner occupied		234,441		103		—		—		234,544
Commercial real estate - non-owner occupied		683,029		823		—		171		684,023
Multi-family		263,911		—		—		—		263,911
Construction and land development		297,465		64		—		519		298,048
One-to-four family residential		325,780		383		32		1,642		327,837
Municipal, consumer, and other		156,297		214		16		57		156,584
Total	$	2,495,258	$	1,620	$	48	$	2,763	$	2,499,689

Schedule of loans by category risk ratings


December 31, 2022	Pass		Pass-Watch		Substandard		Doubtful		Total

	(dollars in thousands)
Commercial and industrial	$	255,309	$	6,630	$	4,818	$	—	$	266,757
Agricultural and farmland		223,114		10,004		4,628		—		237,746
Commercial real estate - owner occupied		198,546		10,105		9,852		—		218,503
Commercial real estate - non-owner occupied		652,691		27,282		33,229		—		713,202
Multi-family		283,682		4,183		—		—		287,865
Construction and land development		358,215		2,527		82		—		360,824
One-to-four family residential		323,632		5,907		8,714		—		338,253
Municipal, consumer, and other		184,299		296		12,508		—		197,103
Total	$	2,479,488	$	66,934	$	73,831	$	—	$	2,620,253


December 31, 2021	Pass		Pass-Watch		Substandard		Doubtful		Total

	(dollars in thousands)
Commercial and industrial	$	267,088	$	5,114	$	14,744	$	—	$	286,946
Agricultural and farmland		221,898		25,213		685		—		247,796
Commercial real estate - owner occupied		198,862		24,098		11,584		—		234,544
Commercial real estate - non-owner occupied		619,212		32,372		32,439		—		684,023
Multi-family		241,362		22,549		—		—		263,911
Construction and land development		268,556		27,474		2,018		—		298,048
One-to-four family residential		308,951		11,221		7,665		—		327,837
Municipal, consumer, and other		143,299		244		13,041		—		156,584
Total	$	2,269,228	$	148,285	$	82,176	$	—	$	2,499,689

Schedule of financial effect of troubled debt restructurings

There were no troubled debt restructurings during the years ended December 31, 2022 and 2021. The following table presents the financial effect of troubled debt restructurings for the year ended December 31, 2020:


						Charge-offs
		Recorded Investment				and Specific
Year Ended December 31, 2020	Number	Pre-Modification		Post-Modification		Reserves

	(dollars in thousands)
Commercial real estate - owner occupied	1	$	853	$	853	$	—

Schedule of changes in the accretable yield for loans acquired with deteriorated credit quality


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Beginning balance	$	413	$	1,397	$	1,662
Reclassification from non-accretable difference		548		508		288
Disposals		—		(1,089)		—
Accretion income		(231)		(403)		(553)
Ending balance	$	730	$	413	$	1,397

DEPOSITS - Interest expense on Deposits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
DEPOSITS
Interest-bearing demand	$ 607	$ 518	$ 647
Money market	813	437	697
Savings	208	188	196
Time	883	1,329	2,681
Total interest expense on deposits	$ 2,511	$ 2,472	$ 4,221

FAIR VALUE OF FINANCIAL INSTRUMENTS - Recurring basis (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	$ 843,524	$ 942,168
Equity securities	3,029	3,443
Fair value	10,147	7,994
Transfer of assets from level 1 to level 2	0	0
Transfer of assets from level 2 to level 1	0	0
Transfer of assets in to level 3	0	0
Transfer of assets out of level 3	0	0
Transfer of liabilities from level 1 to level 2	0	0
Transfer of liabilities from level 2 to level 1	0	0
Transfer of liabilities in to level 3	0	0
Transfer of liabilities out of level 3	0	0
U.S. Treasury
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	154,515	108,976
U.S. government agency
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	55,157	128,105
Municipal securities
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	243,829	297,077
Mortgage-backed: Agency residential
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	195,441	179,466
Mortgage-backed: Agency commercial
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	132,888	164,061
Corporate
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	61,694	64,483
Recurring
FAIR VALUE OF FINANCIAL INSTRUMENTS
Equity securities	3,029	3,443
Fair value	10,147	7,994
Derivative financial assets fair value	7,610	8,697
Derivative financial liabilities fair value	6,981	9,377
Recurring \| U.S. Treasury
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	154,515	108,976
Recurring \| U.S. government agency
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	55,157	128,105
Recurring \| Municipal securities
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	243,829	297,077
Recurring \| Mortgage-backed: Agency residential
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	195,441	179,466
Recurring \| Mortgage-backed: Agency commercial
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	132,888	164,061
Recurring \| Corporate
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	61,694	64,483
Recurring \| Level 1
FAIR VALUE OF FINANCIAL INSTRUMENTS
Equity securities	3,029	3,443
Recurring \| Level 1 \| U.S. Treasury
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	154,515	108,976
Recurring \| Level 2
FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivative financial assets fair value	7,610	8,697
Derivative financial liabilities fair value	6,981	9,377
Recurring \| Level 2 \| U.S. government agency
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	55,157	128,105
Recurring \| Level 2 \| Municipal securities
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	243,829	297,077
Recurring \| Level 2 \| Mortgage-backed: Agency residential
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	195,441	179,466
Recurring \| Level 2 \| Mortgage-backed: Agency commercial
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	132,888	164,061
Recurring \| Level 2 \| Corporate
FAIR VALUE OF FINANCIAL INSTRUMENTS
Debt securities available-for-sale, at fair value	61,694	64,483
Recurring \| Level 3
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value	$ 10,147	$ 7,994

BANK PREMISES AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2022

BANK PREMISES AND EQUIPMENT

Summary of bank premises and depreciation expense


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Land, buildings, and improvements	$	77,869	$	77,180
Furniture, fixtures, and equipment		24,512		24,199
Total bank premises and equipment		102,381		101,379
Less accumulated depreciation		51,912		48,896
Total bank premises and equipment, net	$	50,469	$	52,483


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Buildings and improvements	$	1,623	$	1,694	$	1,761
Furniture, fixtures, and equipment		1,420		1,380		1,180
Total depreciation expense	$	3,043	$	3,074	$	2,941

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

12 Months Ended

Dec. 31, 2022

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

NOTE 10 – SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

All repurchase agreements are sweep instruments. The securities underlying the agreements as of December 31, 2022 and 2021 were under the Company’s control in safekeeping at third-party financial institutions, and included debt securities.

Information pertaining to securities sold under agreements to repurchase as of December 31 is as follows:


	December 31, 2022			December 31, 2021

	(dollars in thousands)
Balance at end of year	$	43,081		$	61,256
Weighted average rate as of end of year		0.28	%		0.07	%
Fair value of securities underlying the agreements	$	50,771		$	64,164
Carrying value of securities underlying the agreements	$	55,850		$	64,262

ACQUISITIONS

12 Months Ended

Dec. 31, 2022

ACQUISITIONS

ACQUISITIONS

NOTE 2 – ACQUISITIONS

Town and Country Financial Corporation

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

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

This transaction will be accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged was recorded at estimated fair values on the date of acquisition. Fair value assessments are incomplete as of the filing date of this Form 10-K. Fair values are subject to refinement for up to one year after the closing date of February 1, 2023. This acquisition is a subsequent event and the financial results of Town and Country are not recognized in this Form 10-K.

The acquisition of Town and Country further enhanced HBT Financial’s footprint in Central Illinois as well as expanding our footprint into metro-east St. Louis. During the year ended December 31, 2022, HBT Financial incurred $1.1 million in pre-tax acquisition expenses related to the planned acquisition of Town and Country, comprised of professional fees and data processing expense.

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 was 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 provided an opportunity to utilize Heartland Bank’s excess liquidity at the time of acquisition 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, has provided an opportunity to expand NXT Bank’s customer relationships.

During the year ended December 31, 2021, HBT Financial incurred $1.4 million in pre-tax acquisition expenses related to the acquisition of NXT, comprised primarily of professional fees and data processing expense. These expenses are reflected in noninterest expense on the consolidated statements of income. There were no acquisition expenses related to the acquisition of NXT during the year ended December 31, 2022.

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.

The following table provides the pro forma information for the results of operations for the years ended December 31, 2021 and 2020, 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
	Year Ended December 31,
(dollars in thousands, except per share data)	2021		2020
Total revenues (net interest income and noninterest income)	$	166,677	$	161,005
Net income		57,883		39,263
Earnings per share - basic		1.98		1.34
Earnings per share - diluted		1.98		1.34

ACCUMULATED OTHER COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance	$ 411,881	$ 363,917	$ 332,918
Other comprehensive income (loss), before tax	(102,427)	(23,333)	14,444
Income tax (benefit) expense	(29,197)	(6,651)	4,123
Other comprehensive income (loss), after tax	(73,230)	(16,682)	10,321
Balance	373,632	411,881	363,917
Accumulated Other Comprehensive Income (Loss)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance	1,471	18,153	7,832
Other comprehensive income (loss) before reclassifications	(104,276)	(24,432)	14,188
Reclassifications	1,849	1,099	256
Other comprehensive income (loss), before tax	(102,427)	(23,333)	14,444
Income tax (benefit) expense	(29,197)	(6,651)	4,123
Other comprehensive income (loss), after tax	(73,230)	(16,682)	10,321
Balance	(71,759)	1,471	18,153
Unrealized gains (losses) on available-for-sale securities
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance	5,736	19,578	8,659
Transfer from available-for-sale to held-to-maturity	7,664	3,887
Other comprehensive income (loss) before reclassifications	(105,459)	(24,798)	15,272
Other comprehensive income (loss), before tax	(105,459)	(24,798)	15,272
Income tax (benefit) expense	(30,061)	(7,069)	4,353
Other comprehensive income (loss), after tax	(75,398)	(17,729)	10,919
Balance	(61,998)	5,736	19,578
Unrealized gains (losses) on held-to-maturity securities
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance	(3,514)	(118)	(131)
Transfer from available-for-sale to held-to-maturity	(7,664)	(3,887)
Reclassifications	1,723	687	18
Other comprehensive income (loss), before tax	1,723	687	18
Income tax (benefit) expense	491	196	5
Other comprehensive income (loss), after tax	1,232	491	13
Balance	(9,946)	(3,514)	(118)
Derivatives
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance	(751)	(1,307)	(696)
Other comprehensive income (loss) before reclassifications	1,183	366	(1,084)
Reclassifications	126	412	238
Other comprehensive income (loss), before tax	1,309	778	(846)
Income tax (benefit) expense	373	222	(235)
Other comprehensive income (loss), after tax	936	556	(611)
Balance	$ 185	$ (751)	$ (1,307)

DEPOSITS

12 Months Ended

Dec. 31, 2022

DEPOSITS

DEPOSITS

NOTE 9 – DEPOSITS

The Company’s deposits are summarized below as of December 31:


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Noninterest-bearing deposits	$	994,954	$	1,087,659
Interest-bearing deposits:
Interest-bearing demand		1,139,150		1,105,949
Money market		555,425		583,198
Savings		634,527		633,171
Time		262,968		328,208
Total interest-bearing deposits		2,592,070		2,650,526
Total deposits	$	3,587,024	$	3,738,185

There were no brokered deposits as of December 31, 2022. Money market deposits include $4.2 million of brokered deposits as of December 31, 2021. Money market deposits also include $1.7 million and $6.9 million of reciprocal transaction deposits as of December 31, 2022 and 2021, respectively. Time deposits include $1.6 million and $0.9 million of reciprocal time deposits as of December 31, 2022 and 2021, respectively.

The aggregate amounts of time deposits in denominations of $250 thousand or more amounted to $27.2 million and $59.5 million as of December 31, 2022 and 2021, respectively. The aggregate amounts of time deposits in denominations of $100 thousand or more amounted to $92.6 million and $133.1 million as of December 31, 2022 and 2021, respectively.

At December 31, 2022, the scheduled maturities of time deposits are as follows (dollars in thousands):


Year ended December 31,
2023	$	191,045
2024		44,573
2025		14,544
2026		8,822
2027		3,855
Thereafter		129
Total	$	262,968

The components of interest expense on deposits for the years ended December 31 are as follows:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Interest-bearing demand	$	607	$	518	$	647
Money market		813		437		697
Savings		208		188		196
Time		883		1,329		2,681
Total interest expense on deposits	$	2,511	$	2,472	$	4,221

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS - Narrative (Details) - period	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
SUBORDINATED NOTES
Trust preferred securities qualified as Tier 1 capital	100.00%	100.00%
Junior Subordinated Debentures Issued
SUBORDINATED NOTES
Maximum deferred interest period quarters	20
Period shorten the maturity date from the event	90 days

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Numerator:
Net income	$ 56,456	$ 56,271	$ 36,845
Earnings allocated to participating securities	(66)	(104)	(93)
Numerator for earnings per share - basic	$ 56,390	$ 56,167	$ 36,752
Denominator:
Weighted average common shares outstanding	28,853,697	27,795,806	27,457,306
Dilutive effect of outstanding restricted stock units	65,619	15,487
Weighted average common shares outstanding, including all dilutive potential shares	28,919,316	27,811,293	27,457,306
Earnings per share - Basic	$ 1.95	$ 2.02	$ 1.34
Earnings per share - Diluted	$ 1.95	$ 2.02	$ 1.34

SECURITIES - Amortized cost and Fair values of securities with gross unrealized gains and losses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Available-for-sale
Amortized Cost	$ 934,456	$ 938,360
Gross Unrealized Gains	106	12,796
Gross Unrealized Losses	(91,038)	(8,988)
Fair Value	843,524	942,168
Held-to-maturity
Amortized Cost	541,600	336,185
Gross Unrealized Gains	195	2,796
Gross Unrealized Losses	(62,994)	(2,954)
Fair Value	478,801	336,027
Total Amortized Cost	1,476,056	1,274,545
Total Gross Unrealized Gains	301	15,592
Total Gross Unrealized Losses	(154,032)	(11,942)
Total Fair Value	1,322,325	1,278,195
U.S. Treasury
Available-for-sale
Amortized Cost	169,860	109,002
Gross Unrealized Gains		328
Gross Unrealized Losses	(15,345)	(354)
Fair Value	154,515	108,976
U.S. government agency
Available-for-sale
Amortized Cost	59,291	129,269
Gross Unrealized Gains		1,303
Gross Unrealized Losses	(4,134)	(2,467)
Fair Value	55,157	128,105
Held-to-maturity
Amortized Cost	88,424	12,349
Gross Unrealized Gains		42
Gross Unrealized Losses	(9,728)	(51)
Fair Value	78,696	12,340
Municipal securities
Available-for-sale
Amortized Cost	275,972	293,837
Gross Unrealized Gains	46	6,144
Gross Unrealized Losses	(32,189)	(2,904)
Fair Value	243,829	297,077
Held-to-maturity
Amortized Cost	42,167	15,666
Gross Unrealized Gains	195	809
Gross Unrealized Losses	(314)
Fair Value	42,048	16,475
Mortgage-backed: Agency residential
Available-for-sale
Amortized Cost	213,676	178,236
Gross Unrealized Gains	5	2,149
Gross Unrealized Losses	(18,240)	(919)
Fair Value	195,441	179,466
Held-to-maturity
Amortized Cost	102,728	20,555
Gross Unrealized Gains		196
Gross Unrealized Losses	(6,470)	(102)
Fair Value	96,258	20,649
Mortgage-backed: Agency commercial
Available-for-sale
Amortized Cost	150,060	164,875
Gross Unrealized Gains		1,234
Gross Unrealized Losses	(17,172)	(2,048)
Fair Value	132,888	164,061
Held-to-maturity
Amortized Cost	308,281	287,615
Gross Unrealized Gains		1,749
Gross Unrealized Losses	(46,482)	(2,801)
Fair Value	261,799	286,563
Corporate
Available-for-sale
Amortized Cost	65,597	63,141
Gross Unrealized Gains	55	1,638
Gross Unrealized Losses	(3,958)	(296)
Fair Value	$ 61,694	$ 64,483

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Dec. 31, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Merger of State Bank of Lincoln into Heartland Bank	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.”
Basis of Consolidation	Basis of Consolidation The consolidated financial statements of HBT Financial include the accounts of the Company and its wholly owned bank subsidiary, Heartland Bank. The Company also has five wholly owned subsidiaries, Heartland Bancorp, Inc. Capital Trust B, Heartland Bancorp, Inc. Capital Trust C, Heartland Bancorp, Inc. Capital Trust D, FFBI Capital Trust I, and National Bancorp Statutory Trust I, which, in accordance with GAAP, are not consolidated as more fully described in Note 13. Significant intercompany transactions and accounts have been eliminated in consolidation.
Use of Estimates	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.
Business and Significant Concentrations of Credit Risk	Business and Significant Concentrations of Credit Risk The Company provides several types of loans to individuals, businesses, and municipal entities primarily located in its customer service area. Real estate and commercial loans are principal areas of concentration. The Company also strives to meet the borrowing needs of the consumers in its market areas. Extension of credit is generally limited to the primary trade areas of the Company. Primary deposit products of the Bank are noninterest-bearing and interest-bearing demand accounts, savings accounts, money market accounts, and term certificates of deposit.
Cash and Cash Equivalents	Cash and Cash Equivalents For purposes of reporting consolidated cash flows, cash and cash equivalents include cash on hand and amounts due from banks, all of which have an original maturity within 90 days or less. Cash flows from loans and deposits are reported net.
Interest-Bearing Time Deposits with Banks	Interest-Bearing Time Deposits with Banks Interest-bearing time deposits with banks are carried at cost.
Debt Securities	Debt Securities Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are carried at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Debt securities available-for-sale are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses on debt securities available-for-sale are included in noninterest income when applicable and reported as a reclassification adjustment in other comprehensive income (loss). Gains and losses on sales of securities are determined using the specific identification method on the trade date. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity. Any transfers of debt securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the held-to-maturity securities. Such amounts are amortized over the period to maturity. Declines in the fair value of individual securities below their cost that are other-than-temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the intent of the Company to not sell the security or whether it is more likely than not that the Company will be required to sell the security before its anticipated recovery. A decline in value due to a credit event that is considered other-than-temporary is recorded as a loss in noninterest income.
Equity Securities	Equity Securities Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the statements of income. The Company has elected to measure its equity securities with no readily determinable fair values at their cost minus impairment, if any, plus or minus charges resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
Restricted Stock	Restricted Stock Restricted stock, which consists of Federal Home Loan Bank of Chicago (“FHLB”) stock, is carried at cost and evaluated for impairment.
Loans Held for Sale	Loans Held for Sale Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on sale and thus quotes typically indicate fair value of the held for sale loans is greater than cost. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income. Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the Company. The carrying value of mortgage loans sold is reduced by fair value allocated to the associated mortgage servicing rights. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgage loans sold.
Loans	Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses, deferred loan fees or costs on originated loans, and unamortized premiums or discounts on acquired loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and recognized as an adjustment of the related loan yield using the interest method. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income if it was accrued during the current year and charged-off against the allowance for loan losses if accrued in a prior year. Amortization of related deferred loan fees or costs is also suspended at this time. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
Allowance for Loan Losses	Allowance for Loan Losses The allowance for loan losses (“allowance”) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance for loan losses represents amounts that have been established to recognize incurred credit losses in the loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance. Loan losses are charged off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged off amounts is recorded as a recovery to the allowance. The allowance consists of two primary components, general reserves and specific reserves related to impaired loans. The general component covers non-impaired loans and is based on historical losses adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 16-quarter period. This actual loss experience is adjusted for qualitative factors based on the risks present for each portfolio segment. These qualitative factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. These qualitative factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The Company reviews the loan portfolio on an ongoing basis to determine whether any loans require classification and impairment testing in accordance with applicable regulations and accounting principles. Loans determined to be impaired are individually evaluated for impairment. When a loan is classified as either substandard or doubtful and in certain other cases, such as troubled debt restructurings, the Company generally measures impairment based on the fair value of the collateral, but also may use the present value of expected future cash flows discounted at the original contractual interest rate, when practical. Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt. In general, if the Company grants a TDR that involves either the absence of principal amortization or a material extension of an existing loan amortization period in excess of our underwriting standards, the loan will be placed on nonaccrual status. However, if a TDR is well secured by an abundance of collateral and the collectability of both interest and principal is probable, the loan may remain on accrual status. A nonaccrual TDR in full compliance with the payment requirements specified in the loan modification for at least six months may return to accrual status, if the collectability of both principal and interest is probable. All TDRs are individually evaluated for impairment. The Company assigns a risk rating to all loans and periodically performs detailed internal reviews of all such loans that are part of relationships with over $750,000 in total exposure to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to review by the Company’s regulators, external loan review, and internal loan review. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans. The risk rating is reviewed annually, at a minimum, and on an as needed basis depending on the specific circumstances of the loan. These credit quality indicators are used to assign a risk rating to each individual loan. Risk ratings are grouped into four major categories, defined as follows: Pass: A Pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention. Pass-Watch: A Pass-Watch loan is still considered a Pass credit and not a classified or criticized asset, but is a reflection of a borrower who exhibits credit weaknesses or downward trends warranting close attention and increased monitoring. These potential weaknesses may result in deterioration of the repayment prospects for the loan. No loss of principal or interest is expected, and the borrower does not pose sufficient risk to warrant classification. Substandard: A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as Substandard have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized as probable that the borrower will not pay principal and interest in accordance with the contractual terms. Doubtful: A Doubtful loan has all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include commercial and industrial, agricultural and farmland, commercial real estate – owner occupied, commercial real estate – non-owner occupied, multi-family, construction and land development, one-to-four family residential, and municipal, consumer and other, with risk characteristics described as follows: Commercial and Industrial: Consists of loans typically granted for working capital, asset acquisition and other business purposes. These loans are underwritten primarily based on the borrower’s cash flow with most loans secondarily supported by collateral. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable, inventory, and equipment, and are typically supported by personal guarantees of the owners. Cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions and specific borrower circumstances. Agricultural and Farmland: Consists of loans typically secured by farmland, agricultural operating assets, or a combination of both, and are generally underwritten to existing cash flows of operating agricultural businesses. Debt repayment is provided by business cash flows. The credit quality of these loans is significantly influenced by changes in prices of corn and soybeans and, to a lesser extent, weather, which has been partially mitigated by federal crop insurance programs. Commercial Real Estate - Owner Occupied: Consists of loans secured by commercial real estate that is both owned and occupied by the same or a related borrower. These loans are primarily underwritten based on the cash flow of the business occupying the property. As with commercial and industrial loans, cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions, and specific borrower circumstances. Commercial Real Estate - Non-owner Occupied: Consists of loans secured by commercial real estate for which the primary source of repayment is the sale or rental cash flows from the underlying collateral. These loans are underwritten based primarily on the historic or projected cash flow from the underlying collateral. Adverse economic developments, or an overbuilt market, typically impact commercial real estate projects. Trends in rental and vacancy rates of commercial properties may impact the credit quality of these loans. Multi-family: Consists of loans secured by five or more unit apartment buildings. Multi-family loans may be affected by demographic and population trends, unemployment or underemployment, and deteriorating market values of real estate. Construction and Land Development: Consists of loans for speculative and pre-sold construction projects for developers intending to either sell upon completion or hold for long term investment, as well as construction of projects to be owner occupied. In addition, loans in this segment generally possess a higher inherent risk of loss than other portfolio segments due to risk of non-completion, changes in budgeted costs, and changes in market forces during the term of the construction period. One-to-four Family Residential: Consists of loans secured by one-to-four family residences, including both first and junior lien mortgage loans for owner occupied and non-owner occupied properties and home equity lines of credit. The degree of risk in residential mortgage lending depends on the local economy, including the local real estate market and unemployment rates. Municipal, Consumer and Other: Loans to municipalities include obligations of municipal entities and loans sponsored by municipal entities for the benefit of a private entity where that private entity, rather than the municipal entity, is responsible for repayment of the obligation. Consumer loans include loans to individuals for consumer purposes and typically consist of small balance loans. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of the consumer loans. Loans to non-depository financial institutions, as well as leases, are also included. Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the Board of Directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the Board of Directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s regulators review the adequacy of the allowance and may require additions to the allowance based on their judgment about information available at the time of their examinations.
Loans Acquired with Deteriorated Credit Quality	Loans Acquired with Deteriorated Credit Quality Loans acquired that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments receivable, are initially recorded at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Loans are evaluated by management at the time of purchase to determine if there is evidence of deterioration in credit quality since origination. Loans where there is evidence of deterioration of credit quality since origination may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the extent of prior charges or a reclassification of the difference from nonaccretable to accretable yield with a positive impact on interest income on a prospective basis. If the Company does not have the information necessary to reasonably estimate cash flows to be expected, it may use the cost recovery method or cash basis method of income recognition.
Off-Balance Sheet Credit Related Financial Instruments	Off-Balance Sheet Credit Related Financial Instruments In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.
Loan Servicing	Loan Servicing The Company periodically sells mortgage loans on the secondary market with servicing retained. For sales of mortgage loans, a portion of the cost of originating the loan is allocated to the servicing right based on fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses. Mortgage servicing rights are carried at fair value on the consolidated balance sheets and changes in fair value are recorded in mortgage servicing rights fair value adjustment on the consolidated statements of income.
Bank Owned Life Insurance	Bank Owned Life Insurance Bank owned life insurance represents life insurance policies on the lives of certain current and former employees and directors for which the Company is the sole owner and beneficiary. These policies are recorded as an asset in the consolidated balance sheets at their cash surrender value ("CSV") or the current amount that could be realized if settled. The change in CSV and insurance proceeds received are included as a component of noninterest income in the consolidated statements of income.
Bank Premises and Equipment	Bank Premises and Equipment Land is carried at cost. Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the individual assets using the straight-line method.
Bank Premises Held for Sale	Bank Premises Held for Sale Bank premises held for sale is carried at the lower of cost or fair value less estimated costs to sell. Bank premises classified as held for sale are not depreciated.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less estimated costs to sell.
Lease Obligations	Lease Obligations The Company leases certain bank premises under non-cancelable operating leases in the normal course of business operations. These lease obligations result in the recognition of right-of-use assets and associated lease contract liabilities. The amount of right-of-use assets and associated lease contract liabilities recorded is based on the present value of future minimum lease payments. The discount rate used is equal to the rate implicit in the lease, when readily determinable, or the Company’s incremental borrowing rate at lease inception, on a collateralized basis over a similar term. Right-of-use assets are included in other assets and lease contract liabilities are included in other liabilities in the consolidated balance sheets and were insignificant as of December 31, 2022 and 2021.
Foreclosed Assets	Foreclosed Assets Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell at the date of foreclosure, establishing a new cost basis. Any write-down based on the fair value of the asset at the date of acquisition is charged to the allowance for loan losses. If the fair value of the asset less estimated cost to sell exceeds the recorded investment in the loan at the date of foreclosure, the increase in value is charged to current year operations unless there has been a prior charge-off, in which case a recovery to the allowance for loan losses is recorded. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated cost to sell. Write-downs of foreclosed assets subsequent to foreclosure are charged to current year operations as are gains and losses from sale of foreclosed assets, as well as expenses to maintain and hold foreclosed assets.
Goodwill and Other Intangible Assets	Goodwill and Other Intangible Assets Goodwill represents the excess of the original cost over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but instead is subject to an annual impairment evaluation. The Company has selected December 31 as the date to perform the annual impairment test. At December 31, 2022 and 2021, the Company’s evaluations of goodwill indicated that goodwill was not impaired. Other identifiable intangible assets consist of core deposit intangible assets with definite useful lives which are being amortized using an accelerated depreciation method over 10 years. The Company will periodically review the status of core deposit intangible assets for any events or circumstances which may change the recoverability of the underlying basis.
Wealth Management Assets and Fees	Wealth Management Assets and Fees Assets of the wealth management department of the Bank are not included in the consolidated balance sheets as such assets are not assets of the Company or the Bank. Fee income generated from wealth management services is recorded in the consolidated statements of income as a source of noninterest income.
Employee Benefit Plans	Employee Benefit Plans The Company sponsors a profit sharing plan under which the Company may contribute, at the discretion of the Board of Directors, a discretionary amount to all participating employees for the plan year. The Company may also make discretionary matching contributions in an amount up to 5% of compensation contributed by employees.
Stock Based Compensation	Stock Based Compensation The Company recognizes compensation cost over the requisite service period, if any, which is generally defined as the vesting period. For awards classified as equity, compensation cost is based on the fair value of the awards on the grant date. For awards classified as liabilities, compensation cost also includes subsequent remeasurements of the fair value of the awards until the award is settled. The Company’s policy is to recognize forfeitures as they occur.
Transfers of Financial Assets and Participating Interests	Transfers of Financial Assets and Participating Interests Transfers of an entire financial asset or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. The transfer of a participating interest in an entire financial asset must also meet the definition of a participating interest. A participating interest in a financial asset has all of the following characteristics: (1) from the date of transfer, it must represent a proportionate (pro rata) ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except any cash flows allocated as any compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or exchange the entire financial asset unless all participating interest holders agree to do so.
Advertising Costs	Advertising Costs Advertising costs are expensed as incurred.
Income Taxes	Income Taxes Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. With regard to uncertain tax matters, the Company recognizes in the consolidated financial statements the impact of a tax position taken, or expected to be taken, if it is more likely than not that the position will be sustained on audit based on the technical merit of the position. Management has analyzed the tax positions taken by the Company and concluded as of December 31, 2022 and 2021, there are no material uncertain tax positions taken or expected to be taken that require recognition of a liability or disclosure in the consolidated financial statements. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses. The Company files consolidated federal and state income tax returns. The Company generally is no longer subject to federal or state income tax examinations for years prior to 2019.
Derivative Financial Instruments	Derivative Financial Instruments As part of the Company’s asset/liability management, the Company may use interest rate swaps to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. Derivatives that are used as part of the asset/liability management process are linked to specific assets or liabilities, or pools of assets or liabilities, and have high correlation between the contract and the underlying item being hedged, both at inception and throughout the hedge period. All derivatives are recognized on the consolidated balance sheet at their fair value. On the date the derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability "cash flow" hedge. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings). The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedged transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific assets and liabilities on the balance sheet or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. The Company discontinues hedge accounting prospectively when (a) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including forecasted transactions); (b) the derivative expires or is sold, terminated, or exercised; (c) the derivative is dedesignated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; or (d) management determines that designation of the derivative as a hedge instrument is no longer appropriate. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative will continue to be carried on the consolidated balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income (loss) will be recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the balance sheet, with subsequent changes in its fair value recognized in current-period earnings.
Comprehensive Income (Loss)	Comprehensive Income (Loss) Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available-for-sale and interest rate swap agreements designated as cash flow hedges, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income (loss).
Fair Value Measurements	Fair Value Measurements The Company categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows: Level 1 - Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date. Level 2 - Inputs that are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3 - Inputs that are unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing as asset or liability. Subsequent to initial recognition, the Company may re-measure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value. Accounting standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy and has not elected to measure any existing financial instruments at fair value, except for mortgage servicing rights; however, it may elect to measure newly acquired financial instruments at fair value in the future.
Revenue from Contracts with Customers	Revenue from Contracts with Customers ASC Topic 606, Revenue from Contracts with Customers, requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve this, the Company takes the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the Company satisfies a performance obligation. The non-interest revenue streams that are considered to be in the scope of this guidance are discussed below. Card income: Consists of debit and credit card interchange fees. For debit and credit card transactions, the Company considers the merchant as the customer for interchange revenue with the performance obligation being satisfied when the cardholder purchases goods or services from the merchant. Interchange revenue is recognized as the services are provided. Payment is typically received daily. Service charges on deposit accounts: Consists of account analysis fees, monthly service fees, and other deposit account related fees. The Company’s performance obligation account analysis fees and monthly service fees are ongoing and either party may cancel at any time. These fees are generally recognized as the services are rendered on a monthly basis. Payment is typically received monthly. Other deposit account related fees are largely transaction based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for other deposit account related fees is primarily received immediately through a direct charge to customers’ accounts. Wealth management fees: Consists of revenue from the management and advisement of client assets and trust administration. The Company’s performance obligation is generally satisfied over time, and the fees are recognized monthly. Payment is typically received quarterly or annually.
Segment Reporting	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	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	Subsequent Events In preparing these consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the consolidated financial statements were issued. Other than the acquisition of Town and Country Financial Corporation, as disclosed in Note 2 – Acquisitions, and further developments in a pending legal matter, as disclosed in Note 23 – Commitments and Contingencies, there were no significant subsequent events through the issuance of these consolidated financial statements that warranted adjustment or disclosure.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 economic variables are best suited to be 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 debt securities portfolios, along with other management judgments. Management is finalizing macroeconomic conditions and forecast assumptions to be used in the model; however, upon adoption of ASU 2016-13 on January 1, 2023, we expect the initial allowance for credit losses and the reserve for unfunded commitments together to be approximately 30% to 50% above the existing allowance for loan loss levels. When finalized, this one-time increase will be recorded, net of tax, as an adjustment to beginning retained earnings. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value and that contractual sale restrictions cannot be recognized and measured as a separate unit of account. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) by creditors in ASC 310-40. This Update also enhances disclosure requirements for certain loan restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity will apply refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Additionally, the amendments in this ASU require a public business entity to disclosure current-period gross write-offs by year of origination for financing receivables and net investments in leases in the existing vintage disclosures. The amendments in this update are effective for years beginning after December 15, 2022, including interim periods within those years. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. ASU 2022-01 replaces the current last-of-layer hedge accounting method with an expanded portfolio layer method that permits multiple hedged layers of a single closed portfolio. The scope of the portfolio layer method is also expanded to include non-prepayable financial assets. ASU 2022-01 also provides additional guidance on the accounting for and disclosure of hedge basis adjustments that are applicable to the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to hedge basis adjustments which are included in this standard apply on a modified retrospective basis by means of a cumulative-effect adjustment to the opening balance of retained earnings on the initial application date. Amendments related to disclosure which are included in this standard may be applied on a prospective basis from the initial application date, or on a retrospective basis to each prior period presented after the date of adoption of the amendments in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendments in this update are effective for years beginning after December 15, 2023, including interim periods within those years. Early adoption is permitted. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position. 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, 2024. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position.

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Cash Flows (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 56,456	$ 56,271	$ 36,845
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	1,949	764	351
Net gain on sales of foreclosed assets	(118)	(505)	(348)
Net cash provided by operating activities	72,586	43,023	31,255
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities	(371,682)	(513,838)	(523,559)
Proceeds from sale of foreclosed assets	475	5,805	2,079
Net cash paid for acquisition of NXT Bancorporation, Inc.		(4,771)
Net cash used in investing activities	(335,123)	(349,613)	(380,450)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of subordinated notes, net of issuance costs			39,211
Taxes paid related to the vesting of restricted stock units	(57)
Repurchase of common stock	(4,783)	(4,906)
Cash dividends and dividend equivalents paid	(18,584)	(16,753)	(16,518)
Net cash (used in) provided by financing activities	(32,572)	403,407	377,675
NET CHANGE IN CASH AND EQUIVALENTS	(295,109)	96,817	28,480
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	409,268	312,451	283,971
CASH AND CASH EQUIVALENTS AT END OF PERIOD	114,159	409,268	312,451
Reportable Legal Entities \| Consolidated HBT
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	56,456	56,271	36,845
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed earnings of consolidated subsidiaries	(35,044)	(41,227)	(22,426)
Stock-based compensation	1,949	764	351
Amortization of discount and issuance costs on subordinated notes and debentures	145	144	92
Net gain on sales of foreclosed assets		(74)
Changes in other assets and liabilities, net	769	(2,231)	1,633
Net cash provided by operating activities	24,275	13,647	16,495
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities		(48)	(17)
Purchase of foreclosed assets from Heartland Bank	(2,325)
Proceeds from sale of foreclosed assets		74
Net cash paid for acquisition of NXT Bancorporation, Inc.		(10,411)
Net cash used in investing activities	(2,325)	(10,385)	(17)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of subordinated notes, net of issuance costs			39,211
Taxes paid related to the vesting of restricted stock units	(57)
Repurchase of common stock	(4,783)	(4,906)
Cash dividends and dividend equivalents paid	(18,584)	(16,753)	(16,518)
Net cash (used in) provided by financing activities	(23,424)	(21,659)	22,693
NET CHANGE IN CASH AND EQUIVALENTS	(1,474)	(18,397)	39,171
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	25,752	44,149	4,978
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$ 24,278	$ 25,752	$ 44,149

STOCK-BASED COMPENSATION PLANS (Details) $ in Thousands	12 Months Ended
STOCK-BASED COMPENSATION PLANS (Details) $ in Thousands	Dec. 31, 2022 USD ($) item installment	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Oct. 09, 2019 shares
STOCK-BASED COMPENSATION PLANS
Total stock-based compensation expense	$ 2,037	$ 990	$ 214
Vesting percentage of unvested restricted stock units and performance restricted stock units, if retirement eligibility requirements are met	100.00%
Accelerated stock-based compensation expense	$ 600
Restricted Stock Units
STOCK-BASED COMPENSATION PLANS
Total stock-based compensation expense	$ 1,334	579	351
Number of shares participant is entitled to receive \| item	1
Fair value of units granted	$ 1,300	900	1,400
Intrinsic value of restricted stock units	700	300
Unrecognized compensation cost related to non-vested stock-based compensation agreements	$ 1,200
Weighted average remaining service period	2 years
Performance Shares
STOCK-BASED COMPENSATION PLANS
Total stock-based compensation expense	$ 615	185
Unrecognized compensation cost related to non-vested stock-based compensation agreements	$ 300
Weighted average remaining service period	1 year 7 months 6 days
Performance Shares \| Key employees
STOCK-BASED COMPENSATION PLANS
Fair value of units granted	$ 500	600
Performance Shares \| Minimum
STOCK-BASED COMPENSATION PLANS
Percentage of the number of units granted that may be earned	0.00%
Performance Shares \| Maximum
STOCK-BASED COMPENSATION PLANS
Percentage of the number of units granted that may be earned	150.00%
Total awards classified as equity
STOCK-BASED COMPENSATION PLANS
Total stock-based compensation expense	$ 1,949	764	351
Stock Appreciation Rights
STOCK-BASED COMPENSATION PLANS
Total stock-based compensation expense	$ 88	226	$ (137)
Vesting period	4 years
Unrecognized compensation cost related to non-vested stock-based compensation agreements	$ 28
Stock appreciation rights plan liability recorded for the outstanding units	500	500
Stock appreciation rights plan liability recorded for the previously exercised units	$ 500	$ 800
Number of installments in which the liability recorded for previously exercised units will be paid \| installment	2
Omnibus Incentive Plan
STOCK-BASED COMPENSATION PLANS
Authorized number of shares \| shares				1,820,000

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Statements of income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Other income	$ 2,366	$ 3,034	$ 3,812
Total noninterest income	34,717	37,328	34,456
Interest expense	7,180	5,820	6,460
INCOME BEFORE INCOME TAX EXPENSE	76,190	76,562	49,573
Income tax benefit	19,734	20,291	12,728
NET INCOME	56,456	56,271	36,845
Reportable Legal Entities \| Consolidated HBT
Bank	28,000	20,000	17,600
Non-bank			36
Bank	35,044	41,227	22,462
Non-bank			(36)
Other income	51	454	215
Total noninterest income	63,095	61,681	40,277
Interest expense	3,666	3,305	2,189
Other expense	5,292	3,741	2,519
Total expenses	8,958	7,046	4,708
INCOME BEFORE INCOME TAX EXPENSE	54,137	54,635	35,569
Income tax benefit	(2,319)	(1,636)	(1,276)
NET INCOME	$ 56,456	$ 56,271	$ 36,845

GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Amortization of core deposit intangible assets:
2023	$ 353
2024	337
2025	275
2026	20
2027	20
Thereafter	65
Total	$ 1,070	$ 1,943

STOCK-BASED COMPENSATION PLANS - Summary of assumptions used (Details) - Stock Appreciation Rights	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	3.95%	1.40%
Expected volatility	36.54%	35.52%
Expected life (in years)	6 years 8 months 12 days	7 years 8 months 12 days
Expected dividend yield	3.27%	3.20%

DEPOSITS - Interest expense on Deposits - Maturities of Time Deposits (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Maturities of Time Deposits:
2023	$ 191,045
2024	44,573
2025	14,544
2026	8,822
2027	3,855
Thereafter	129
Total	$ 262,968	$ 328,208

DEPOSITS - Interest bearing Deposits - Narrative (Detail) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
DEPOSITS
Brokered deposits	$ 0.0	$ 4.2
Reciprocal transaction deposits, Money market deposits	1.7	6.9
Reciprocal transaction deposits, Time deposits	1.6	0.9
Time deposits in denominations of $250,000 or more	27.2	59.5
Time deposits in denominations of $100,000 or more	$ 92.6	$ 133.1

SECURITIES (Tables)

12 Months Ended

Dec. 31, 2022

SECURITIES

Schedule of amortized cost and fair values of securities available-for-sale, with gross unrealized gains and losses


December 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	169,860	$	—	$	(15,345)	$	154,515
U.S. government agency		59,291		—		(4,134)		55,157
Municipal		275,972		46		(32,189)		243,829
Mortgage-backed:
Agency residential		213,676		5		(18,240)		195,441
Agency commercial		150,060		—		(17,172)		132,888
Corporate		65,597		55		(3,958)		61,694
Total available-for-sale		934,456		106		(91,038)		843,524
Held-to-maturity:
U.S. government agency		88,424		—		(9,728)		78,696
Municipal		42,167		195		(314)		42,048
Mortgage-backed:
Agency residential		102,728		—		(6,470)		96,258
Agency commercial		308,281		—		(46,482)		261,799
Total held-to-maturity		541,600		195		(62,994)		478,801
Total debt securities	$	1,476,056	$	301	$	(154,032)	$	1,322,325


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

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	109,002	$	328	$	(354)	$	108,976
U.S. government agency		129,269		1,303		(2,467)		128,105
Municipal		293,837		6,144		(2,904)		297,077
Mortgage-backed:
Agency residential		178,236		2,149		(919)		179,466
Agency commercial		164,875		1,234		(2,048)		164,061
Corporate		63,141		1,638		(296)		64,483
Total available-for-sale		938,360		12,796		(8,988)		942,168
Held-to-maturity:
U.S. government agency		12,349		42		(51)		12,340
Municipal		15,666		809		—		16,475
Mortgage-backed:
Agency residential		20,555		196		(102)		20,649
Agency commercial		287,615		1,749		(2,801)		286,563
Total held-to-maturity		336,185		2,796		(2,954)		336,027
Total debt securities	$	1,274,545	$	15,592	$	(11,942)	$	1,278,195

Schedule of certain debt securities from the available-for-sale category to the held-to-maturity category


	March 31, 2022				June 30, 2021				March 31, 2021
	Amortized				Amortized				Amortized
	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value

	(dollars in thousands)
U.S. government agency	$	78,841	$	71,048	$	—	$	—	$	7,593	$	7,323
Mortgage-backed:
Agency residential		8,175		7,651		—		—		8,776		8,536
Agency commercial		27,834		25,432		99,271		99,275		118,792		113,861
Total	$	114,850	$	104,131	$	99,271	$	99,275	$	135,161	$	129,720

Schedule of amortized cost and fair value of securities by contractual maturity


	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value

	(dollars in thousands)
Due in 1 year or less	$	19,501	$	19,127	$	2,288	$	2,290
Due after 1 year through 5 years		230,286		216,799		27,813		26,908
Due after 5 years through 10 years		251,203		217,722		83,181		76,214
Due after 10 years		69,730		61,547		17,309		15,332

Mortgage-backed:
Agency residential		213,676		195,441		102,728		96,258
Agency commercial		150,060		132,888		308,281		261,799
Total	$	934,456	$	843,524	$	541,600	$	478,801

Schedule of gross unrealized losses and fair value of investments


	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
December 31, 2022	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	(8,401)	$	92,445	$	(6,944)	$	62,070	$	(15,345)	$	154,515
U.S. government agency		(2,980)		47,370		(1,154)		7,787		(4,134)		55,157
Municipal		(10,906)		149,261		(21,283)		87,794		(32,189)		237,055
Mortgage-backed:
Agency residential		(8,332)		127,288		(9,908)		65,692		(18,240)		192,980
Agency commercial		(4,764)		62,672		(12,408)		70,216		(17,172)		132,888
Corporate		(2,594)		52,190		(1,364)		5,600		(3,958)		57,790
Total available-for-sale		(37,977)		531,226		(53,061)		299,159		(91,038)		830,385
Held-to-maturity:
U.S. government agency		(1,754)		15,751		(7,974)		62,945		(9,728)		78,696
Municipal		(314)		23,433		—		—		(314)		23,433
Mortgage-backed:
Agency residential		(4,039)		78,452		(2,431)		17,806		(6,470)		96,258
Agency commercial		(16,716)		103,298		(29,766)		158,501		(46,482)		261,799
Total held-to-maturity		(22,823)		220,934		(40,171)		239,252		(62,994)		460,186
Total debt securities	$	(60,800)	$	752,160	$	(93,232)	$	538,411	$	(154,032)	$	1,290,571


	Investments in a Continuous Unrealized Loss Position
	Less than 12 Months				12 Months or More				Total
December 31, 2021	Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value

Available-for-sale:	(dollars in thousands)
U.S. Treasury	$	(354)	$	68,410	$	—	$	—	$	(354)	$	68,410
U.S. government agency		(2,183)		80,219		(284)		5,578		(2,467)		85,797
Municipal		(2,018)		89,424		(886)		17,327		(2,904)		106,751
Mortgage-backed:
Agency residential		(851)		91,703		(68)		4,305		(919)		96,008
Agency commercial		(1,921)		113,111		(127)		6,443		(2,048)		119,554
Corporate		(7)		2,737		(289)		4,671		(296)		7,408
Total available-for-sale		(7,334)		445,604		(1,654)		38,324		(8,988)		483,928
Held-to-maturity:
U.S. government agency		(51)		4,949		—		—		(51)		4,949
Mortgage-backed:
Agency residential		(102)		14,932		—		—		(102)		14,932
Agency commercial		(2,673)		174,428		(128)		2,776		(2,801)		177,204
Total held-to-maturity		(2,826)		194,309		(128)		2,776		(2,954)		197,085
Total debt securities	$	(10,160)	$	639,913	$	(1,782)	$	41,100	$	(11,942)	$	681,013

Schedule of equity securities with initial cost and carrying values of equity securities, with cumulative net unrealized gains and losses


	Readily		No Readily
	Determinable		Determinable
December 31, 2022	Fair Value		Fair Value

	(dollars in thousands)
Initial cost	$	3,142	$	2,142
Cumulative net unrealized losses		(113)		(165)
Carrying value	$	3,029	$	1,977


	Readily		No Readily
	Determinable		Determinable
December 31, 2021	Fair Value		Fair Value

	(dollars in thousands)
Initial cost	$	3,142	$	2,092
Cumulative net unrealized gains (losses)		301		(165)
Carrying value	$	3,443	$	1,927

Schedule of gains (losses) on securities


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Readily determinable fair value		(414)		107		33
No readily determinable fair value		—		—		—
Unrealized gains (losses) on equity securities	$	(414)		107	$	33

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Financial Effect of Troubled Debt Restructurings (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($) loan
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans with payment modifications due to COVID-19	$ 0	$ 200
Troubled debt restructurings	3,000	3,500
Troubled debt restructuring subsequent payment defaults during the three months	$ 0	$ 0
Commercial real estate - owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Number of Loans \| loan			1
Recorded Investment, Pre-Modification			$ 853
Recorded Investment, Post-Modification			$ 853

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Accretable Yield For Loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Changes in accretable yield for loans acquired with deteriorated credit quality
Beginning balance	$ 413	$ 1,397	$ 1,662
Reclassification from non-accretable difference	548	508	288
Disposals		(1,089)
Accretion income	(231)	(403)	(553)
Ending balance	$ 730	$ 413	$ 1,397

FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2022

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 22 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Recurring Basis

The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Additional information on fair value measurements are summarized in Note 1. There were no transfers between levels during the years ended December 31, 2022 and 2021. The Company’s policy for determining transfers between levels occurs at the end of the reporting period when circumstances in the underlying valuation criteria change and result in transfer between levels.

The following tables present the balances of the assets measured at fair value on a recurring basis as of December 31:


December 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Debt securities available-for-sale:
U.S. Treasury	$	154,515	$	—	$	—	$	154,515
U.S. government agency		—		55,157		—		55,157
Municipal		—		243,829		—		243,829
Mortgage-backed:
Agency residential		—		195,441		—		195,441
Agency commercial		—		132,888		—		132,888
Corporate		—		61,694		—		61,694
Equity securities with readily determinable fair values		3,029		—		—		3,029
Mortgage servicing rights		—		—		10,147		10,147
Derivative financial assets		—		7,610		—		7,610
Derivative financial liabilities		—		6,981		—		6,981


December 31, 2021	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Debt securities available-for-sale:
U.S. Treasury	$	108,976	$	—	$	—	$	108,976
U.S. government agency		—		128,105		—		128,105
Municipal		—		297,077		—		297,077
Mortgage-backed:
Agency residential		—		179,466		—		179,466
Agency commercial		—		164,061		—		164,061
Corporate		—		64,483		—		64,483
Equity securities with readily determinable fair values		3,443		—		—		3,443
Mortgage servicing rights		—		—		7,994		7,994
Derivative financial assets		—		8,697		—		8,697
Derivative financial liabilities		—		9,377		—		9,377

The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy. There were no changes to the valuation techniques from December 31, 2021 to December 31, 2022.

Investment Securities

When available, the Company uses quoted market prices to determine the fair value of securities; such items are classified in Level 1 of the fair value hierarchy. For the Company’s securities where quoted prices are not available for identical securities in an active market, the Company determines fair value utilizing vendors who apply matrix pricing for similar bonds where no price is observable or may compile prices from various sources. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace. Fair values from these models are verified, where possible, against quoted market prices for recent trading activity of assets with similar characteristics to the security being valued. Such methods are generally classified as Level 2. However, when prices from independent sources vary, cannot be obtained or cannot be corroborated, a security is generally classified as Level 3. The change in fair value of debt securities available-for-sale is recorded through an adjustment to the consolidated statements of comprehensive income (loss). The change in fair value of equity securities with readily determinable fair values is recorded through an adjustment to the consolidated statements of income.

Derivative Financial Instruments

Interest rate swap agreements are carried at fair value as determined by dealer valuation models. Based on the inputs used, the derivative financial instruments subjected to recurring fair value adjustments are classified as Level 2. For derivative financial instruments designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statements of comprehensive income (loss). For derivative financial instruments not designated as hedging instruments, the change in fair value is recorded through an adjustment to the consolidated statement of income.

Mortgage Servicing Rights

The Company has elected to record its mortgage servicing rights at fair value. Mortgage servicing rights do not trade in an active market with readily observable prices. Accordingly, the Company determines the fair value of mortgage servicing rights by estimating the fair value of the future cash flows associated with the mortgage loans being serviced as calculated by an independent third party. Key economic assumptions used in measuring the fair value of mortgage servicing rights include, but are not limited to, prepayment speeds and discount rates. Due to the nature of the valuation inputs, mortgage servicing rights are classified as Level 3. The change in fair value is recorded through an adjustment to the consolidated statements of income.

The following tables present additional information about the unobservable inputs used in the fair value measurement of the mortgage servicing rights (dollars in thousands):


December 31, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Mortgage servicing rights	$	10,147	Discounted cash flows	Constant pre-payment rates (CPR)	5.3% to 59.7% (8.2%)
				Discount rate	9.0% to 11.7% (9.3%)

December 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Mortgage servicing rights	$	7,994	Discounted cash flows	Constant pre-payment rates (CPR)	7.0% to 88.9% (11.7%)
				Discount rate	9.0% to 11.0% (9.0%)

Nonrecurring Basis

Certain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as there is evidence of impairment or a change in the amount of previously recognized impairment.

The following tables present the balances of the assets measured at fair value on a nonrecurring basis as of December 31:


December 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Loans held for sale	$	—	$	615	$	—	$	615
Collateral-dependent impaired loans		—		—		17,460		17,460
Bank premises held for sale		—		—		235		235
Foreclosed assets		—		—		3,030		3,030


December 31, 2021	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Loans held for sale	$	—	$	4,942	$	—	$	4,942
Collateral-dependent impaired loans		—		—		22,423		22,423
Bank premises held for sale		—		—		1,452		1,452
Foreclosed assets		—		—		3,278		3,278

Loans Held for Sale

Mortgage loans originated and held for sale are carried at the lower of cost or estimated fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on the sale and thus these quotes indicate fair value of the held for sale loans is greater than cost.

Collateral-dependent Impaired Loans

The fair value of collateral-dependent impaired loans is estimated based on the fair value of the underlying collateral supporting the loan. Collateral values are estimated using Level 3 inputs based on appraisals and other valuation estimates of the underlying collateral and customized discounting criteria.

Bank Premises Held for Sale

Bank premises held for sale are recorded at the lower of cost or fair value, less estimated selling costs, at the date classified as held for sale. Values are estimated using Level 3 inputs based on appraisals and customized discounting criteria. The carrying value of bank premises held for sale is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs.

Foreclosed Assets

Foreclosed assets are recorded at fair value based on property appraisals, less estimated selling costs, at the date of the transfer. Subsequent to the transfer, foreclosed assets are carried at the lower of cost or fair value, less estimated selling costs. Values are estimated using Level 3 inputs based on appraisals and customized discounting criteria. The carrying value of foreclosed assets is not re-measured to fair value on a recurring basis but is subject to fair value adjustments when the carrying value exceeds the fair value, less estimated selling costs.

Collateral-Dependent Impaired Loans, Bank Premises Held for Sale, and Foreclosed Assets

The estimated fair value of collateral-dependent impaired loans, bank premises held for sale, and foreclosed assets is based on the appraised fair value of the collateral, less estimated costs to sell. Collateral-dependent impaired loans, bank premises held for sale, and foreclosed assets are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal, or a similar evaluation, as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals or a similar evaluation of the collateral underlying collateral-dependent loans and foreclosed assets are obtained at the time a loan is first considered impaired or a loan is transferred to foreclosed assets. Appraisals or a similar evaluation of bank premises held for sale are obtained when first classified as held for sale. Appraisals or similar evaluations are obtained subsequently as deemed necessary by management but at least annually on foreclosed assets and bank premises held for sale. Appraisals are reviewed for accuracy and consistency by management. Appraisals are performed by individuals selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated costs to sell. These discounts and estimates are developed by management by comparison to historical results.

The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands).


December 31, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral-dependent impaired loans	$	17,460	Appraisal of collateral	Appraisal adjustments	Not meaningful
Bank premises held for sale		235	Appraisal	Appraisal adjustments	7% (7%)
Foreclosed assets		3,030	Appraisal	Appraisal adjustments	7% (7%)

December 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral-dependent impaired loans	$	22,423	Appraisal of collateral	Appraisal adjustments	Not meaningful
Bank premises held for sale		1,452	Appraisal	Appraisal adjustments	7% (7%)
Foreclosed assets		3,278	Appraisal	Appraisal adjustments	7% (7%)

Other Fair Value Methods

The following methods and assumptions were used by the Company in estimating fair value disclosures of its other financial instruments. There were no changes in the methods and significant assumptions used to estimate the fair value of these financial instruments.

Cash and Cash Equivalents

The carrying amounts of these financial instruments approximate their fair values.

Restricted Stock

The carrying amount of FHLB stock approximates fair value based on the redemption provisions of the FHLB.

Loans

The fair value estimation process for the loan portfolio uses an exit price concept and reflects discounts the Company believes are consistent with discounts in the marketplace. Fair values are estimated for portfolios of loans with similar characteristics. The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for similar maturities. The fair value analysis also includes other assumptions to estimate fair value, intended to approximate those a market participant would use in an orderly transaction, with adjustments for discount rates, interest rates, liquidity, and credit spreads, as appropriate.

Investments in Unconsolidated Subsidiaries

The fair values of the Company’s investments in unconsolidated subsidiaries are presumed to approximate carrying amounts.

Time Deposits

Fair values of certificates of deposit with stated maturities have been estimated using the present value of estimated future cash flows discounted at rates currently offered for similar instruments. Time deposits also include public funds time deposits.

Securities Sold Under Agreements to Repurchase

The fair values of repurchase agreements with variable interest rates are presumed to approximate their recorded carrying amounts.

Subordinated Notes

The fair values of subordinated debentures are estimated using discounted cash flow analyses based on rates observed on recent debt issuances by other financial institutions.

Junior Subordinated Debentures

The fair values of subordinated debentures are estimated using discounted cash flow analyses based on rates observed on recent debt issuances by other financial institutions.

Accrued Interest

The carrying amounts of accrued interest approximate fair value.

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair values have been estimated using data which management considered the best available and estimation methodologies deemed suitable for the pertinent category of financial instrument.

The following table provides summary information on the carrying amounts and estimated fair values of the Company’s financial instruments as of December 31:


	Fair Value	December 31, 2022				December 31, 2021
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Amount		Fair Value		Amount		Fair Value

			(dollars in thousands)
Financial assets:
Cash and cash equivalents	Level 1	$	114,159	$	114,159	$	409,268	$	409,268
Debt securities held-to-maturity	Level 2		541,600		478,801		336,185		336,027
Restricted stock	Level 3		7,965		7,965		2,739		2,739
Loans, net	Level 3		2,594,920		2,566,930		2,475,753		2,494,686
Investments in unconsolidated subsidiaries	Level 3		1,165		1,165		1,165		1,165
Accrued interest receivable	Level 2		19,506		19,506		14,901		14,901

Financial liabilities:
Time deposits	Level 3		262,968		253,619		328,208		327,779
Securities sold under agreements to repurchase	Level 2		43,081		43,081		61,256		61,256
Subordinated notes	Level 3		39,395		37,205		39,316		41,602
Junior subordinated debentures	Level 3		37,780		37,030		37,714		33,640
Accrued interest payable	Level 2		1,363		1,363		1,043		1,043

The Company estimated the fair value of lending related commitments as described in Note 23 to be immaterial based on limited interest rate exposure due to their variable nature, short-term commitment periods and termination clauses provided in the agreements.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

FORECLOSED ASSETS - Gains (losses) on Foreclosed Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
FORECLOSED ASSETS
Direct write-downs	$ (432)	$ (195)	$ (213)
Net gain on sales	118	505	348
Guarantee reimbursements			7
Gains (losses) on foreclosed assets	$ (314)	$ 310	$ 142

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2022

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

Schedule of condensed parent company only balance sheets


	December 31, 2022		December 31, 2021

ASSETS	(dollars in thousands)
Cash and cash equivalents	$	24,278	$	25,752
Investment in subsidiaries:
Bank		422,217		461,339
Non-bank		1,165		1,165
Other assets		5,338		1,283
Total assets	$	452,998	$	489,539

LIABILITIES
Subordinated notes	$	39,395	$	39,316
Junior subordinated debentures		37,780		37,714
Other liabilities		2,191		628
Total liabilities		79,366		77,658

STOCKHOLDERS' EQUITY		373,632		411,881
Total liabilities and stockholders' equity	$	452,998	$	489,539

Schedule of condensed parent company only statements of income


	Years ended December 31
	2022		2021		2020

INCOME	(dollars in thousands)
Dividends received from subsidiaries:
Bank	$	28,000	$	20,000	$	17,600
Non-bank		—		—		36
Undistributed earnings from subsidiaries:
Bank		35,044		41,227		22,462
Non-bank		—		—		(36)
Other income		51		454		215
Total income		63,095		61,681		40,277

EXPENSES
Interest expense		3,666		3,305		2,189
Other expense		5,292		3,741		2,519
Total expenses		8,958		7,046		4,708
INCOME BEFORE INCOME TAX BENEFIT		54,137		54,635		35,569
INCOME TAX BENEFIT		(2,319)		(1,636)		(1,276)
NET INCOME	$	56,456	$	56,271	$	36,845

Schedule of condensed parent company only statements of cash flows


	Year ended December 31
	2022		2021		2020

CASH FLOWS FROM OPERATING ACTIVITIES	(dollars in thousands)
Net income	$	56,456	$	56,271	$	36,845
Adjustments to reconcile net income to net cash provided by operating activities:
Undistributed earnings of consolidated subsidiaries		(35,044)		(41,227)		(22,426)
Stock-based compensation		1,949		764		351
Amortization of discount and issuance costs on subordinated notes and debentures		145		144		92
Net gain on sale of foreclosed assets		—		(74)		—
Changes in other assets and liabilities, net		769		(2,231)		1,633
Net cash provided by operating activities		24,275		13,647		16,495


CASH FLOWS FROM INVESTING ACTIVITIES
Capital contribution to bank subsidiary		—		—		—
Capital contribution to non-bank subsidiary		—		—		—
Purchase of securities		—		(48)		(17)
Purchase of foreclosed assets from Heartland Bank		(2,325)		—		—
Proceeds from sale of foreclosed assets		—		74		—
Net cash paid for acquisition of NXT Bancorporation, Inc.		—		(10,411)		—
Net cash used in investing activities		(2,325)		(10,385)		(17)


CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of subordinated notes, net of issuance costs		—		—		39,211
Issuance of common stock		—		—		—
Taxes paid related to the vesting of restricted stock units		(57)		—		—
Repurchase of common stock		(4,783)		(4,906)		—
Cash dividends and dividend equivalents paid		(18,584)		(16,753)		(16,518)
Net cash (used in) provided by financing activities		(23,424)		(21,659)		22,693

NET CHANGE IN CASH AND EQUIVALENTS		(1,474)		(18,397)		39,171
CASH AND CASH EQUIVALENTS
Beginning of year		25,752		44,149		4,978
End of year	$	24,278	$	25,752	$	44,149

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

12 Months Ended

Dec. 31, 2022

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

LOANS AND THE ALLOWANCE FOR LOAN LOSSES

NOTE 4 – LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Major categories of loans as of December 31, 2022 and 2021 are summarized as follows:


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Commercial and industrial	$	266,757	$	286,946
Agricultural and farmland		237,746		247,796
Commercial real estate - owner occupied		218,503		234,544
Commercial real estate - non-owner occupied		713,202		684,023
Multi-family		287,865		263,911
Construction and land development		360,824		298,048
One-to-four family residential		338,253		327,837
Municipal, consumer, and other		197,103		156,584
Loans, before allowance for loan losses		2,620,253		2,499,689
Allowance for loan losses		(25,333)		(23,936)
Loans, net of allowance for loan losses	$	2,594,920	$	2,475,753

Paycheck Protection Program (PPP) loans (included above)
Commercial and industrial	$	28	$	28,404
Agricultural and farmland		—		913
Municipal, consumer, and other		—		171
Total PPP loans	$	28	$	29,488

The following tables detail activity in the allowance for loan losses for the years ended December 31:


					Commercial		Commercial								Municipal,
	Commercial		Agricultural		Real Estate		Real Estate				Construction		One-to-four		Consumer,
	and		and		Owner		Non-owner				and Land		Family		and
	Industrial		Farmland		Occupied		Occupied		Multi-Family		Development		Residential		Other		Total

	(dollars in thousands)
Balance, December 31, 2019	$	4,441	$	2,766	$	1,779	$	3,663	$	1,024	$	2,977	$	2,540	$	3,109	$	22,299
Provision for loan losses		677		(1,946)		961		7,862		933		1,032		(894)		1,907		10,532
Charge-offs		(1,784)		(27)		(39)		(349)		—		(27)		(155)		(587)		(2,968)
Recoveries		595		—		440		75		—		250		310		305		1,975
Balance, December 31, 2020		3,929		793		3,141		11,251		1,957		4,232		1,801		4,734		31,838
Provision for loan losses		(1,474)		52		(1,280)		(3,130)		(694)		340		(472)		(1,419)		(8,077)
Charge-offs		(668)		—		(30)		—		—		—		(267)		(449)		(1,414)
Recoveries		653		—		9		24		—		342		249		312		1,589
Balance, December 31, 2021		2,440		845		1,840		8,145		1,263		4,914		1,311		3,178		23,936
Provision for loan losses		88		(49)		(1,653)		(1,707)		209		(692)		146		2,952		(706)
Charge-offs		(23)		—		(25)		—		—		—		(67)		(569)		(684)
Recoveries		774		—		1,031		283		—		1		369		329		2,787
Balance, December 31, 2022	$	3,279	$	796	$	1,193	$	6,721	$	1,472	$	4,223	$	1,759	$	5,890	$	25,333

The following tables present the recorded investments in loans and the allowance for loan losses by category as of December 31:


					Commercial		Commercial								Municipal,
	Commercial		Agricultural		Real Estate		Real Estate				Construction		One-to-four		Consumer,
	and		and		Owner		Non-owner				and Land		Family		and
December 31, 2022	Industrial		Farmland		Occupied		Occupied		Multi-Family		Development		Residential		Other		Total

Loan balances:	(dollars in thousands)
Collectively evaluated for impairment	$	261,833	$	233,118	$	203,558	$	671,663	$	287,298	$	359,892	$	325,621	$	184,579	$	2,527,562
Individually evaluated for impairment		4,818		4,033		11,366		30,509		—		82		8,399		12,508		71,715
Acquired with deteriorated credit quality		106		595		3,579		11,030		567		850		4,233		16		20,976
Total	$	266,757	$	237,746	$	218,503	$	713,202	$	287,865	$	360,824	$	338,253	$	197,103	$	2,620,253

Allowance for loan losses:
Collectively evaluated for impairment	$	3,121	$	796	$	1,008	$	4,332	$	1,470	$	4,221	$	1,709	$	2,327	$	18,984
Individually evaluated for impairment		158		—		168		2,388		—		—		44		3,562		6,320
Acquired with deteriorated credit quality		—		—		17		1		2		2		6		1		29
Total	$	3,279	$	796	$	1,193	$	6,721	$	1,472	$	4,223	$	1,759	$	5,890	$	25,333

					Commercial		Commercial								Municipal,
	Commercial		Agricultural		Real Estate		Real Estate				Construction		One-to-four		Consumer,
	and		and		Owner		Non-owner				and Land		Family		and
December 31, 2021	Industrial		Farmland		Occupied		Occupied		Multi-Family		Development		Residential		Other		Total

Loan balances:	(dollars in thousands)
Collectively evaluated for impairment	$	272,064	$	247,021	$	216,794	$	641,555	$	262,701	$	293,548	$	314,807	$	143,510	$	2,392,000
Individually evaluated for impairment		14,744		12		12,332		29,575		—		2,018		6,897		13,041		78,619
Acquired with deteriorated credit quality		138		763		5,418		12,893		1,210		2,482		6,133		33		29,070
Total	$	286,946	$	247,796	$	234,544	$	684,023	$	263,911	$	298,048	$	327,837	$	156,584	$	2,499,689

Allowance for loan losses:
Collectively evaluated for impairment	$	2,253	$	845	$	1,480	$	5,138	$	1,259	$	4,895	$	1,099	$	1,302	$	18,271
Individually evaluated for impairment		187		—		327		2,999		—		—		210		1,875		5,598
Acquired with deteriorated credit quality		—		—		33		8		4		19		2		1		67
Total	$	2,440	$	845	$	1,840	$	8,145	$	1,263	$	4,914	$	1,311	$	3,178	$	23,936

The following tables present loans individually evaluated for impairment by category of loans as of December 31:


	Unpaid
	Principal		Recorded		Related
December 31, 2022	Balance		Investment		Allowance

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	268	$	254	$	158
Agricultural and farmland		—		—		—
Commercial real estate - owner occupied		635		610		168
Commercial real estate - non-owner occupied		14,269		14,261		2,388
Multi-family		—		—		—
Construction and land development		—		—		—
One-to-four family residential		569		524		44
Municipal, consumer, and other		8,152		8,131		3,562
Total	$	23,893	$	23,780	$	6,320

With no related allowance:
Commercial and industrial	$	4,564	$	4,564	$	—
Agricultural and farmland		4,440		4,033		—
Commercial real estate - owner occupied		10,912		10,756		—
Commercial real estate - non-owner occupied		16,327		16,248		—
Multi-family		—		—		—
Construction and land development		92		82		—
One-to-four family residential		9,181		7,875		—
Municipal, consumer, and other		4,410		4,377		—
Total	$	49,926	$	47,935	$	—

Total loans individually evaluated for impairment:
Commercial and industrial	$	4,832	$	4,818	$	158
Agricultural and farmland		4,440		4,033		—
Commercial real estate - owner occupied		11,547		11,366		168
Commercial real estate - non-owner occupied		30,596		30,509		2,388
Multi-family		—		—		—
Construction and land development		92		82		—
One-to-four family residential		9,750		8,399		44
Municipal, consumer, and other		12,562		12,508		3,562
Total	$	73,819	$	71,715	$	6,320


	Unpaid
	Principal		Recorded		Related
December 31, 2021	Balance		Investment		Allowance

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	303	$	303	$	187
Agricultural and farmland		—		—		—
Commercial real estate - owner occupied		3,013		3,013		327
Commercial real estate - non-owner occupied		14,912		14,893		2,999
Multi-family		—		—		—
Construction and land development		—		—		—
One-to-four family residential		1,421		1,314		210
Municipal, consumer, and other		8,523		8,498		1,875
Total	$	28,172	$	28,021	$	5,598

With no related allowance:
Commercial and industrial	$	14,452	$	14,441	$	—
Agricultural and farmland		12		12		—
Commercial real estate - owner occupied		9,534		9,319		—
Commercial real estate - non-owner occupied		14,755		14,682		—
Multi-family		—		—		—
Construction and land development		2,112		2,018		—
One-to-four family residential		7,129		5,583		—
Municipal, consumer, and other		4,603		4,543		—
Total	$	52,597	$	50,598	$	—

Total loans individually evaluated for impairment:
Commercial and industrial	$	14,755	$	14,744	$	187
Agricultural and farmland		12		12		—
Commercial real estate - owner occupied		12,547		12,332		327
Commercial real estate - non-owner occupied		29,667		29,575		2,999
Multi-family		—		—		—
Construction and land development		2,112		2,018		—
One-to-four family residential		8,550		6,897		210
Municipal, consumer, and other		13,126		13,041		1,875
Total	$	80,769	$	78,619	$	5,598

The following table presents the average recorded investment and interest income recognized for loans individually evaluated for impairment by category of loans during the years ended December 31:


	Year Ended December 31,
	2022				2021				2020
	Average		Interest		Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized		Investment		Recognized

With an allowance recorded:	(dollars in thousands)
Commercial and industrial	$	204	$	18	$	1,593	$	89	$	3,031	$	169
Agricultural and farmland		—		—		83		4		273		9
Commercial real estate - owner occupied		970		63		3,052		177		1,622		98
Commercial real estate - non-owner occupied		10,943		740		16,494		791		6,345		220
Multi-family		—		—		—		—		—		—
Construction and land development		—		—		554		27		2,441		116
One-to-four family residential		384		16		1,988		77		3,120		110
Municipal, consumer, and other		6,259		236		8,681		158		10,617		286
Total	$	18,760	$	1,073	$	32,445	$	1,323	$	27,449	$	1,008

With no related allowance:
Commercial and industrial	$	9,568	$	453	$	7,125	$	330	$	4,004	$	251
Agricultural and farmland		228		13		290		17		11,061		561
Commercial real estate - owner occupied		8,619		525		7,771		344		11,056		528
Commercial real estate - non-owner occupied		12,636		1,278		10,339		432		14,412		458
Multi-family		—		—		434		10		447		10
Construction and land development		1,505		106		2,107		28		892		23
One-to-four family residential		6,238		352		6,248		192		8,022		316
Municipal, consumer, and other		3,361		148		4,666		86		3,089		115
Total	$	42,155	$	2,875	$	38,980	$	1,439	$	52,983	$	2,262

Total loans individually evaluated for impairment:
Commercial and industrial	$	9,772	$	471	$	8,718	$	419	$	7,035	$	420
Agricultural and farmland		228		13		373		21		11,334		570
Commercial real estate - owner occupied		9,589		588		10,823		521		12,678		626
Commercial real estate - non-owner occupied		23,579		2,018		26,833		1,223		20,757		678
Multi-family		—		—		434		10		447		10
Construction and land development		1,505		106		2,661		55		3,333		139
One-to-four family residential		6,622		368		8,236		269		11,142		426
Municipal, consumer, and other		9,620		384		13,347		244		13,706		401
Total	$	60,915	$	3,948	$	71,425	$	2,762	$	80,432	$	3,270

The following tables present loans by category based on current payment and accrual status as of December 31:


	Accruing Interest
			30 - 89 Days		90+ Days				Total
December 31, 2022	Current		Past Due		Past Due		Nonaccrual		Loans

	(dollars in thousands)
Commercial and industrial	$	266,521	$	17	$	—	$	219	$	266,757
Agricultural and farmland		237,727		19		—		—		237,746
Commercial real estate - owner occupied		218,242		187		—		74		218,503
Commercial real estate - non-owner occupied		713,031		—		—		171		713,202
Multi-family		287,854		11		—		—		287,865
Construction and land development		360,763		61		—		—		360,824
One-to-four family residential		335,576		894		145		1,638		338,253
Municipal, consumer, and other		196,892		157		1		53		197,103
Total	$	2,616,606	$	1,346	$	146	$	2,155	$	2,620,253


	Accruing Interest
			30 - 89 Days		90+ Days				Total
December 31, 2021	Current		Past Due		Past Due		Nonaccrual		Loans

	(dollars in thousands)
Commercial and industrial	$	286,563	$	9	$	—	$	374	$	286,946
Agricultural and farmland		247,772		24		—		—		247,796
Commercial real estate - owner occupied		234,441		103		—		—		234,544
Commercial real estate - non-owner occupied		683,029		823		—		171		684,023
Multi-family		263,911		—		—		—		263,911
Construction and land development		297,465		64		—		519		298,048
One-to-four family residential		325,780		383		32		1,642		327,837
Municipal, consumer, and other		156,297		214		16		57		156,584
Total	$	2,495,258	$	1,620	$	48	$	2,763	$	2,499,689

The following tables present total loans by category based on their assigned risk ratings determined by management as of December 31:


December 31, 2022	Pass		Pass-Watch		Substandard		Doubtful		Total

	(dollars in thousands)
Commercial and industrial	$	255,309	$	6,630	$	4,818	$	—	$	266,757
Agricultural and farmland		223,114		10,004		4,628		—		237,746
Commercial real estate - owner occupied		198,546		10,105		9,852		—		218,503
Commercial real estate - non-owner occupied		652,691		27,282		33,229		—		713,202
Multi-family		283,682		4,183		—		—		287,865
Construction and land development		358,215		2,527		82		—		360,824
One-to-four family residential		323,632		5,907		8,714		—		338,253
Municipal, consumer, and other		184,299		296		12,508		—		197,103
Total	$	2,479,488	$	66,934	$	73,831	$	—	$	2,620,253


December 31, 2021	Pass		Pass-Watch		Substandard		Doubtful		Total

	(dollars in thousands)
Commercial and industrial	$	267,088	$	5,114	$	14,744	$	—	$	286,946
Agricultural and farmland		221,898		25,213		685		—		247,796
Commercial real estate - owner occupied		198,862		24,098		11,584		—		234,544
Commercial real estate - non-owner occupied		619,212		32,372		32,439		—		684,023
Multi-family		241,362		22,549		—		—		263,911
Construction and land development		268,556		27,474		2,018		—		298,048
One-to-four family residential		308,951		11,221		7,665		—		327,837
Municipal, consumer, and other		143,299		244		13,041		—		156,584
Total	$	2,269,228	$	148,285	$	82,176	$	—	$	2,499,689


						Charge-offs
		Recorded Investment				and Specific
Year Ended December 31, 2020	Number	Pre-Modification		Post-Modification		Reserves

	(dollars in thousands)
Commercial real estate - owner occupied	1	$	853	$	853	$	—

During the year ended December 31, 2020, the troubled debt restructuring was the result of a payment concession. As of December 31, 2022 and 2021, there were no troubled debt restructurings which had subsequent payment defaults within 12 months of the modification. For purposes of this disclosure, the Company considers “default” to mean 90 days or more past due as to interest or principal or were on nonaccrual status subsequent to restructuring.

As of December 31, 2022 and 2021, the Company had $3.0 million and $3.5 million of troubled debt restructurings, respectively. Restructured loans are evaluated for impairment quarterly as part of the Company’s determination of the allowance for loan losses. There were no material commitments to lend additional funds to debtors owing loans whose terms have been modified in troubled debt restructurings.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), along with a joint statement issued by banking regulatory agencies, provided that short-term loan payment modifications made prior to December 31, 2021 to borrowers experiencing financial hardship due to the COVID-19 pandemic generally do not need to be accounted for as a troubled debt restructuring. As of December 31, 2022, the Company had no loans that were granted a payment modification due to a COVID-19 related financial hardship which had not returned to regular payments. As of December 31, 2021, the Company had $0.2 million of loans that were granted a payment modification due to a COVID-19 related financial hardship and had not returned to regular payments. Substantially all modifications were in the form of a three-month interest-only period or a one-month payment deferral. Some borrowers received more than one loan payment modification.

Changes in the accretable yield for loans acquired with deteriorated credit quality were as follows for the years ended December 31:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Beginning balance	$	413	$	1,397	$	1,662
Reclassification from non-accretable difference		548		508		288
Disposals		—		(1,089)		—
Accretion income		(231)		(403)		(553)
Ending balance	$	730	$	413	$	1,397

FAIR VALUE OF FINANCIAL INSTRUMENTS - Unobservable inputs used in nonrecurring measurements (Details) - Nonrecurring - Level 3 $ in Thousands	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Collateral-dependent impaired loans \| Appraisal of collateral
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value	$ 17,460	$ 22,423
Alternative Investment, Measurement Input [Extensible List]	hbt:AppraisalAdjustmentsMember	hbt:AppraisalAdjustmentsMember
Bank premises held for sale \| Appraisal
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value	$ 235	$ 1,452
Measurement input	7	7
Alternative Investment, Measurement Input [Extensible List]	hbt:AppraisalAdjustmentsMember	hbt:AppraisalAdjustmentsMember
Bank premises held for sale \| Appraisal \| Weighted average
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	(7)	(7)
Foreclosed assets \| Appraisal
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value	$ 3,030	$ 3,278
Measurement input	7	7
Alternative Investment, Measurement Input [Extensible List]	hbt:AppraisalAdjustmentsMember	hbt:AppraisalAdjustmentsMember
Foreclosed assets \| Appraisal \| Weighted average
FAIR VALUE OF FINANCIAL INSTRUMENTS
Measurement input	(7)	(7)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stock Transactions, Parenthetical Disclosures [Abstract]
Cash dividends	$ 0.64	$ 0.60	$ 0.60

LOAN SERVICING (Tables)

12 Months Ended

Dec. 31, 2022

LOAN SERVICING

Schedule of activity in mortgage servicing rights


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Beginning balance	$	7,994	$	5,934	$	8,518
Acquired		—		370		—
Capitalized servicing rights		530		1,200		1,981
Fair value adjustment:
Attributable to payments and principal reductions		(1,343)		(1,788)		(2,364)
Attributable to changes in valuation inputs and assumptions		2,966		2,278		(2,201)
Total fair value adjustment		1,623		490		(4,565)
Ending balance	$	10,147	$	7,994	$	5,934

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Stockholders' Equity
Debt securities held-to-maturity	$ 478,801	$ 336,027
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	29,308,491	29,276,547
Common stock, shares outstanding	28,752,626	28,986,061
Treasury stock ,shares	555,865	290,486

INCOME TAXES - Allocation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current
Federal	$ 15,194	$ 11,330	$ 8,358
State	7,459	6,053	4,709
Total current	22,653	17,383	13,067
Deferred
Federal	(2,045)	1,945	(226)
State	(874)	963	(113)
Total deferred	(2,919)	2,908	(339)
Income tax expense	$ 19,734	$ 20,291	$ 12,728

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

FAIR VALUE OF FINANCIAL INSTRUMENTS - Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
FAIR VALUE OF FINANCIAL INSTRUMENTS
Loans held for sale	$ 615	$ 4,942
Collateral-dependent impaired loans	17,460	22,423
Bank premises held for sale	235	1,452
Foreclosed assets	3,030	3,278
Level 2
FAIR VALUE OF FINANCIAL INSTRUMENTS
Loans held for sale	615	4,942
Level 3
FAIR VALUE OF FINANCIAL INSTRUMENTS
Collateral-dependent impaired loans	17,460	22,423
Bank premises held for sale	235	1,452
Foreclosed assets	$ 3,030	$ 3,278

DERIVATIVE FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2022

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 14 – DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are negotiated contracts entered into by two issuing counterparties containing specific agreement terms, including the underlying instrument, amount, exercise price, and maturities. The derivatives accounting guidance requires that the Company to recognize all derivative financial instruments as either assets or liabilities at fair value in the consolidated balance sheets. The Company may utilize interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position.

Interest Rate Swaps Designated as Cash Flow Hedges

The Company designated certain interest rate swap agreements as cash flow hedges on variable-rate borrowings. For derivative instruments that are designated and qualify as a cash flow hedge, the gain or loss on interest rate swaps designated as cash flow hedging instruments are reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

The interest rate swap agreements designated as cash flow hedges are summarized as follows:


	December 31, 2022				December 31, 2021
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value

	(dollars in thousands)
Fair value recorded in other assets	$	17,000	$	629	$	—	$	—
Fair value recorded in other liabilities		—		—		17,000		(680)

As of December 31, 2022, the interest rate swap agreements designated as cash flow hedges had contractual maturities between 2024 and 2025. As of December 31, 2022, counterparties had cash pledged and held on deposit by the Company of $0.6 million. As of December 31, 2021, the Company had cash pledged and held on deposit at counterparties of $0.8 million.

In 2019, the Company had an interest rate swap contract with a notional amount of $10.0 million designated as a cash flow hedge on variable-rate loans. Beginning April 1, 2019, this hedging relationship was no longer considered highly effective, and the Company discontinued hedge accounting. In accordance with hedge accounting guidance, the net unrealized gain associated with the discontinued hedging relationship, recorded within accumulated other comprehensive income, was reclassified into earnings through April 7, 2020, the period the hedged forecasted transactions affected earnings.

For the years ended December 31, 2022, 2021, and 2020, the effect of interest rate swap agreements designated as cash flow hedges on the consolidated statements of income are summarized as follows:


Location of gross gain (loss) reclassified	Amounts of gross gain (loss)
from accumulated other	reclassified from accumulated
comprehensive income (loss) to income	other comprehensive income (loss)
	Year Ended December 31,
	2022		2021		2020

Designated as cash flow hedges:	(dollars in thousands)
Taxable loan interest income	$	—	$	—	$	64
Junior subordinated debentures interest expense		(126)		(412)		(302)
Total	$	(126)	$	(412)	$	(238)

Interest Rate Swaps Not Designated as Hedging Instruments

The Company may offer interest rate swap agreements to its commercial borrowers in connection with their risk management needs. The Company manages the interest rate risk associated with these contracts by entering into an equal and offsetting derivative with a third-party financial institution. While these interest rate swap agreements generally work together as an economic interest rate hedge, the Company did not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred.

The interest rate swap agreements not designated as hedging instruments are summarized as follows:


	December 31, 2022				December 31, 2021
	Notional		Fair		Notional		Fair
	Amount		Value		Amount		Value

	(dollars in thousands)
Fair value recorded in other assets:
Interest rate swaps with a commercial borrower counterparty	$	—	$	—	$	112,041	$	8,622
Interest rate swaps with a financial institution counterparty		106,995		6,981		3,880		75
Total fair value recorded in other assets	$	106,995	$	6,981	$	115,921	$	8,697

Fair value recorded in other liabilities:
Interest rate swaps with a commercial borrower counterparty	$	106,995	$	(6,981)	$	3,880	$	(75)
Interest rate swaps with a financial institution counterparty		—		—		112,041		(8,622)
Total fair value recorded in other liabilities	$	106,995	$	(6,981)	$	115,921	$	(8,697)

As of December 31, 2022, the interest rate swap agreements not designated as hedging instruments had contractual maturities between 2023 and 2042. As of December 31, 2021, the Company had $7.5 million of debt securities pledged and held in safekeeping at the financial institution counterparty.

The effect of interest rate contracts not designated as hedging instruments recognized in other noninterest income on the consolidated statements of income are summarized as follows for the years ended December 31:


	Year Ended December 31,
	2022		2021		2020

Not designated as hedging instruments:	(dollars in thousands)
Gross gains	$	16,002	$	13,773	$	24,758
Gross losses		(16,002)		(13,773)		(24,758)
Net gains (losses)	$	—	$	—	$	—

DEPOSITS (Tables)

12 Months Ended

Dec. 31, 2022

DEPOSITS

Schedule of Company's interest-bearing deposits


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Noninterest-bearing deposits	$	994,954	$	1,087,659
Interest-bearing deposits:
Interest-bearing demand		1,139,150		1,105,949
Money market		555,425		583,198
Savings		634,527		633,171
Time		262,968		328,208
Total interest-bearing deposits		2,592,070		2,650,526
Total deposits	$	3,587,024	$	3,738,185

Scheduled maturities of time deposits


Year ended December 31,
2023	$	191,045
2024		44,573
2025		14,544
2026		8,822
2027		3,855
Thereafter		129
Total	$	262,968

Schedule of interest expense on deposits


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Interest-bearing demand	$	607	$	518	$	647
Money market		813		437		697
Savings		208		188		196
Time		883		1,329		2,681
Total interest expense on deposits	$	2,511	$	2,472	$	4,221

- Definition

Tabular disclosure of type of deposit liability.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (e)

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(ii)

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (1)

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (1)

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (d)

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iv)

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (5)

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)(i)(iii)

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (4)

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (f)
-Subparagraph (2)

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (c)

Reference 13: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (2)

Reference 14: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)
-Subparagraph (3)

Reference 15: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher SEC
-Name Regulation S-K (SK)
-Number 229
-Section 1406
-Paragraph (a)

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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 consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Significant accounting policies are summarized below.

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

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.”

Basis of Consolidation

The consolidated financial statements of HBT Financial include the accounts of the Company and its wholly owned bank subsidiary, Heartland Bank.

The Company also has five wholly owned subsidiaries, Heartland Bancorp, Inc. Capital Trust B, Heartland Bancorp, Inc. Capital Trust C, Heartland Bancorp, Inc. Capital Trust D, FFBI Capital Trust I, and National Bancorp Statutory Trust I, which, in accordance with GAAP, are not consolidated as more fully described in Note 13.

Significant intercompany transactions and accounts have been eliminated in consolidation.

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.

Business and Significant Concentrations of Credit Risk

The Company provides several types of loans to individuals, businesses, and municipal entities primarily located in its customer service area. Real estate and commercial loans are principal areas of concentration. The Company also strives to meet the borrowing needs of the consumers in its market areas. Extension of credit is generally limited to the primary trade areas of the Company. Primary deposit products of the Bank are noninterest-bearing and interest-bearing demand accounts, savings accounts, money market accounts, and term certificates of deposit.

Cash and Cash Equivalents

For purposes of reporting consolidated cash flows, cash and cash equivalents include cash on hand and amounts due from banks, all of which have an original maturity within 90 days or less. Cash flows from loans and deposits are reported net.

Interest-Bearing Time Deposits with Banks

Interest-bearing time deposits with banks are carried at cost.

Debt Securities

Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity and are carried at amortized cost. Debt securities not classified as held-to-maturity are classified as available-for-sale. Debt securities available-for-sale are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses on debt securities available-for-sale are included in noninterest income when applicable and reported as a reclassification adjustment in other comprehensive income (loss). Gains and losses on sales of securities are determined using the specific identification method on the trade date. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity.

Any transfers of debt securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income (loss) and in the carrying value of the held-to-maturity securities. Such amounts are amortized over the period to maturity.

Declines in the fair value of individual securities below their cost that are other-than-temporary result in write-downs of the individual securities to their fair value. The Company monitors the investment security portfolio for impairment on an individual security basis and has a process in place to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves analyzing the length of time and the extent to which the fair value has been less than the amortized cost basis, the market liquidity for the security, the financial condition and near-term prospects of the issuer, expected cash flows, and the intent of the Company to not sell the security or whether it is more likely than not that the Company will be required to sell the security before its anticipated recovery. A decline in value due to a credit event that is considered other-than-temporary is recorded as a loss in noninterest income.

Equity Securities

Equity securities with readily determinable fair values are measured at fair value with changes in fair value recognized in unrealized gains (losses) on equity securities on the statements of income.

The Company has elected to measure its equity securities with no readily determinable fair values at their cost minus impairment, if any, plus or minus charges resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Restricted Stock

Restricted stock, which consists of Federal Home Loan Bank of Chicago (“FHLB”) stock, is carried at cost and evaluated for impairment.

Loans Held for Sale

Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. The Company obtains quotes or bids on these loans directly from purchasing financial institutions. Typically, these quotes include a premium on sale and thus quotes typically indicate fair value of the held for sale loans is greater than cost. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Mortgage loans held for sale are generally sold with the mortgage servicing rights retained by the Company. The carrying value of mortgage loans sold is reduced by fair value allocated to the associated mortgage servicing rights. Gains or losses on sales of mortgage loans are recognized based on the difference between the selling price and the carrying value of the related mortgage loans sold.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses, deferred loan fees or costs on originated loans, and unamortized premiums or discounts on acquired loans.

Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income if it was accrued during the current year and charged-off against the allowance for loan losses if accrued in a prior year. Amortization of related deferred loan fees or costs is also suspended at this time. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses (“allowance”) is an estimate of loan losses inherent in the Company’s loan portfolio. The allowance for loan losses represents amounts that have been established to recognize incurred credit losses in the loan portfolio that are both probable and reasonably estimable at the date of the consolidated financial statements. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance. Loan losses are charged off against the allowance when the Company determines the loan balance to be uncollectible. Cash received on previously charged off amounts is recorded as a recovery to the allowance.

The allowance consists of two primary components, general reserves and specific reserves related to impaired loans. The general component covers non-impaired loans and is based on historical losses adjusted for qualitative factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Company over the most recent 16-quarter period. This actual loss experience is adjusted for qualitative factors based on the risks present for each portfolio segment. These qualitative factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

These qualitative factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The Company reviews the loan portfolio on an ongoing basis to determine whether any loans require classification and impairment testing in accordance with applicable regulations and accounting principles. Loans determined to be impaired are individually evaluated for impairment. When a loan is classified as either substandard or doubtful and in certain other cases, such as troubled debt restructurings, the Company generally measures impairment based on the fair value of the collateral, but also may use the present value of expected future cash flows discounted at the original contractual interest rate, when practical.

Under certain circumstances, the Company will provide borrowers relief through loan restructurings. A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the borrower’s financial difficulties grants a concession to the borrower that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. TDR concessions can include reduction of interest rates, extension of maturity dates, forgiveness of principal or interest due, or acceptance of other assets in full or partial satisfaction of the debt.

In general, if the Company grants a TDR that involves either the absence of principal amortization or a material extension of an existing loan amortization period in excess of our underwriting standards, the loan will be placed on nonaccrual status. However, if a TDR is well secured by an abundance of collateral and the collectability of both interest and principal is probable, the loan may remain on accrual status. A nonaccrual TDR in full compliance with the payment requirements specified in the loan modification for at least six months may return to accrual status, if the collectability of both principal and interest is probable. All TDRs are individually evaluated for impairment.

The Company assigns a risk rating to all loans and periodically performs detailed internal reviews of all such loans that are part of relationships with over $750,000 in total exposure to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to review by the Company’s regulators, external loan review, and internal loan review. During the internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which the borrowers operate and the fair values of collateral securing the loans. The risk rating is reviewed annually, at a minimum, and on an as needed basis depending on the specific circumstances of the loan. These credit quality indicators are used to assign a risk rating to each individual loan. Risk ratings are grouped into four major categories, defined as follows:

Pass: A Pass loan is a credit with no existing or known potential weaknesses deserving of management’s close attention.

Pass-Watch: A Pass-Watch loan is still considered a Pass credit and not a classified or criticized asset, but is a reflection of a borrower who exhibits credit weaknesses or downward trends warranting close attention and increased monitoring. These potential weaknesses may result in deterioration of the repayment prospects for the loan. No loss of principal or interest is expected, and the borrower does not pose sufficient risk to warrant classification.

Substandard: A Substandard loan is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Loans classified as Substandard have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized as probable that the borrower will not pay principal and interest in accordance with the contractual terms.

Doubtful: A Doubtful loan has all the weaknesses inherent in those classified as Substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The Company maintains a separate general valuation allowance for each portfolio segment. These portfolio segments include commercial and industrial, agricultural and farmland, commercial real estate – owner occupied, commercial real estate – non-owner occupied, multi-family, construction and land development, one-to-four family residential, and municipal, consumer and other, with risk characteristics described as follows:

Commercial and Industrial: Consists of loans typically granted for working capital, asset acquisition and other business purposes. These loans are underwritten primarily based on the borrower’s cash flow with most loans secondarily supported by collateral. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable, inventory, and equipment, and are typically supported by personal guarantees of the owners. Cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions and specific borrower circumstances.

Agricultural and Farmland: Consists of loans typically secured by farmland, agricultural operating assets, or a combination of both, and are generally underwritten to existing cash flows of operating agricultural businesses. Debt repayment is provided by business cash flows. The credit quality of these loans is significantly influenced by changes in prices of corn and soybeans and, to a lesser extent, weather, which has been partially mitigated by federal crop insurance programs.

Commercial Real Estate - Owner Occupied: Consists of loans secured by commercial real estate that is both owned and occupied by the same or a related borrower. These loans are primarily underwritten based on the cash flow of the business occupying the property. As with commercial and industrial loans, cash flows and collateral values may fluctuate based on general economic conditions, specific industry conditions, and specific borrower circumstances.

Commercial Real Estate - Non-owner Occupied: Consists of loans secured by commercial real estate for which the primary source of repayment is the sale or rental cash flows from the underlying collateral. These loans are underwritten based primarily on the historic or projected cash flow from the underlying collateral. Adverse economic developments, or an overbuilt market, typically impact commercial real estate projects. Trends in rental and vacancy rates of commercial properties may impact the credit quality of these loans.

Multi-family: Consists of loans secured by five or more unit apartment buildings. Multi-family loans may be affected by demographic and population trends, unemployment or underemployment, and deteriorating market values of real estate.

Construction and Land Development: Consists of loans for speculative and pre-sold construction projects for developers intending to either sell upon completion or hold for long term investment, as well as construction of projects to be owner occupied. In addition, loans in this segment generally possess a higher inherent risk of loss than other portfolio segments due to risk of non-completion, changes in budgeted costs, and changes in market forces during the term of the construction period.

One-to-four Family Residential: Consists of loans secured by one-to-four family residences, including both first and junior lien mortgage loans for owner occupied and non-owner occupied properties and home equity lines of credit. The degree of risk in residential mortgage lending depends on the local economy, including the local real estate market and unemployment rates.

Municipal, Consumer and Other: Loans to municipalities include obligations of municipal entities and loans sponsored by municipal entities for the benefit of a private entity where that private entity, rather than the municipal entity, is responsible for repayment of the obligation. Consumer loans include loans to individuals for consumer purposes and typically consist of small balance loans. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of the consumer loans. Loans to non-depository financial institutions, as well as leases, are also included.

Although management believes the allowance to be adequate, ultimate losses may vary from its estimates. At least quarterly, the Board of Directors reviews the adequacy of the allowance, including consideration of the relevant risks in the portfolio, current economic conditions and other factors. If the Board of Directors and management determine that changes are warranted based on those reviews, the allowance is adjusted. In addition, the Company’s regulators review the adequacy of the allowance and may require additions to the allowance based on their judgment about information available at the time of their examinations.

Loans Acquired with Deteriorated Credit Quality

Loans acquired that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all contractually required payments receivable, are initially recorded at fair value (as determined by the present value of expected future cash flows) with no allowance for loan losses. Loans are evaluated by management at the time of purchase to determine if there is evidence of deterioration in credit quality since origination. Loans where there is evidence of deterioration of credit quality since origination may be aggregated and accounted for as a pool of loans if the loans being aggregated have common risk characteristics. The difference between the undiscounted cash flows expected at acquisition and the investment in the loan, or the “accretable yield,” is recognized as interest income over the life of the loan. Contractually required payments for interest and principal that exceed the undiscounted cash flows expected at acquisition, or the “nonaccretable difference,” are not recognized as a yield adjustment. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses. Subsequent increases in expected cash flows result in a reversal of the provision for loan losses to the extent of prior charges or a reclassification of the difference from nonaccretable to accretable yield with a positive impact on interest income on a prospective basis. If the Company does not have the information necessary to reasonably estimate cash flows to be expected, it may use the cost recovery method or cash basis method of income recognition.

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Company has entered into commitments to extend credit, including commitments under credit arrangements, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.

Loan Servicing

The Company periodically sells mortgage loans on the secondary market with servicing retained. For sales of mortgage loans, a portion of the cost of originating the loan is allocated to the servicing right based on fair value. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses. Mortgage servicing rights are carried at fair value on the consolidated balance sheets and changes in fair value are recorded in mortgage servicing rights fair value adjustment on the consolidated statements of income.

Bank Owned Life Insurance

Bank owned life insurance represents life insurance policies on the lives of certain current and former employees and directors for which the Company is the sole owner and beneficiary. These policies are recorded as an asset in the consolidated balance sheets at their cash surrender value ("CSV") or the current amount that could be realized if settled. The change in CSV and insurance proceeds received are included as a component of noninterest income in the consolidated statements of income.

Bank Premises and Equipment

Land is carried at cost. Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the individual assets using the straight-line method.

Bank Premises Held for Sale

Bank premises held for sale is carried at the lower of cost or fair value less estimated costs to sell. Bank premises classified as held for sale are not depreciated.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or fair value less estimated costs to sell.

Lease Obligations

The Company leases certain bank premises under non-cancelable operating leases in the normal course of business operations. These lease obligations result in the recognition of right-of-use assets and associated lease contract liabilities. The amount of right-of-use assets and associated lease contract liabilities recorded is based on the present value of future minimum lease payments. The discount rate used is equal to the rate implicit in the lease, when readily determinable, or the Company’s incremental borrowing rate at lease inception, on a collateralized basis over a similar term. Right-of-use assets are included in other assets and lease contract liabilities are included in other liabilities in the consolidated balance sheets and were insignificant as of December 31, 2022 and 2021.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated cost to sell at the date of foreclosure, establishing a new cost basis. Any write-down based on the fair value of the asset at the date of acquisition is charged to the allowance for loan losses. If the fair value of the asset less estimated cost to sell exceeds the recorded investment in the loan at the date of foreclosure, the increase in value is charged to current year operations unless there has been a prior charge-off, in which case a recovery to the allowance for loan losses is recorded. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less estimated cost to sell. Write-downs of foreclosed assets subsequent to foreclosure are charged to current year operations as are gains and losses from sale of foreclosed assets, as well as expenses to maintain and hold foreclosed assets.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the original cost over the fair value of assets acquired and liabilities assumed. Goodwill is not amortized but instead is subject to an annual impairment evaluation. The Company has selected December 31 as the date to perform the annual impairment test. At December 31, 2022 and 2021, the Company’s evaluations of goodwill indicated that goodwill was not impaired.

Other identifiable intangible assets consist of core deposit intangible assets with definite useful lives which are being amortized using an accelerated depreciation method over 10 years. The Company will periodically review the status of core deposit intangible assets for any events or circumstances which may change the recoverability of the underlying basis.

Wealth Management Assets and Fees

Assets of the wealth management department of the Bank are not included in the consolidated balance sheets as such assets are not assets of the Company or the Bank. Fee income generated from wealth management services is recorded in the consolidated statements of income as a source of noninterest income.

Employee Benefit Plans

The Company sponsors a profit sharing plan under which the Company may contribute, at the discretion of the Board of Directors, a discretionary amount to all participating employees for the plan year. The Company may also make discretionary matching contributions in an amount up to 5% of compensation contributed by employees.

Stock Based Compensation

The Company recognizes compensation cost over the requisite service period, if any, which is generally defined as the vesting period. For awards classified as equity, compensation cost is based on the fair value of the awards on the grant date. For awards classified as liabilities, compensation cost also includes subsequent remeasurements of the fair value of the awards until the award is settled. The Company’s policy is to recognize forfeitures as they occur.

Transfers of Financial Assets and Participating Interests

Transfers of an entire financial asset or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

The transfer of a participating interest in an entire financial asset must also meet the definition of a participating interest. A participating interest in a financial asset has all of the following characteristics: (1) from the date of transfer, it must represent a proportionate (pro rata) ownership interest in the financial asset, (2) from the date of transfer, all cash flows received, except any cash flows allocated as any compensation for servicing or other services performed, must be divided proportionately among participating interest holders in the amount equal to their share ownership, (3) the rights of each participating interest holder must have the same priority, and (4) no party has the right to pledge or exchange the entire financial asset unless all participating interest holders agree to do so.

Advertising Costs

Advertising costs are expensed as incurred.

Income Taxes

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

With regard to uncertain tax matters, the Company recognizes in the consolidated financial statements the impact of a tax position taken, or expected to be taken, if it is more likely than not that the position will be sustained on audit based on the technical merit of the position. Management has analyzed the tax positions taken by the Company and concluded as of December 31, 2022 and 2021, there are no material uncertain tax positions taken or expected to be taken that require recognition of a liability or disclosure in the consolidated financial statements. When applicable, the Company recognizes interest accrued related to unrecognized tax benefits and penalties in operating expenses.

The Company files consolidated federal and state income tax returns. The Company generally is no longer subject to federal or state income tax examinations for years prior to 2019.

Derivative Financial Instruments

As part of the Company’s asset/liability management, the Company may use interest rate swaps to hedge various exposures or to modify interest rate characteristics of various balance sheet accounts. Derivatives that are used as part of the asset/liability management process are linked to specific assets or liabilities, or pools of assets or liabilities, and have high correlation between the contract and the underlying item being hedged, both at inception and throughout the hedge period.

All derivatives are recognized on the consolidated balance sheet at their fair value. On the date the derivative contract is entered into, the Company may designate the derivative as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability "cash flow" hedge. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income (loss), until earnings are affected by the variability of cash flows (e.g., when periodic settlements on a variable-rate asset or liability are recorded in earnings).

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedged transactions. This process includes linking all derivatives that are designated as cash flow hedges to specific assets and liabilities on the balance sheet or forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively.

The Company discontinues hedge accounting prospectively when (a) it is determined that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item (including forecasted transactions); (b) the derivative expires or is sold, terminated, or exercised; (c) the derivative is dedesignated as a hedge instrument, because it is unlikely that a forecasted transaction will occur; or (d) management determines that designation of the derivative as a hedge instrument is no longer appropriate.

When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the derivative will continue to be carried on the consolidated balance sheet at its fair value, and gains and losses that were accumulated in other comprehensive income (loss) will be recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the derivative will be carried at its fair value on the balance sheet, with subsequent changes in its fair value recognized in current-period earnings.

Comprehensive Income (Loss)

Accounting principles generally require that recognized revenue, expenses, gains, and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available-for-sale and interest rate swap agreements designated as cash flow hedges, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income (loss).

Fair Value Measurements

The Company categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Assets and liabilities valued at fair value are categorized based on the inputs to the valuation techniques as follows:

Level 1 - Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2 - Inputs that are significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Inputs that are unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing as asset or liability.

Subsequent to initial recognition, the Company may re-measure the carrying value of assets and liabilities measured on a nonrecurring basis to fair value. Adjustments to fair value usually result when certain assets are impaired. Such assets are written down from their carrying amounts to their fair value.

Accounting standards allow entities the irrevocable option to elect to measure certain financial instruments and other items at fair value for the initial and subsequent measurement on an instrument-by-instrument basis. The Company adopted the policy and has not elected to measure any existing financial instruments at fair value, except for mortgage servicing rights; however, it may elect to measure newly acquired financial instruments at fair value in the future.

Revenue from Contracts with Customers

ASC Topic 606, Revenue from Contracts with Customers, requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. To achieve this, the Company takes the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the Company satisfies a performance obligation. The non-interest revenue streams that are considered to be in the scope of this guidance are discussed below.

Card income: Consists of debit and credit card interchange fees. For debit and credit card transactions, the Company considers the merchant as the customer for interchange revenue with the performance obligation being satisfied when the cardholder purchases goods or services from the merchant. Interchange revenue is recognized as the services are provided. Payment is typically received daily.

Service charges on deposit accounts: Consists of account analysis fees, monthly service fees, and other deposit account related fees. The Company’s performance obligation account analysis fees and monthly service fees are ongoing and either party may cancel at any time. These fees are generally recognized as the services are rendered on a monthly basis. Payment is typically received monthly. Other deposit account related fees are largely transaction based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for other deposit account related fees is primarily received immediately through a direct charge to customers’ accounts.

Wealth management fees: Consists of revenue from the management and advisement of client assets and trust administration. The Company’s performance obligation is generally satisfied over time, and the fees are recognized monthly. Payment is typically received quarterly or annually.

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 consolidated financial statements were issued.

Other than the acquisition of Town and Country Financial Corporation, as disclosed in Note 2 – Acquisitions, and further developments in a pending legal matter, as disclosed in Note 23 – Commitments and Contingencies, there were no significant subsequent events through the issuance of these consolidated financial statements that warranted adjustment or disclosure.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 economic variables are best suited to be 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 debt securities portfolios, along with other management judgments. Management is finalizing macroeconomic conditions and forecast assumptions to be used in the model; however, upon adoption of ASU 2016-13 on January 1, 2023, we expect the initial allowance for credit losses and the reserve for unfunded commitments together to be approximately 30% to 50% above the existing allowance for loan loss levels. When finalized, this one-time increase will be recorded, net of tax, as an adjustment to beginning retained earnings.

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

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the recognition and measurement guidance for troubled debt restructurings (“TDRs”) by creditors in ASC 310-40. This Update also enhances disclosure requirements for certain loan restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity will apply refinancing and restructuring guidance to determine whether a modification or other form of restructuring results in a new loan or a continuation of an existing loan. Additionally, the amendments in this ASU require a public business entity to disclosure current-period gross write-offs by year of origination for financing receivables and net investments in leases in the existing vintage disclosures. The amendments in this update are effective for years beginning after December 15, 2022, including interim periods within those years. This standard is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

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

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, 2024. The Company is currently evaluating the effect that this standard will have on the consolidated results of operations and financial position.

REGULATORY CAPITAL (Tables)

12 Months Ended

Dec. 31, 2022

REGULATORY CAPITAL

Schedule of the Company's and the bank subsidiaries' actual and required capital amounts and ratios


	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2022	Amount		Ratio		Amount		Ratio		Amount		Ratio

		(dollars in thousands)
Total Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	516,556	16.27	%	$	254,052	8.00	%		N/A	N/A
Heartland Bank and Trust Company		489,316	15.43			253,643	8.00		$	317,054	10.00	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	451,828	14.23	%	$	190,539	6.00	%		N/A	N/A
Heartland Bank and Trust Company		463,983	14.63			190,233	6.00		$	253,643	8.00	%

Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	415,213	13.07	%	$	142,904	4.50	%		N/A	N/A
Heartland Bank and Trust Company		463,983	14.63			142,674	4.50		$	206,085	6.50	%

Tier 1 Capital (to Average Assets)
Consolidated HBT Financial, Inc.	$	451,828	10.48	%	$	172,427	4.00	%		N/A	N/A
Heartland Bank and Trust Company		463,983	10.78			172,240	4.00		$	215,300	5.00	%


	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2021	Amount		Ratio		Amount		Ratio		Amount		Ratio

		(dollars in thousands)
Total Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	479,320	16.88	%	$	227,115	8.00	%		N/A	N/A
Heartland Bank and Trust Company		452,162	15.94			226,950	8.00		$	283,688	10.00	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	416,068	14.66	%	$	170,336	6.00	%		N/A	N/A
Heartland Bank and Trust Company		428,226	15.09			170,213	6.00		$	226,950	8.00	%

Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	379,519	13.37	%	$	127,752	4.50	%		N/A	N/A
Heartland Bank and Trust Company		428,226	15.09			127,659	4.50		$	184,397	6.50	%

Tier 1 Capital (to Average Assets)
Consolidated HBT Financial, Inc.	$	416,068	9.84	%	$	169,171	4.00	%		N/A	N/A
Heartland Bank and Trust Company		428,226	10.13			169,070	4.00		$	211,337	5.00	%

DOCUMENT AND ENTITY INFORMATION - USD ($) $ in Millions	12 Months Ended
DOCUMENT AND ENTITY INFORMATION - USD ($) $ in Millions	Dec. 31, 2022	Feb. 15, 2023	Jun. 30, 2022
DOCUMENT AND ENTITY INFORMATION
Document Type	10-K
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2022
Entity File Number	001-39085
Entity Registrant Name	HBT Financial, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	37-1117216
Entity Address, Address Line One	401 North Hershey Road
Entity Address, City or Town	Bloomington
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	61704
City Area Code	888
Local Phone Number	897-2276
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	HBT
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
ICFR Auditor Attestation Flag	false
Auditor Name	RSM US LLP
Auditor Firm ID	49
Auditor Location	Chicago, Illinois
Entity Public Float			$ 177.6
Entity Common Stock, Shares Outstanding		32,145,546
Entity Central Index Key	0000775215
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false

ACQUISITIONS (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Feb. 01, 2023	Oct. 01, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Goodwill			$ 29,322	$ 29,322	$ 23,620	$ 23,620
Pre-tax acquisition expenses			$ 0	$ 1,400
Town and Country
Business Acquisition [Line Items]
Percentage of voting interests acquired	100.00%
Stock consideration per share	1.9010
Cash consideration per share	$ 35.66
Share Price	$ 21.12
Cash consideration	$ 38,000
Stock consideration (number of shares)	3,378,600
Total consideration	$ 109,400
Maximum period for refinement of fair values from closing date			1 year
NXT Bancorporation, Inc
Business Acquisition [Line Items]
Percentage of voting interests acquired		100.00%
Stock consideration per share		67.6783
Cash consideration per share		$ 400
Share Price		$ 16.27
Goodwill		$ 5,702
Cash consideration		10,633
Market value of shares issued as part of consideration		$ 29,270
Stock consideration (number of shares)		1,799,016
Total consideration		$ 39,903
Pre-tax acquisition expenses			$ 1,100

INCOME TAXES - Federal income tax (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Federal income tax expense:
Federal income tax, at statutory rate	$ 16,000	$ 16,078	$ 10,410
Federal income tax, at statutory rate (as a percent)	21.00%	21.00%	21.00%
Increase (decrease) resulting from:
Federally tax exempt interest income	$ (1,618)	$ (1,426)	$ (1,470)
Federally tax exempt interest income (as a percent)	(2.10%)	(1.90%)	(3.00%)
State taxes, net of federal benefit	$ 5,285	$ 5,430	$ 3,631
State taxes, net of federal benefit (as a percent)	6.90%	7.10%	7.40%
Other	$ 67	$ 209	$ 157
Other (as a percent)	0.10%	0.30%	0.30%
Income tax expense	$ 19,734	$ 20,291	$ 12,728
Total (as a percent)	25.90%	26.50%	25.70%

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
NET INCOME	$ 56,456	$ 56,271	$ 36,845
OTHER COMPREHENSIVE (LOSS) INCOME
Unrealized (losses) gains on debt securities available-for-sale	(105,459)	(24,798)	15,272
Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity	1,723	687	18
Unrealized gains (losses) on derivative instruments	1,183	366	(1,084)
Reclassification adjustment for net settlements on derivative instruments	126	412	238
Total other comprehensive (loss) income, before tax	(102,427)	(23,333)	14,444
Income tax (benefit) expense	(29,197)	(6,651)	4,123
Total other comprehensive (loss) income	(73,230)	(16,682)	10,321
TOTAL COMPREHENSIVE (LOSS) INCOME	$ (16,774)	$ 39,589	$ 47,166

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS (Tables) - Junior Subordinated Debentures Issued

12 Months Ended

Dec. 31, 2022

SUBORDINATED NOTES

Schedule of carrying value of subordinated debentures


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Heartland Bancorp, Inc. Capital Trust B	$	10,310	$	10,310
Heartland Bancorp, Inc. Capital Trust C		10,310		10,310
Heartland Bancorp, Inc. Capital Trust D		5,155		5,155
FFBI Capital Trust I		7,217		7,217
National Bancorp Statutory Trust I		5,773		5,773
Total junior subordinated debentures, at face value		38,765		38,765
National Bancorp Statutory Trust I unamortized discount		(985)		(1,051)
Total junior subordinated debentures, at carrying value	$	37,780	$	37,714

Schedule of interest rates and maturities of the junior subordinated debentures


				Interest Rate at
	Variable			December 31,		December 31,		Maturity
	Interest Rate			2022		2021		Date
Heartland Bancorp, Inc. Capital Trust B	LIBOR plus	2.75	%	6.83	%	2.87	%	April 6, 2034
Heartland Bancorp, Inc. Capital Trust C	LIBOR plus	1.53		6.30		1.73		June 15, 2037
Heartland Bancorp, Inc. Capital Trust D	LIBOR plus	1.35		6.12		1.55		September 15, 2037
FFBI Capital Trust I	LIBOR plus	2.80		6.88		2.92		April 6, 2034
National Bancorp Statutory Trust I	LIBOR plus	2.90		7.67		3.10		December 15, 2037

INCOME TAXES

12 Months Ended

Dec. 31, 2022

INCOME TAXES

INCOME TAXES

NOTE 16 – INCOME TAXES

Allocation of income tax expense between current and deferred portions for the years ended December 31 is as follows:



	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Current
Federal	$	15,194	$	11,330	$	8,358
State		7,459		6,053		4,709
Total current		22,653		17,383		13,067

Deferred
Federal		(2,045)		1,945		(226)
State		(874)		963		(113)
Total deferred		(2,919)		2,908		(339)
Income tax expense	$	19,734	$	20,291	$	12,728

Income tax expense differs from the statutory federal rate for the years ended December 31 due to the following:


	Year Ended December 31,
	2022				2021				2020
	Amount		Percentage		Amount		Percentage		Amount		Percentage

	(dollars in thousands)
Federal income tax, at statutory rate	$	16,000	21.0	%	$	16,078	21.0	%	$	10,410	21.0	%
Increase (decrease) resulting from:
Federally tax exempt interest income		(1,618)	(2.1)			(1,426)	(1.9)			(1,470)	(3.0)
State taxes, net of federal benefit		5,285	6.9			5,430	7.1			3,631	7.4
Other		67	0.1			209	0.3			157	0.3
Income tax expense	$	19,734	25.9	%	$	20,291	26.5	%	$	12,728	25.7	%

The components of the deferred tax assets and liabilities are as follows:


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Deferred tax assets
Allowance for loan losses	$	7,151	$	6,756
Compensation related		2,623		2,314
Deferred loan fees		965		1,059
Nonaccrual interest		480		489
Foreclosed assets		142		43
Goodwill		153		316
Net unrealized losses on debt securities		29,874		304
Other		5,237		853
Total deferred tax assets		46,625		12,134

Deferred tax liabilities
Fixed asset depreciation		3,940		4,188
Mortgage servicing rights		2,868		2,262
Other purchase accounting adjustments		610		776
Intangible assets		214		374
Prepaid assets		756		664
Other		2,756		505
Total deferred tax liabilities		11,144		8,769
Net deferred tax asset	$	35,481	$	3,365

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)		12 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Jan. 01, 2023	Dec. 31, 2022 USD ($) segment item subsidiary	Dec. 31, 2021 USD ($)
ACCOUNTING POLICIES
Number of Subsidiary \| subsidiary		5
Number of primary components of allowance for loan losses \| item		2
Actual loss history period		4 years
Internal review threshold		$ 750,000
Definite useful lives of other identifiable intangible assets		10 years
Number of segments \| segment		1
Percentage matching the compensation contributed by employees		5.00%
Deferred tax asset		$ 35,481,000	$ 3,365,000
Uncertain tax positions		0	$ 0
Subsequent Event \| Accounting Standards Update 2016-13 [Member] \| Minimum
ACCOUNTING POLICIES
Expected percentage increase to allowance upon adoption	30.00%
Subsequent Event \| Accounting Standards Update 2016-13 [Member] \| Maximum
ACCOUNTING POLICIES
Expected percentage increase to allowance upon adoption	50.00%
Financial asset acquired with credit deterioration \| Loans
ACCOUNTING POLICIES
Allowance for credit loss		$ 0

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Individually evaluated for impairment by category of loans (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Unpaid Principal Balance
With an allowance recorded	$ 23,893	$ 28,172
With no related allowance	49,926	52,597
Total loans individually evaluated for impairment	73,819	80,769
Recorded Investment
With an allowance recorded	23,780	28,021
With no related allowance	47,935	50,598
Total loans individually evaluated for impairment	71,715	78,619
Related Allowance	6,320	5,598
Average Recorded Investment
With an allowance recorded	18,760	32,445	$ 27,449
With no related allowance	42,155	38,980	52,983
Total loans individually evaluated for impairment	60,915	71,425	80,432
Interest Income Recognized
With an allowance recorded	1,073	1,323	1,008
With no related allowance	2,875	1,439	2,262
Total loans individually evaluated for impairment	3,948	2,762	3,270
Commercial and industrial
Unpaid Principal Balance
With an allowance recorded	268	303
With no related allowance	4,564	14,452
Total loans individually evaluated for impairment	4,832	14,755
Recorded Investment
With an allowance recorded	254	303
With no related allowance	4,564	14,441
Total loans individually evaluated for impairment	4,818	14,744
Related Allowance	158	187
Average Recorded Investment
With an allowance recorded	204	1,593	3,031
With no related allowance	9,568	7,125	4,004
Total loans individually evaluated for impairment	9,772	8,718	7,035
Interest Income Recognized
With an allowance recorded	18	89	169
With no related allowance	453	330	251
Total loans individually evaluated for impairment	471	419	420
Agricultural and farmland
Unpaid Principal Balance
With no related allowance	4,440	12
Total loans individually evaluated for impairment	4,440	12
Recorded Investment
With no related allowance	4,033	12
Total loans individually evaluated for impairment	4,033	12
Average Recorded Investment
With an allowance recorded		83	273
With no related allowance	228	290	11,061
Total loans individually evaluated for impairment	228	373	11,334
Interest Income Recognized
With an allowance recorded		4	9
With no related allowance	13	17	561
Total loans individually evaluated for impairment	13	21	570
Commercial real estate - owner occupied
Unpaid Principal Balance
With an allowance recorded	635	3,013
With no related allowance	10,912	9,534
Total loans individually evaluated for impairment	11,547	12,547
Recorded Investment
With an allowance recorded	610	3,013
With no related allowance	10,756	9,319
Total loans individually evaluated for impairment	11,366	12,332
Related Allowance	168	327
Average Recorded Investment
With an allowance recorded	970	3,052	1,622
With no related allowance	8,619	7,771	11,056
Total loans individually evaluated for impairment	9,589	10,823	12,678
Interest Income Recognized
With an allowance recorded	63	177	98
With no related allowance	525	344	528
Total loans individually evaluated for impairment	588	521	626
Commercial real estate - non-owner occupied
Unpaid Principal Balance
With an allowance recorded	14,269	14,912
With no related allowance	16,327	14,755
Total loans individually evaluated for impairment	30,596	29,667
Recorded Investment
With an allowance recorded	14,261	14,893
With no related allowance	16,248	14,682
Total loans individually evaluated for impairment	30,509	29,575
Related Allowance	2,388	2,999
Average Recorded Investment
With an allowance recorded	10,943	16,494	6,345
With no related allowance	12,636	10,339	14,412
Total loans individually evaluated for impairment	23,579	26,833	20,757
Interest Income Recognized
With an allowance recorded	740	791	220
With no related allowance	1,278	432	458
Total loans individually evaluated for impairment	2,018	1,223	678
Multi-family
Average Recorded Investment
With no related allowance		434	447
Total loans individually evaluated for impairment		434	447
Interest Income Recognized
With no related allowance		10	10
Total loans individually evaluated for impairment		10	10
Construction and land development
Unpaid Principal Balance
With no related allowance	92	2,112
Total loans individually evaluated for impairment	92	2,112
Recorded Investment
With no related allowance	82	2,018
Total loans individually evaluated for impairment	82	2,018
Average Recorded Investment
With an allowance recorded		554	2,441
With no related allowance	1,505	2,107	892
Total loans individually evaluated for impairment	1,505	2,661	3,333
Interest Income Recognized
With an allowance recorded		27	116
With no related allowance	106	28	23
Total loans individually evaluated for impairment	106	55	139
One-to-four family residential
Unpaid Principal Balance
With an allowance recorded	569	1,421
With no related allowance	9,181	7,129
Total loans individually evaluated for impairment	9,750	8,550
Recorded Investment
With an allowance recorded	524	1,314
With no related allowance	7,875	5,583
Total loans individually evaluated for impairment	8,399	6,897
Related Allowance	44	210
Average Recorded Investment
With an allowance recorded	384	1,988	3,120
With no related allowance	6,238	6,248	8,022
Total loans individually evaluated for impairment	6,622	8,236	11,142
Interest Income Recognized
With an allowance recorded	16	77	110
With no related allowance	352	192	316
Total loans individually evaluated for impairment	368	269	426
Municipal, consumer, and other
Unpaid Principal Balance
With an allowance recorded	8,152	8,523
With no related allowance	4,410	4,603
Total loans individually evaluated for impairment	12,562	13,126
Recorded Investment
With an allowance recorded	8,131	8,498
With no related allowance	4,377	4,543
Total loans individually evaluated for impairment	12,508	13,041
Related Allowance	3,562	1,875
Average Recorded Investment
With an allowance recorded	6,259	8,681	10,617
With no related allowance	3,361	4,666	3,089
Total loans individually evaluated for impairment	9,620	13,347	13,706
Interest Income Recognized
With an allowance recorded	236	158	286
With no related allowance	148	86	115
Total loans individually evaluated for impairment	$ 384	$ 244	$ 401

DERIVATIVE FINANCIAL INSTRUMENTS - Interest rate contracts not designated as hedging instruments (Details) - Not designated - Interest rate swap - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
DERIVATIVE FINANCIAL INSTRUMENTS
Gross gains	$ 16,002	$ 13,773	$ 24,758
Derivative, Gain, Statement of Income or Comprehensive Income [Extensible Enumeration]	Noninterest Income, Other Operating Income	Noninterest Income, Other Operating Income	Noninterest Income, Other Operating Income
Gross losses	$ (16,002)	$ (13,773)	$ (24,758)
Derivative, Loss, Statement of Income or Comprehensive Income [Extensible Enumeration]	Noninterest Income, Other Operating Income	Noninterest Income, Other Operating Income	Noninterest Income, Other Operating Income
Other assets
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative asset notional amount	$ 106,995	$ 115,921
Derivative financial assets fair value	6,981	8,697
Other assets \| Commercial Borrower
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative asset notional amount		112,041
Derivative financial assets fair value		8,622
Other assets \| Financial Institutions Borrower
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative asset notional amount	106,995	3,880
Derivative financial assets fair value	6,981	75
Other liabilities
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative liability notional amount	106,995	115,921
Derivative financial liabilities fair value	(6,981)	(8,697)
Other liabilities \| Commercial Borrower
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative liability notional amount	106,995	3,880
Derivative financial liabilities fair value	$ (6,981)	(75)
Other liabilities \| Financial Institutions Borrower
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative liability notional amount		112,041
Derivative financial liabilities fair value		$ (8,622)

SECURITIES - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
SECURITIES - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
SECURITIES
Carrying value of securities pledged to secure public and trust deposits	$ 1,322,325	$ 1,278,195
Assets Pledged
SECURITIES
Carrying value of securities pledged to secure public and trust deposits	$ 332,600	$ 353,300
Illinois
SECURITIES
Percentage of obligations of local municipalities	49.00%
Percentage of general obligations in local municipalities	81.00%

JUNIOR SUBORDINATED DEBENTURES ISSUED TO CAPITAL TRUSTS - Carrying Values (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) subsidiary	Dec. 31, 2021 USD ($)
SUBORDINATED NOTES
Number of subsidiary business trusts \| subsidiary	5
Subordinated notes, at carrying value	$ 39,395	$ 39,316
Junior Subordinated Debentures Issued
SUBORDINATED NOTES
Subordinated notes, at face value	38,765	38,765
Subordinated notes, at carrying value	37,780	37,714
Junior Subordinated Debentures Issued \| Heartland Bancorp, Inc. Capital Trust B
SUBORDINATED NOTES
Subordinated notes, at face value	10,310	10,310
Junior Subordinated Debentures Issued \| Heartland Bancorp, Inc. Capital Trust C
SUBORDINATED NOTES
Subordinated notes, at face value	10,310	10,310
Junior Subordinated Debentures Issued \| Heartland Bancorp, Inc. Capital Trust D
SUBORDINATED NOTES
Subordinated notes, at face value	5,155	5,155
Junior Subordinated Debentures Issued \| FFBI Capital Trust I
SUBORDINATED NOTES
Subordinated notes, at face value	7,217	7,217
Junior Subordinated Debentures Issued \| National Bancorp Statutory Trust I
SUBORDINATED NOTES
Subordinated notes, at face value	5,773	5,773
Unamortized discount	$ (985)	$ (1,051)

GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule Of Goodwill And Finite Lived Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Goodwill [Roll Forward]
Beginning Balance	$ 29,322	$ 23,620	$ 23,620
Additions		5,702
Ending Balance	29,322	29,322	23,620
Indefinite-lived Intangible Assets [Roll Forward]
Beginning balance	1,943
Amortization	(873)	(1,054)	(1,232)
Ending balance	1,070	1,943
Core Deposits
Indefinite-lived Intangible Assets [Roll Forward]
Beginning balance	1,943	2,798	4,030
Additions		199
Amortization	(873)	(1,054)	(1,232)
Ending balance	1,070	1,943	2,798
Accumulated amortization	$ 20,847	$ 19,974	$ 18,920

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

SECURITIES - Amortized cost and Fair values of securities with maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Amortized Cost
Amortized Cost	$ 934,456	$ 938,360
Fair Value
Fair Value	843,524	942,168
Amortized Cost
Debt securities held-to-maturity	541,600	336,185
Fair Value
Fair Value	478,801	336,027
Mortgage-backed: Agency residential
Amortized Cost
Amortized Cost	213,676	178,236
Fair Value
Fair Value	195,441	179,466
Amortized Cost
Debt securities held-to-maturity	102,728	20,555
Fair Value
Fair Value	96,258	20,649
Mortgage-backed: Agency commercial
Amortized Cost
Amortized Cost	150,060	164,875
Fair Value
Fair Value	132,888	164,061
Amortized Cost
Debt securities held-to-maturity	308,281	287,615
Fair Value
Fair Value	261,799	$ 286,563
Available-for-sale
Amortized Cost
Due in 1 year or less	19,501
Due after 1 year through 5 years	230,286
Due after 5 years through 10 years	251,203
Due after 10 years	69,730
Amortized Cost	934,456
Fair Value
Due in 1 year or less	19,127
Due after 1 year through 5 years	216,799
Due after 5 years through 10 years	217,722
Due after 10 years	61,547
Fair Value	843,524
Available-for-sale \| Mortgage-backed: Agency residential
Amortized Cost
Amortized Cost	213,676
Fair Value
Fair Value	195,441
Available-for-sale \| Mortgage-backed: Agency commercial
Amortized Cost
Amortized Cost	150,060
Fair Value
Fair Value	132,888
Held-to-maturity
Amortized Cost
Due in 1 year or less	2,288
Due after 1 year through 5 years	27,813
Due after 5 years through 10 years	83,181
Due after 10 years	17,309
Debt securities held-to-maturity	541,600
Fair Value
Due in 1 year or less	2,290
Due after 1 year through 5 years	26,908
Due after 5 years through 10 years	76,214
Due after 10 years	15,332
Fair Value	478,801
Held-to-maturity \| Mortgage-backed: Agency residential
Amortized Cost
Debt securities held-to-maturity	102,728
Fair Value
Fair Value	96,258
Held-to-maturity \| Mortgage-backed: Agency commercial
Amortized Cost
Debt securities held-to-maturity	308,281
Fair Value
Fair Value	$ 261,799

ACQUISITIONS - Schedule of pro forma (Details) - NXT Bancorporation, Inc - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Business Acquisition, Pro Forma Information [Abstract]
Total revenues (net interest income and noninterest income)	$ 166,677	$ 161,005
Net income	$ 57,883	$ 39,263
Earnings per share - basic	$ 1.98	$ 1.34
Earnings per share - diluted	$ 1.98	$ 1.34

SUBORDINATED NOTES (Tables)

12 Months Ended

Dec. 31, 2022

Subordinated Notes

SUBORDINATED NOTES

Schedule of carrying value of subordinated debentures


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Subordinated notes, at face value	$	40,000	$	40,000
Unamortized issuance costs		(605)		(684)
Subordinated notes, at carrying value	$	39,395	$	39,316

ACQUISITIONS (Tables) - NXT Bancorporation, Inc

12 Months Ended

Dec. 31, 2022

Business Acquisition [Line Items]

Schedule of recognized identified assets acquired and liabilities assumed

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

Business acquisition, pro forma information


	Pro Forma
	Year Ended December 31,
(dollars in thousands, except per share data)	2021		2020
Total revenues (net interest income and noninterest income)	$	166,677	$	161,005
Net income		57,883		39,263
Earnings per share - basic		1.98		1.34
Earnings per share - diluted		1.98		1.34

BANK PREMISES AND EQUIPMENT

12 Months Ended

Dec. 31, 2022

BANK PREMISES AND EQUIPMENT

BANK PREMISES AND EQUIPMENT

NOTE 6 – BANK PREMISES AND EQUIPMENT

Bank premises and equipment are stated at cost less accumulated depreciation as of December 31 as follows:


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Land, buildings, and improvements	$	77,869	$	77,180
Furniture, fixtures, and equipment		24,512		24,199
Total bank premises and equipment		102,381		101,379
Less accumulated depreciation		51,912		48,896
Total bank premises and equipment, net	$	50,469	$	52,483

Depreciation expense by category for the years ended December 31 is as follows:


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Buildings and improvements	$	1,623	$	1,694	$	1,761
Furniture, fixtures, and equipment		1,420		1,380		1,180
Total depreciation expense	$	3,043	$	3,074	$	2,941

During 2021, six branch locations were closed or consolidated as part of a branch rationalization plan. The related bank premises were transferred to held for sale at the lower of the carrying value or fair value, less estimated costs to sell. As of December 31, 2022 and 2021, bank premises held for sale totaled $0.2 million and $1.5 million, respectively. During the years ended December 31, 2022 and 2021, there were impairment losses of $0.1 million and $0.7 million, respectively, on bank premises held for sale included in gains (losses) on other assets in the consolidated statements of income. During the year ended December 31, 2020, there were no impairment losses on bank premises held for sale.

SECURITIES - Amortized cost and Fair values of held-to-maturity securities transferred from available-for-sale securities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021
Held-to-maturity
Debt securities held-to-maturity	$ 541,600		$ 336,185
Fair Value	478,801		336,027
U.S. government agency
Held-to-maturity
Debt securities held-to-maturity	88,424		12,349
Fair Value	78,696		12,340
Mortgage-backed: Agency residential
Held-to-maturity
Debt securities held-to-maturity	102,728		20,555
Fair Value	96,258		20,649
Mortgage-backed: Agency commercial
Held-to-maturity
Debt securities held-to-maturity	308,281		287,615
Fair Value	$ 261,799		$ 286,563
Debt Securities Transferred
Held-to-maturity
Debt securities held-to-maturity		$ 114,850		$ 99,271	$ 135,161
Fair Value		104,131		99,275	129,720
Debt Securities Transferred \| U.S. government agency
Held-to-maturity
Debt securities held-to-maturity		78,841			7,593
Fair Value		71,048			7,323
Debt Securities Transferred \| Mortgage-backed: Agency residential
Held-to-maturity
Debt securities held-to-maturity		8,175			8,776
Fair Value		7,651			8,536
Debt Securities Transferred \| Mortgage-backed: Agency commercial
Held-to-maturity
Debt securities held-to-maturity		27,834		99,271	118,792
Fair Value		$ 25,432		$ 99,275	$ 113,861

DEPOSITS - Interest bearing Deposits (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
DEPOSITS
Noninterest-bearing deposits	$ 994,954	$ 1,087,659
Interest-bearing demand	1,139,150	1,105,949
Money market	555,425	583,198
Savings	634,527	633,171
Time	262,968	328,208
Total interest-bearing deposits	2,592,070	2,650,526
Total deposits	$ 3,587,024	$ 3,738,185

DERIVATIVE FINANCIAL INSTRUMENTS - Derivative instrument assets and liabilities (Details) - Designated - Interest rate swap - Cash flow hedge - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other assets
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial liabilities fair value	$ (629)
Derivative financial liability notional amount	$ 17,000
Other liabilities
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial liabilities fair value		$ (680)
Derivative financial liability notional amount		$ 17,000

STOCK-BASED COMPENSATION PLANS - Summary (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Restricted Stock Units
Stock-based compensation plans
Outstanding (in units)	109,244	71,000
Granted (in units)	66,995	59,994	73,700
Exercised (in units)	(34,925)	(20,225)
Forfeited (in units)	(1,328)	(1,525)	(2,700)
Outstanding (in units)	139,986	109,244	71,000
Weighted Average Grant Date Assigned Value
Outstanding (in dollars per unit)	$ 17.27	$ 18.98
Granted (in dollars per unit)	18.81	15.81	$ 18.98
Exercised (in dollars per unit)	17.26	18.86
Forfeited (in dollars per unit)	18.35	18.11	19.03
Outstanding (in dollars per unit)	$ 18.01	$ 17.27	$ 18.98
Performance Shares
Stock-based compensation plans
Outstanding (in units)	38,344
Granted (in units)	23,723	38,344
Outstanding (in units)	62,067	38,344
Weighted Average Grant Date Assigned Value
Outstanding (in dollars per unit)	$ 15.72
Granted (in dollars per unit)	19.14	$ 15.72
Outstanding (in dollars per unit)	$ 17.02	$ 15.72
Stock Appreciation Rights
Stock-based compensation plans
Outstanding (in units)	97,920	105,570	110,160
Exercised (in units)	(24,480)	(6,120)
Expired (in units)		(1,530)
Forfeited (in units)			(4,590)
Outstanding (in units)	73,440	97,920	105,570
Exercisable (in shares)	67,320
Weighted Average Grant Date Assigned Value
Outstanding (in dollars per unit)	$ 16.32	$ 16.32	$ 16.32
Exercised (in dollars per unit)	16.32	16.32
Expired (in dollars per unit)		16.32
Forfeited (in dollars per unit)			16.32
Outstanding (in dollars per unit)	$ 16.32	$ 16.32	$ 16.32
Weighted average remaining contractual term	6 years 8 months 12 days

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Assigned Risk Ratings (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	$ 2,620,253	$ 2,499,689
Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	2,479,488	2,269,228
Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	66,934	148,285
Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	73,831	82,176
Commercial and industrial
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	266,757	286,946
Commercial and industrial \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	255,309	267,088
Commercial and industrial \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	6,630	5,114
Commercial and industrial \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	4,818	14,744
Agricultural and farmland
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	237,746	247,796
Agricultural and farmland \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	223,114	221,898
Agricultural and farmland \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	10,004	25,213
Agricultural and farmland \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	4,628	685
Commercial real estate - owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	218,503	234,544
Commercial real estate - owner occupied \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	198,546	198,862
Commercial real estate - owner occupied \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	10,105	24,098
Commercial real estate - owner occupied \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	9,852	11,584
Commercial real estate - non-owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	713,202	684,023
Commercial real estate - non-owner occupied \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	652,691	619,212
Commercial real estate - non-owner occupied \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	27,282	32,372
Commercial real estate - non-owner occupied \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	33,229	32,439
Multi-family
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	287,865	263,911
Multi-family \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	283,682	241,362
Multi-family \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	4,183	22,549
Construction and land development
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	360,824	298,048
Construction and land development \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	358,215	268,556
Construction and land development \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	2,527	27,474
Construction and land development \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	82	2,018
One-to-four family residential
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	338,253	327,837
One-to-four family residential \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	323,632	308,951
One-to-four family residential \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	5,907	11,221
One-to-four family residential \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	8,714	7,665
Municipal, consumer, and other
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	197,103	156,584
Municipal, consumer, and other \| Pass
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	184,299	143,299
Municipal, consumer, and other \| Pass-Watch
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	296	244
Municipal, consumer, and other \| Substandard
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Total	$ 12,508	$ 13,041

EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions	12 Months Ended
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
EMPLOYEE BENEFIT PLANS
Contribution liability	$ 6.4	$ 6.6
Medical benefits expense amount	4.9	4.2	$ 4.8
Profit Sharing Plan
EMPLOYEE BENEFIT PLANS
Contribution expense	$ 1.3	$ 1.3	$ 1.1
Employees contributions vesting period	6 years	6 years	6 years

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Balance at end of year	$ 43,081	$ 61,256
Weighted average rate as of end of year	0.28%	0.07%
Fair value of securities underlying the agreements	$ 50,771	$ 64,164
Carrying value of securities underlying the agreements	$ 55,850	$ 64,262

REGULATORY CAPITAL

12 Months Ended

Dec. 31, 2022

REGULATORY CAPITAL

REGULATORY CAPITAL

NOTE 21 – REGULATORY CAPITAL

The Company (on a consolidated basis) and the Bank are each subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the consolidated financial statements of the Company and the Bank. Additionally, the ability of the Company to pay dividends to its stockholders is dependent upon the ability of the Bank to pay dividends to the Company.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. As allowed under the regulations, the Company and the Bank elected to exclude accumulated other comprehensive income, including unrealized gains and losses on securities, in the computation of regulatory capital. Prompt corrective action provisions are not applicable to bank holding companies.

Additionally, the Company and the Bank must maintain a “capital conservation buffer” to avoid becoming subject to restrictions on capital distributions and certain discretionary bonus payments to management. As of December 31, 2022 and 2021, the capital conservation buffer was 2.5% of risk-weighted assets.

As of December 31, 2022, the Company and the Bank meet all capital adequacy requirements to which they are subject.

The actual and required capital amounts and ratios of HBT Financial, Inc. (consolidated) and the Bank are as follows:


	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2022	Amount		Ratio		Amount		Ratio		Amount		Ratio

		(dollars in thousands)
Total Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	516,556	16.27	%	$	254,052	8.00	%		N/A	N/A
Heartland Bank and Trust Company		489,316	15.43			253,643	8.00		$	317,054	10.00	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	451,828	14.23	%	$	190,539	6.00	%		N/A	N/A
Heartland Bank and Trust Company		463,983	14.63			190,233	6.00		$	253,643	8.00	%

Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	415,213	13.07	%	$	142,904	4.50	%		N/A	N/A
Heartland Bank and Trust Company		463,983	14.63			142,674	4.50		$	206,085	6.50	%

Tier 1 Capital (to Average Assets)
Consolidated HBT Financial, Inc.	$	451,828	10.48	%	$	172,427	4.00	%		N/A	N/A
Heartland Bank and Trust Company		463,983	10.78			172,240	4.00		$	215,300	5.00	%


	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2021	Amount		Ratio		Amount		Ratio		Amount		Ratio

		(dollars in thousands)
Total Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	479,320	16.88	%	$	227,115	8.00	%		N/A	N/A
Heartland Bank and Trust Company		452,162	15.94			226,950	8.00		$	283,688	10.00	%

Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	416,068	14.66	%	$	170,336	6.00	%		N/A	N/A
Heartland Bank and Trust Company		428,226	15.09			170,213	6.00		$	226,950	8.00	%

Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated HBT Financial, Inc.	$	379,519	13.37	%	$	127,752	4.50	%		N/A	N/A
Heartland Bank and Trust Company		428,226	15.09			127,659	4.50		$	184,397	6.50	%

Tier 1 Capital (to Average Assets)
Consolidated HBT Financial, Inc.	$	416,068	9.84	%	$	169,171	4.00	%		N/A	N/A
Heartland Bank and Trust Company		428,226	10.13			169,070	4.00		$	211,337	5.00	%

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References + Details

FORECLOSED ASSETS (Tables)

12 Months Ended

Dec. 31, 2022

FORECLOSED ASSETS

Schedule of foreclosed assets activity


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Beginning balance	$	3,278	$	4,168	$	5,099
Transfers from loans		541		4,857		1,074
Capitalized improvements		—		—		6
Proceeds from sales		(475)		(5,805)		(2,079)
Sales through loan origination		—		(252)		(67)
Net gain on sales		118		505		348
Direct write-downs		(432)		(195)		(213)
Ending balance	$	3,030	$	3,278	$	4,168

Schedule of gains (losses) on foreclosed assets


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Direct write-downs	$	(432)	$	(195)	$	(213)
Net gain on sales		118		505		348
Guarantee reimbursements		—		—		7
Gains (losses) on foreclosed assets	$	(314)	$	310	$	142

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2022

COMMITMENTS AND CONTINGENCIES

Schedule of commitments and conditional obligations


	Contractual Amount
	December 31, 2022		December 31, 2021

		(dollars in thousands)
Commitments to extend credit	$	756,885	$	609,947
Standby letters of credit		17,785		12,960

Schedule of future minimum lease payments


Year ended December 31,
2023	$	191
2024		123
2025		42
Total	$	356

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 56,456	$ 56,271	$ 36,845
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	3,043	3,074	2,941
Provision for loan losses	(706)	(8,077)	10,532
Net amortization of debt securities	6,959	7,066	5,045
Amortization of unrealized gain on dedesignated cash flow hedge			(64)
Deferred income tax (benefit) expense	(2,919)	2,908	(339)
Stock-based compensation	1,949	764	351
Net accretion of discount and deferred loan fees on loans	(5,337)	(12,448)	(4,902)
Net unrealized loss (gain) on equity securities	414	(107)	(33)
Net (gain) loss on disposals of bank premises and equipment	(9)	33	2
Net gain on sales of bank premises held for sale	(187)
Impairment losses on bank premises held for sale	60	661	0
Net gain on sales of foreclosed assets	(118)	(505)	(348)
Write-down of foreclosed assets	432	195	213
Amortization of intangibles	873	1,054	1,232
(Increase) decrease in mortgage servicing rights	(2,153)	(1,690)	2,584
Amortization of discount and issuance costs on subordinated notes and debentures	145	144	92
Amortization of premium on Federal Home Loan Bank borrowings		(105)
Amortization of premium on interest-bearing time deposits with banks	5	4
Amortization of premium on time deposits	(188)	(81)
Mortgage loans originated for sale	(56,240)	(179,921)	(370,112)
Proceeds from sale of mortgage loans	62,028	195,538	368,765
Net gain on sale of mortgage loans	(1,461)	(5,846)	(8,835)
Increase in cash surrender value of bank owned life insurance	(164)	(41)
(Increase) decrease in accrued interest receivable	(4,605)	240	(304)
(Increase) decrease in other assets	(8,007)	1,676	(1,090)
Increase (decrease) in other liabilities	22,316	(17,784)	(11,320)
Net cash provided by operating activities	72,586	43,023	31,255
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of interest-bearing time deposits with banks	485	245	248
Proceeds from paydowns, maturities, and calls of debt securities	154,166	213,491	222,999
Purchase of securities	(371,682)	(513,838)	(523,559)
Net increase in loans	(113,665)	(50,089)	(80,278)
Purchase of restricted stock	(6,151)	(241)	(73)
Proceeds from redemption of restricted stock	925	796
Purchases of bank premises and equipment	(1,047)	(1,028)	(1,861)
Proceeds from sales of bank premises and equipment	27	17	1
Proceeds from sales of bank premises held for sale	1,344
Proceeds from sales of foreclosed assets	475	5,805	2,079
Capital improvements to foreclosed assets			(6)
Net cash paid for acquisition of NXT Bancorporation, Inc.		(4,771)
Net cash used in investing activities	(335,123)	(349,613)	(380,450)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits	(150,973)	426,146	353,679
Net (decrease) increase in repurchase agreements	(18,175)	11,440	1,303
Net increase (decrease) in Federal Home Loan Bank advances	160,000	(12,520)
Issuance of subordinated notes, net of issuance costs			39,211
Taxes paid related to the vesting of restricted stock units	(57)
Repurchase of common stock	(4,783)	(4,906)
Cash dividends and dividend equivalents paid	(18,584)	(16,753)	(16,518)
Net cash (used in) provided by financing activities	(32,572)	403,407	377,675
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(295,109)	96,817	28,480
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	409,268	312,451	283,971
CASH AND CASH EQUIVALENTS AT END OF PERIOD	114,159	409,268	312,451
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	6,860	5,928	6,441
Cash paid for income taxes	20,035	20,861	17,451
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITIES
Transfers of loans to foreclosed assets	$ 541	4,857	1,074
Sales of foreclosed assets through loan origination		252	$ 67
Transfers of bank premises and equipment to bank premises held for sale		$ 1,345

SUBORDINATED NOTES (Details) - Subordinated Notes - USD ($) $ in Thousands	Sep. 03, 2020	Dec. 31, 2022	Dec. 31, 2021
SUBORDINATED NOTES
Subordinated notes, at face value	$ 40,000	$ 40,000	$ 40,000
Debt issuance costs	$ 800
Amortization period of debt issuance costs	10 years
Qualifies as Tier 2 capital		100.00%	100.00%
SOFR
SUBORDINATED NOTES
Spread on interest rate basis	4.37%
First five years
SUBORDINATED NOTES
Fixed interest rate	4.50%

DERIVATIVE FINANCIAL INSTRUMENTS - Interest rate contracts designated as cash flow hedges (Details) - Cash flow hedge - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
DERIVATIVE FINANCIAL INSTRUMENTS
Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss)	$ (126)	$ (412)	$ (238)
Taxable loan interest income
DERIVATIVE FINANCIAL INSTRUMENTS
Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss)			64
Subordinated debentures interest expense
DERIVATIVE FINANCIAL INSTRUMENTS
Amounts of gross gain (loss) reclassified from accumulated other comprehensive income (loss)	$ (126)	$ (412)	$ (302)

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Past Due Status (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accruing Interest
Accruing Interest	$ 2,616,606	$ 2,495,258
Nonaccrual	2,155	2,763
Total	2,620,253	2,499,689
30 - 89 Days Past Due
Accruing Interest
Accruing Interest	1,346	1,620
90+ Days Past Due
Accruing Interest
Accruing Interest	146	48
Commercial and industrial
Accruing Interest
Accruing Interest	266,521	286,563
Nonaccrual	219	374
Total	266,757	286,946
Commercial and industrial \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	17	9
Agricultural and farmland
Accruing Interest
Accruing Interest	237,727	247,772
Total	237,746	247,796
Agricultural and farmland \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	19	24
Commercial real estate - owner occupied
Accruing Interest
Accruing Interest	218,242	234,441
Nonaccrual	74
Total	218,503	234,544
Commercial real estate - owner occupied \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	187	103
Commercial real estate - non-owner occupied
Accruing Interest
Accruing Interest	713,031	683,029
Nonaccrual	171	171
Total	713,202	684,023
Commercial real estate - non-owner occupied \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest		823
Multi-family
Accruing Interest
Accruing Interest	287,854	263,911
Total	287,865	263,911
Multi-family \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	11
Construction and land development
Accruing Interest
Accruing Interest	360,763	297,465
Nonaccrual		519
Total	360,824	298,048
Construction and land development \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	61	64
One-to-four family residential
Accruing Interest
Accruing Interest	335,576	325,780
Nonaccrual	1,638	1,642
Total	338,253	327,837
One-to-four family residential \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	894	383
One-to-four family residential \| 90+ Days Past Due
Accruing Interest
Accruing Interest	145	32
Municipal, consumer, and other
Accruing Interest
Accruing Interest	196,892	156,297
Nonaccrual	53	57
Total	197,103	156,584
Municipal, consumer, and other \| 30 - 89 Days Past Due
Accruing Interest
Accruing Interest	157	214
Municipal, consumer, and other \| 90+ Days Past Due
Accruing Interest
Accruing Interest	$ 1	$ 16

DEFERRED COMPENSATION (Details) - SERP - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2020	Dec. 31, 2021
DEFERRED COMPENSATION
Deferred compensation liability	$ 0		$ 0
Deferred compensation expense		$ 1,700
Period over which SERP benefit payments to be paid	30 years

RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Related party transactions
Deposits of related parties	$ 3,587,024	$ 3,738,185
Related parties
Related party transactions
Loans to related parties	2,200	2,600
Deposits of related parties	$ 22,000	$ 4,000

- Definition

For an unclassified balance sheet, amounts due from related parties including affiliates, employees, joint ventures, officers and stockholders, immediate families thereof, and pension funds.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(k)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-03.10(3))
-URI https://asc.fasb.org/extlink&oid=126897435&loc=d3e534808-122878

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(3)(a)(2))
-URI https://asc.fasb.org/extlink&oid=120391452&loc=d3e13212-122682

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 11: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.3)
-URI https://asc.fasb.org/extlink&oid=126734703&loc=d3e572229-122910

+ Details

INCOME TAXES - Components of net deferred tax asset (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets
Allowance for loan losses	$ 7,151	$ 6,756
Compensation related	2,623	2,314
Deferred loan fees	965	1,059
Nonaccrual interest	480	489
Foreclosed assets	142	43
Goodwill	153	316
Net unrealized losses on debt securities	29,874	304
Other	5,237	853
Total deferred tax assets	46,625	12,134
Deferred tax liabilities
Fixed asset depreciation	3,940	4,188
Mortgage servicing rights	2,868	2,262
Other purchase accounting adjustments	610	776
Intangible assets	214	374
Prepaid assets	756	664
Other	2,756	505
Total deferred tax liabilities	11,144	8,769
Net deferred tax asset (liability)	$ 35,481	$ 3,365

STOCK-BASED COMPENSATION PLANS

12 Months Ended

Dec. 31, 2022

STOCK-BASED COMPENSATION PLANS

STOCK-BASED COMPENSATION PLANS

NOTE 20 – STOCK-BASED COMPENSATION PLANS

The Company adopted the HBT Financial, Inc. Omnibus Incentive Plan (the “Omnibus Incentive Plan”) in 2019. The Omnibus Incentive Plan provides for grants of (i) stock options, (ii) stock appreciation rights, (iii) restricted shares, (iv) restricted stock units, (v) performance awards, (vi) other share-based awards and (vii) other cash-based awards to eligible employees, non-employee directors and consultants of the Company. The maximum number of shares of common stock available for issuance under the Omnibus Incentive Plan is 1,820,000 shares.

The following is a summary of stock-based compensation expense (benefit):


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Restricted stock units	$	1,334	$	579	$	351
Performance restricted stock units		615		185		—
Total awards classified as equity		1,949		764		351
Stock appreciation rights		88		226		(137)
Total stock-based compensation expense	$	2,037	$	990	$	214

In February 2022, all outstanding restricted stock unit and performance restricted stock unit agreements were modified to address treatment upon retirement. In the event of retirement, and if the retirement eligibility requirements are met, then 100% of unvested restricted stock units and performance restricted stock units will continue to vest in accordance with the originally established vesting schedule. The retirement modification resulted in the acceleration of $0.6 million of expense, although total compensation costs related to the modified agreements remained the same.

Restricted Stock Units

A restricted stock unit grants a participant the right to receive one share of the Company’s common stock, following the completion of the requisite service period. Restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and is recognized on a straight-line basis over the service period for the entire award. Dividend equivalents on restricted stock units, which are either accrued until vested or paid at the same time as dividends on common stock, are classified as dividends charged to retained earnings.

During the years ended December 31, 2022, 2021, and 2020, the total grant date fair value of the restricted stock units granted was $1.3 million, $0.9 million, and $1.4 million, respectively, based on the grant date closing prices. The total intrinsic value of restricted stock units that vested during the year ended December 31, 2022 and 2021 were $0.7 million and $0.3 million, respectively.

The following is a summary of outstanding restricted stock unit activity:


		Weighted
		Average
	Restricted	Grant Date
	Stock Units	Fair Value
Balance, December 31, 2019	—	$	—
Granted	73,700		18.98
Vested	—		—
Forfeited	(2,700)		19.03
Balance, December 31, 2020	71,000	$	18.98
Granted	59,994		15.81
Vested	(20,225)		18.86
Forfeited	(1,525)		18.11
Balance, December 31, 2021	109,244	$	17.27
Granted	66,995		18.81
Vested	(34,925)		17.26
Forfeited	(1,328)		18.35
Balance, December 31, 2022	139,986	$	18.01

As of December 31, 2022, unrecognized compensation cost related to non-vested restricted stock units was $1.2 million. This cost is expected to be recognized over the weighted average remaining contractual term of 2.0 years.

Performance Restricted Stock Units

A performance restricted stock unit is similar to a restricted stock unit, except that the number of shares of the Company’s common stock awarded is based on a performance condition and the completion of the requisite service period. The number of shares of the Company’s common stock that may be earned ranges from 0% to 150% of the number of performance restricted stock units granted. Performance restricted stock units are classified as equity. Compensation cost is based on the Company’s stock price on the grant date and an assessment of the probable outcome of the performance condition. Compensation cost is recognized on a straight-line basis over the service period of the entire award. Changes in the performance condition probability assessment result in cumulative catch-up adjustments to the compensation cost recognized. Dividend equivalents on performance restricted stock units, which are accrued until vested, are classified as dividends charged to retained earnings.

During the years ended December 31, 2022 and 2021, the total fair value of the performance restricted stock units granted was $0.5 million and $0.6 million, respectively, based on the grant date closing prices and an assessment of the probable outcome of the performance condition on the grant date. Performance conditions are based on either the average annual return on average tangible common equity during the performance period or average loan balances for a specified geographic region during the performance period, with downward adjustments if certain credit quality criteria are not maintained.

The following is a summary of performance restricted stock unit activity:


		Weighted
	Performance	Average
	Restricted	Grant Date
	Stock Units	Fair Value
Balance, December 31, 2019	—	$	—
Granted	—		—
Vested	—		—
Forfeited	—		—
Balance, December 31, 2020	—	$	—
Granted	38,344		15.72
Vested	—		—
Forfeited	—		—
Balance, December 31, 2021	38,344	$	15.72
Granted	23,723		19.14
Vested	—		—
Forfeited	—		—
Balance, December 31, 2022	62,067	$	17.02

As of December 31, 2022, unrecognized compensation cost related to non-vested performance restricted stock units was $0.3 million, based on the current assessment of the probable outcome of the performance conditions. This cost is expected to be recognized over the weighted average remaining service period of 1.6 years.

Stock Appreciation Rights

A stock appreciation right grants a participant the right to receive an amount of cash, the value of which equals the appreciation in the Company’s stock price between the grant date and the exercise date. Stock appreciation rights are classified as liabilities. The liability is based on an option-pricing model used to estimate the fair value of the stock appreciation rights. Compensation cost for non-vested stock appreciation rights is recognized on a straight line basis over the service period of the entire award. The non-vested stock appreciation rights vest in four equal annual installments beginning on the first anniversary of the grant date.

The following is a summary of stock appreciation rights activity:


		Weighted
	Stock	Average
	Appreciation	Grant Date
	Rights	Assigned Value
Balance, December 31, 2019	110,160	$	16.32
Granted	—		—
Exercised	—		—
Expired	—		—
Forfeited	(4,590)		16.32
Balance, December 31, 2020	105,570	$	16.32
Granted	—		—
Exercised	(6,120)		16.32
Expired	(1,530)		16.32
Forfeited	—		—
Balance, December 31, 2021	97,920	$	16.32
Granted	—		—
Exercised	(24,480)		16.32
Expired	—		—
Forfeited	—		—
Balance, December 31, 2022	73,440	$	16.32

A further summary of outstanding stock appreciation rights as of December 31, 2022, is as follows:


			Weighted Average
	Stock Appreciation Rights		Remaining
Grant Date Assigned Values	Outstanding	Exercisable	Contractual Term
$ 16.32	73,440	67,320	6.7	years

As of December 31, 2022, unrecognized compensation cost related to non-vested stock appreciation rights was $28 thousand.

As of December 31, 2022 and 2021, the liability recorded for outstanding stock appreciation rights was $0.5 million and $0.5 million, respectively. The Company used an option pricing model to value the stock appreciation rights, using the assumptions in the following table. Expected volatility is derived from the historical volatility of the Company’s stock price and a selected peer group of industry-related companies.


	December 31, 2022			December 31, 2021
Risk-free interest rate		3.95	%		1.40	%
Expected volatility		36.54	%		35.52	%
Expected life (in years)		6.7			7.7
Expected dividend yield		3.27	%		3.20	%

As of December 31, 2022, the liability recorded for previously exercised stock appreciation rights was $0.5 million, which will be paid in two remaining annual installments in 2023 and 2024. As of December 31, 2021, the liability recorded for previously exercised stock appreciation rights was $0.8 million.

FORECLOSED ASSETS - Activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
FORECLOSED ASSETS
Beginning balance	$ 3,278	$ 4,168	$ 5,099
Transfers from loans	541	4,857	1,074
Capitalized improvements			6
Proceeds from sales	(475)	(5,805)	(2,079)
Sales through loan origination		(252)	(67)
Net gain on sales	118	505	348
Direct write-downs	(432)	(195)	(213)
Ending balance	$ 3,030	$ 3,278	$ 4,168

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2022

EARNINGS PER SHARE

Schedule of reconciliations of the numerators and denominators used to compute basic and diluted earnings


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Numerator:
Net income	$	56,456	$	56,271	$	36,845
Earnings allocated to participating securities		(66)		(104)		(93)
Numerator for earnings per share - basic and diluted	$	56,390	$	56,167	$	36,752

Denominator:
Weighted average common shares outstanding		28,853,697		27,795,806		27,457,306
Dilutive effect of outstanding restricted stock units		65,619		15,487		—
Weighted average common shares outstanding, including all dilutive potential shares		28,919,316		27,811,293		27,457,306

Earnings per share - Basic	$	1.95	$	2.02	$	1.34
Earnings per share - Diluted	$	1.95	$	2.02	$	1.34

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2022

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

NOTE 24 – RELATED PARTY TRANSACTIONS

Loans

As of December 31, 2022 and 2021, loans to directors, executive officers, principal shareholders and their affiliated entities (“related parties”) amounted to $2.2 million and $2.6 million, respectively. These loans were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing for comparable loans with persons not related to us.

Deposits

Deposits of related parties amounted to $22.0 million and $4.0 million as of December 31, 2022 and 2021, respectively.

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Summary (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	$ 23,936	$ 31,838	$ 22,299
Provision for loan losses	(706)	(8,077)	10,532
Charge-offs	(684)	(1,414)	(2,968)
Recoveries	2,787	1,589	1,975
Allowance for loan losses at end of period	25,333	23,936	31,838
Commercial and industrial
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	2,440	3,929	4,441
Provision for loan losses	88	(1,474)	677
Charge-offs	(23)	(668)	(1,784)
Recoveries	774	653	595
Allowance for loan losses at end of period	3,279	2,440	3,929
Agricultural and farmland
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	845	793	2,766
Provision for loan losses	(49)	52	(1,946)
Charge-offs			(27)
Allowance for loan losses at end of period	796	845	793
Commercial real estate - owner occupied
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	1,840	3,141	1,779
Provision for loan losses	(1,653)	(1,280)	961
Charge-offs	(25)	(30)	(39)
Recoveries	1,031	9	440
Allowance for loan losses at end of period	1,193	1,840	3,141
Commercial real estate - non-owner occupied
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	8,145	11,251	3,663
Provision for loan losses	(1,707)	(3,130)	7,862
Charge-offs			(349)
Recoveries	283	24	75
Allowance for loan losses at end of period	6,721	8,145	11,251
Multi-family
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	1,263	1,957	1,024
Provision for loan losses	209	(694)	933
Allowance for loan losses at end of period	1,472	1,263	1,957
Construction and land development
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	4,914	4,232	2,977
Provision for loan losses	(692)	340	1,032
Charge-offs			(27)
Recoveries	1	342	250
Allowance for loan losses at end of period	4,223	4,914	4,232
One-to-four family residential
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	1,311	1,801	2,540
Provision for loan losses	146	(472)	(894)
Charge-offs	(67)	(267)	(155)
Recoveries	369	249	310
Allowance for loan losses at end of period	1,759	1,311	1,801
Municipal, consumer, and other
Activity in the allowance for loan losses
Allowance for loan losses at beginning of period	3,178	4,734	3,109
Provision for loan losses	2,952	(1,419)	1,907
Charge-offs	(569)	(449)	(587)
Recoveries	329	312	305
Allowance for loan losses at end of period	$ 5,890	$ 3,178	$ 4,734

BORROWINGS

12 Months Ended

Dec. 31, 2022

BORROWINGS

BORROWINGS

NOTE 11 – BORROWINGS

As of December 31, 2022, Federal Home Loan Bank of Chicago (“FHLB”) borrowings totaled $160.0 million and consisted of short-term borrowings which had a weighted average rate of 4.29% and mature within 30 days. There were no FHLB borrowings outstanding as of December 31, 2021. Borrowings from the FHLB are secured by FHLB stock held by the Company and pledged security in the form of qualifying loans. The loans pledged as of December 31, 2022 and 2021 totaled $892.1 million and $567.0 million, respectively. As of December 31, 2022 and 2021, loans pledged also served as collateral for credit exposure of $0.3 million and $0.4 million, respectively, associated with the Bank’s participation in the FHLB’s Mortgage Partnership Finance Program.

The Bank also had available borrowings through the discount window of the Federal Reserve Bank of Chicago (“FRB”). Available borrowings are based on the collateral pledged. As of December 31, 2022 and 2021, there was no collateral pledged and there was no outstanding balance.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks	$ 18,970	$ 23,387
Interest-bearing deposits with banks	95,189	385,881
Cash and cash equivalents	114,159	409,268
Interest-bearing time deposits with banks		490
Debt securities available-for-sale, at fair value	843,524	942,168
Debt securities held-to-maturity (fair value of $478,801 in 2022 and $336,027 in 2021)	541,600	336,185
Equity securities with readily determinable fair value	3,029	3,443
Equity securities with no readily determinable fair value	1,977	1,927
Restricted stock, at cost	7,965	2,739
Loans held for sale	615	4,942
Loans, before allowance for loan losses	2,620,253	2,499,689
Allowance for loan losses	(25,333)	(23,936)
Loans, net of allowance for loan losses	2,594,920	2,475,753
Bank owned life insurance	7,557	7,393
Bank premises and equipment, net	50,469	52,483
Bank premises held for sale	235	1,452
Foreclosed assets	3,030	3,278
Goodwill	29,322	29,322
Core deposit intangible assets, net	1,070	1,943
Mortgage servicing rights, at fair value	10,147	7,994
Investments in unconsolidated subsidiaries	1,165	1,165
Accrued interest receivable	19,506	14,901
Other assets	56,444	17,408
Total assets	4,286,734	4,314,254
Deposits:
Noninterest-bearing	994,954	1,087,659
Interest-bearing	2,592,070	2,650,526
Total deposits	3,587,024	3,738,185
Securities sold under agreements to repurchase	43,081	61,256
Federal Home Loan Bank advances	160,000	0
Subordinated notes	39,395	39,316
Junior subordinated debentures issued to capital trusts	37,780	37,714
Other liabilities	45,822	25,902
Total liabilities	3,913,102	3,902,373
COMMITMENTS AND CONTINGENCIES (Note 23)
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 28,752,626 at 2022 and 28,986,061 at 2021	293	293
Surplus	222,783	220,891
Retained earnings	232,004	194,132
Accumulated other comprehensive income (loss)	(71,759)	1,471
Treasury stock at cost, 555,865 shares at 2022 and 290,486 at 2021	(9,689)	(4,906)
Total stockholders' equity	373,632	411,881
Total liabilities and stockholders' equity	$ 4,286,734	$ 4,314,254

SECURITIES - Sale and Gain (loss) on securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Net unrealized gains (losses) on equity securities:
Readily determinable fair value	$ (414)	$ 107	$ 33
Gains (losses) on securities	$ (414)	$ 107	$ 33

LOAN SERVICING - Mortgage Servicing Rights (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Beginning balance	$ 7,994
Ending balance	10,147	$ 7,994
Mortgage Loans
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Beginning balance	7,994	5,934	$ 8,518
Acquired		370
Capitalized servicing rights	530	1,200	1,981
Attributable to payments and principal reductions	(1,343)	(1,788)	(2,364)
Attributable to changes in valuation inputs and assumptions	2,966	2,278	(2,201)
Total fair value adjustment	1,623	490	(4,565)
Ending balance	10,147	7,994	$ 5,934
Mortgage loans serviced for others	$ 955,800	$ 1,040,000

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2022

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 23 – COMMITMENTS AND CONTINGENCIES

Financial Instruments

The Bank is party to credit-related financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Such commitments and conditional obligations were as follows as of December 31:


	Contractual Amount
	December 31, 2022		December 31, 2021

		(dollars in thousands)
Commitments to extend credit	$	756,885	$	609,947
Standby letters of credit		17,785		12,960

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, by the Bank upon extension of credit is based on management’s credit evaluation of the customer. Collateral held varies, but may include real estate, accounts receivable, inventory, property, plant, and equipment, and income-producing properties.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those standby letters of credit are primarily issued to support extensions of credit. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers. The Bank secures the standby letters of credit with the same collateral used to secure the related loan.

Lease Commitments

The Company leases office space under operating leases. Certain leases contain renewal options for periods from three to five years at their fair rental value at the time of renewal. Future minimum lease payments under these leases are as follows (dollars in thousands):


Year ended December 31,
2023	$	191
2024		123
2025		42
Total	$	356

Legal Contingencies

In the normal course of business, the Company, or its subsidiaries, are involved in various legal proceedings. In the opinion of management, any liability resulting from pending proceedings would not be expected to have a material adverse effect on the Company's consolidated financial statements.

PLB Investments LLC, John Kuehner, and A.S. Palmer Investments LLC v. Heartland Bank and Trust Company and PNC Bank N.A., In the United States District Court for the Northern District of Illinois, Case No. 1:20-cv-1023 (“Class Action”); Melanie E. Damian, As Receiver of Today’s Growth Consultant, Inc. (dba The Income Store) v. Heartland Bank and Trust Company and PNC Bank N.A., In the United States District Court for the Northern District of Illinois, Case No. 1:20-cv-7819 (“Receiver’s Action”)

The Bank was a defendant in the purported Class Action lawsuit that was filed on February 12, 2020, in the U.S. District Court for the Northern District of Illinois. The plaintiffs in the Class Action alleged that the Bank negligently enabled and facilitated a fraudulent, Ponzi-like scheme perpetrated by Today’s Growth Consultant, Inc. (dba The Income Store) (“TGC”). Additionally, the Receiver for TGC filed the Receiver’s Action on December 30, 2020, in the U.S. District Court for the Northern District of Illinois, with similar allegations.

On February 20, 2023, the Bank reached an agreement in principle to settle both the Class Action and Receiver’s Action in which the Bank would make one-time cash payments totaling $13.0 million, without admitting fault, to release the Bank from further liability and claims in both the Class Action and Receiver’s Action.

Pursuant to the agreement in principle, the parties would settle and dismiss the Class Action and Receiver’s Action and seek the entry of bar orders from the U.S. District Court for the Northern District of Illinois (the “Court”) prohibiting any continued or future claims against the Bank and its related parties relating to the Class Action and the Receiver’s Action, whether asserted to date or not. If definitive settlement agreements, including the bar orders described in the preceding sentence, are approved by the Court and are not subject to appeal, the Bank will make one-time cash payments totaling $13.0 million.

The agreement in principle is subject to the execution and delivery of definitive settlement agreements reflecting the terms of the agreement in principle, notice to TGC’s investor claimants and final, non-appealable approvals by the Court. While the Bank believes that the proposed settlements are consistent with the terms of similar settlements that have been approved by other courts and were not successfully appealed, it is possible that the Court may decide not to approve the definitive settlement agreements or that the Seventh Circuit Court of Appeals may decide to accept an appeal thereof.

The proposed settlements do not include any admission of liability or wrongdoing by the Bank, and the Bank expressly denies any liability or wrongdoing with respect to any matter alleged in the Class Action and Receiver’s Action. The Bank has agreed in principle to the settlements to avoid the cost, risks and distraction of continued litigation. The Company believes the proposed settlements are in the best interests of the Company and its shareholders.

Accordingly, the Bank recorded a $13.0 million accrual related to these matters as of December 31, 2022. The Bank’s insurer has agreed to reimburse $7.4 million of the settlement payment which was recorded as an insurance recovery receivable as of December 31, 2022. During the fourth quarter and year ended December 31, 2022, the estimated net settlement amount of $5.6 million was included in other noninterest expense in the consolidated statements of income.

DeBaere, et al v. Heartland Bank and Trust Company

The Bank is a defendant in a purported class action lawsuit filed in June 2020, in the Circuit Court of Cook County, Illinois. The plaintiff, a customer of the Bank, alleges that the Bank breached its contract with the plaintiff by (1) charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction, and (2) charging overdraft fees for transactions that were authorized on a positive account balance, but when settled, settled into a negative balance.

Miller, et al v. State Bank of Lincoln and Heartland Bank and Trust Company

The Bank is a defendant in a purported class action lawsuit filed in May 2020, in the Circuit Court of Logan County, Illinois. The plaintiff, a customer of State Bank of Lincoln, which previously merged with the Bank, alleges that the Bank breached its contract with the plaintiff by charging multiple insufficient funds fees or overdraft fees on a single customer-initiated transaction.

The Bank intends to vigorously defend in both the DeBaere and Miller cases. However, the Company believes an unfavorable outcome in each case is probable at this time, as that term is used in assessing loss contingencies. Accordingly, consistent with the authoritative guidance in the evaluation of contingencies, an accrual has been recorded related to these matters of $2.6 million in the aggregate during the fourth quarter and year ended December 31, 2022. While the amount recorded reflects management’s best estimate as of December 31, 2022, the Company cannot yet offer an opinion on the estimated range of possible loss.

SECURITIES - Investments in a Continuous Unrealized Loss Position (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) item	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Available-for-sale: Unrealized Loss
Less than 12 Months	$ (37,977)	$ (7,334)
12 Months or More	(53,061)	(1,654)
Total Unrealized Loss of Available-for-sale securities	(91,038)	(8,988)
Held-to-maturity: Unrealized Loss
Less than 12 Months	(22,823)	(2,826)
12 Months or More	(40,171)	(128)
Total Unrealized Loss of Held-to-maturity securities	(62,994)	(2,954)
Available-for-sale: Fair Value
Less than 12 Months	531,226	445,604
12 Months or More	299,159	38,324
Total Fair Value Available-for-sale securities	830,385	483,928
Held-to-maturity: Fair value
Less than 12 Months	220,934	194,309
12 Months or More	239,252	2,776
Total Fair Value Held-to-maturity securities	460,186	197,085
Total: Unrealized Losses
Less Than 12 Months	(60,800)	(10,160)
12 Months or More	(93,232)	(1,782)
Total Unrealized Losses	(154,032)	(11,942)
Total: Fair Value
Less than 12 Months	752,160	639,913
12 Months or More	538,411	41,100
Total Fair Value	$ 1,290,571	681,013
Number of securities in an unrealized loss position for a period of twelve months or more \| item	261
Number of securities in an unrealized loss position for a period of less than twelve months \| item	519
Proceeds from sales of securities available-for-sale	$ 0	0	$ 0
U.S. Treasury
Available-for-sale: Unrealized Loss
Less than 12 Months	(8,401)	(354)
12 Months or More	(6,944)
Total Unrealized Loss of Available-for-sale securities	(15,345)	(354)
Available-for-sale: Fair Value
Less than 12 Months	92,445	68,410
12 Months or More	62,070
Total Fair Value Available-for-sale securities	154,515	68,410
U.S. government agency
Available-for-sale: Unrealized Loss
Less than 12 Months	(2,980)	(2,183)
12 Months or More	(1,154)	(284)
Total Unrealized Loss of Available-for-sale securities	(4,134)	(2,467)
Held-to-maturity: Unrealized Loss
Less than 12 Months	(1,754)	(51)
12 Months or More	(7,974)
Total Unrealized Loss of Held-to-maturity securities	(9,728)	(51)
Available-for-sale: Fair Value
Less than 12 Months	47,370	80,219
12 Months or More	7,787	5,578
Total Fair Value Available-for-sale securities	55,157	85,797
Held-to-maturity: Fair value
Less than 12 Months	15,751	4,949
12 Months or More	62,945
Total Fair Value Held-to-maturity securities	78,696	4,949
Municipal securities
Available-for-sale: Unrealized Loss
Less than 12 Months	(10,906)	(2,018)
12 Months or More	(21,283)	(886)
Total Unrealized Loss of Available-for-sale securities	(32,189)	(2,904)
Available-for-sale: Fair Value
Less than 12 Months	149,261	89,424
12 Months or More	87,794	17,327
Total Fair Value Available-for-sale securities	237,055	106,751
Total: Unrealized Losses
Less Than 12 Months	(314)
Total Unrealized Losses	(314)
Total: Fair Value
Less than 12 Months	23,433
Total Fair Value	23,433
Mortgage-backed: Agency residential
Available-for-sale: Unrealized Loss
Less than 12 Months	(8,332)	(851)
12 Months or More	(9,908)	(68)
Total Unrealized Loss of Available-for-sale securities	(18,240)	(919)
Held-to-maturity: Unrealized Loss
Less than 12 Months	(4,039)	(102)
12 Months or More	(2,431)
Total Unrealized Loss of Held-to-maturity securities	(6,470)	(102)
Available-for-sale: Fair Value
Less than 12 Months	127,288	91,703
12 Months or More	65,692	4,305
Total Fair Value Available-for-sale securities	192,980	96,008
Held-to-maturity: Fair value
Less than 12 Months	78,452	14,932
12 Months or More	17,806
Total Fair Value Held-to-maturity securities	96,258	14,932
Mortgage-backed: Agency commercial
Available-for-sale: Unrealized Loss
Less than 12 Months	(4,764)	(1,921)
12 Months or More	(12,408)	(127)
Total Unrealized Loss of Available-for-sale securities	(17,172)	(2,048)
Held-to-maturity: Unrealized Loss
Less than 12 Months	(16,716)	(2,673)
12 Months or More	(29,766)	(128)
Total Unrealized Loss of Held-to-maturity securities	(46,482)	(2,801)
Available-for-sale: Fair Value
Less than 12 Months	62,672	113,111
12 Months or More	70,216	6,443
Total Fair Value Available-for-sale securities	132,888	119,554
Held-to-maturity: Fair value
Less than 12 Months	103,298	174,428
12 Months or More	158,501	2,776
Total Fair Value Held-to-maturity securities	261,799	177,204
Corporate
Available-for-sale: Unrealized Loss
Less than 12 Months	(2,594)	(7)
12 Months or More	(1,364)	(289)
Total Unrealized Loss of Available-for-sale securities	(3,958)	(296)
Available-for-sale: Fair Value
Less than 12 Months	52,190	2,737
12 Months or More	5,600	4,671
Total Fair Value Available-for-sale securities	$ 57,790	$ 7,408

CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS - Balance Sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 114,159	$ 409,268
Other assets	56,444	17,408
Total assets	4,286,734	4,314,254
LIABILITIES
Subordinated notes	39,395	39,316
Junior subordinated debentures	37,780	37,714
Other liabilities	45,822	25,902
Total liabilities	3,913,102	3,902,373
STOCKHOLDERS' EQUITY	373,632	411,881	$ 363,917	$ 332,918
Total liabilities and stockholders' equity	4,286,734	4,314,254
Reportable Legal Entities \| Consolidated HBT
ASSETS
Cash and cash equivalents	24,278	25,752
Bank	422,217	461,339
Non-bank	1,165	1,165
Other assets	5,338	1,283
Total assets	452,998	489,539
LIABILITIES
Subordinated notes	39,395	39,316
Junior subordinated debentures	37,780	37,714
Other liabilities	2,191	628
Total liabilities	79,366	77,658
STOCKHOLDERS' EQUITY	373,632	411,881
Total liabilities and stockholders' equity	$ 452,998	$ 489,539

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

INCOME TAXES

Schedule of allocation of federal and state income taxes between current and deferred portions



	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Current
Federal	$	15,194	$	11,330	$	8,358
State		7,459		6,053		4,709
Total current		22,653		17,383		13,067

Deferred
Federal		(2,045)		1,945		(226)
State		(874)		963		(113)
Total deferred		(2,919)		2,908		(339)
Income tax expense	$	19,734	$	20,291	$	12,728

Schedule of effective income tax rate reconciliation


	Year Ended December 31,
	2022				2021				2020
	Amount		Percentage		Amount		Percentage		Amount		Percentage

	(dollars in thousands)
Federal income tax, at statutory rate	$	16,000	21.0	%	$	16,078	21.0	%	$	10,410	21.0	%
Increase (decrease) resulting from:
Federally tax exempt interest income		(1,618)	(2.1)			(1,426)	(1.9)			(1,470)	(3.0)
State taxes, net of federal benefit		5,285	6.9			5,430	7.1			3,631	7.4
Other		67	0.1			209	0.3			157	0.3
Income tax expense	$	19,734	25.9	%	$	20,291	26.5	%	$	12,728	25.7	%

Schedule of components of the net deferred tax asset (liability)


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Deferred tax assets
Allowance for loan losses	$	7,151	$	6,756
Compensation related		2,623		2,314
Deferred loan fees		965		1,059
Nonaccrual interest		480		489
Foreclosed assets		142		43
Goodwill		153		316
Net unrealized losses on debt securities		29,874		304
Other		5,237		853
Total deferred tax assets		46,625		12,134

Deferred tax liabilities
Fixed asset depreciation		3,940		4,188
Mortgage servicing rights		2,868		2,262
Other purchase accounting adjustments		610		776
Intangible assets		214		374
Prepaid assets		756		664
Other		2,756		505
Total deferred tax liabilities		11,144		8,769
Net deferred tax asset	$	35,481	$	3,365

SUBORDINATED NOTES

12 Months Ended

Dec. 31, 2022

SUBORDINATED NOTES.

SUBORDINATED NOTES

NOTE 12 – SUBORDINATED NOTES

On September 3, 2020, the Company issued $40.0 million of fixed-to-floating rate subordinated notes that mature on September 15, 2030. The subordinated notes, which are unsecured obligations of the Company, bear a fixed interest rate of 4.50% for the first five years after issuance and thereafter bear interest at a floating rate equal to three-month SOFR, as determined on the Floating Interest Determination Date, plus 4.37%. Interest is payable semi-annually during the five year fixed rate period and quarterly during the subsequent five year floating rate period. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after September 15, 2025. If the subordinated notes are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The transaction resulted in debt issuance costs of $0.8 million which will be amortized over 10 years. As of December 31, 2022 and 2021, 100% of the subordinated notes qualified as Tier 2 capital.

The face value and carrying value of the subordinated notes are summarized below:


	December 31, 2022		December 31, 2021

	(dollars in thousands)
Subordinated notes, at face value	$	40,000	$	40,000
Unamortized issuance costs		(605)		(684)
Subordinated notes, at carrying value	$	39,395	$	39,316

COMMITMENTS AND CONTINGENCIES - Legal Contingencies (Details) - USD ($) $ in Millions		3 Months Ended
	Feb. 20, 2023	Dec. 31, 2022
TGC Cases
Litigation
Settlement amount	$ 13.0
Accrual recorded		$ 13.0
Insurance recovery receivable		7.4
Net settlement amount included in other noninterest expense		5.6
DeBaere and Miller cases
Litigation
Accrual recorded		$ 2.6

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables)

12 Months Ended

Dec. 31, 2022

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Schedule of Information pertaining to securities sold under agreements to repurchase


	December 31, 2022			December 31, 2021

	(dollars in thousands)
Balance at end of year	$	43,081		$	61,256
Weighted average rate as of end of year		0.28	%		0.07	%
Fair value of securities underlying the agreements	$	50,771		$	64,164
Carrying value of securities underlying the agreements	$	55,850		$	64,262

FORECLOSED ASSETS - Additional Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($) loan	Dec. 31, 2021 USD ($) loan	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
FORECLOSED ASSETS
Carrying value of foreclosed asset	$ 3,030	$ 3,278	$ 4,168	$ 5,099
One-to-four family residential real estate property
FORECLOSED ASSETS
Carrying value of foreclosed asset	$ 20	$ 200
Number of loans in the process of foreclosure \| loan	4	4
Loan amount in the process of foreclosure	$ 200	$ 100

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2022

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

NOTE 19 – EMPLOYEE BENEFIT PLANS

Profit Sharing Plan

During the years ended December 31, 2022, 2021, and 2020, the Company’s profit sharing plan contribution expense amounted to $1.3 million, $1.3 million, and $1.1 million, respectively. The Company’s contributions vest to employees ratably over a six-year period.

Medical Insurance Benefits

The Company is partially self-insured for medical claims filed by its employees. As of December 31, 2022 and 2021, the Company’s maximum aggregate liability under the plan was $6.4 million and $6.6 million, respectively. During the years ended December 31, 2022, 2021, and 2020, medical benefits expense amounted to $4.9 million, $4.2 million, and $4.8 million, respectively.

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Loans, including fees:
Taxable	$ 120,343	$ 103,900	$ 102,893
Federally tax exempt	3,135	2,384	2,303
Securities:
Taxable	23,368	16,948	13,179
Federally tax exempt	4,569	4,400	4,696
Interest-bearing deposits in bank	1,541	527	938
Other interest and dividend income	98	64	56
Total interest and dividend income	153,054	128,223	124,065
INTEREST EXPENSE
Deposits	2,511	2,472	4,221
Securities sold under agreements to repurchase	36	34	48
Borrowings	967	9	2
Subordinated notes	1,879	1,879	616
Junior subordinated debentures issued to capital trusts	1,787	1,426	1,573
Total interest expense	7,180	5,820	6,460
Net interest income	145,874	122,403	117,605
PROVISION FOR LOAN LOSSES	(706)	(8,077)	10,532
Net interest income after provision for loan losses	146,580	130,480	107,073
NONINTEREST INCOME
Mortgage servicing	2,609	2,825	2,978
Mortgage servicing rights fair value adjustment	2,153	1,690	(2,584)
Gains on sale of mortgage loans	1,461	5,846	8,835
Unrealized gains (losses) on equity securities	(414)	107	33
Gains (losses) on foreclosed assets	(314)	310	142
Gains (losses) on other assets	136	(723)	(71)
Income on bank owned life insurance	164	41
Other noninterest income	2,366	3,034	3,812
Total noninterest income	34,717	37,328	34,456
NONINTEREST EXPENSE
Salaries	51,767	48,972	50,225
Employee benefits	8,325	6,513	7,905
Occupancy of bank premises	7,673	6,788	6,580
Furniture and equipment	2,476	2,676	2,447
Data processing	7,441	7,329	6,742
Marketing and customer relations	3,803	3,376	3,476
Amortization of intangible assets	873	1,054	1,232
FDIC insurance	1,164	1,043	707
Loan collection and servicing	1,049	1,317	1,755
Foreclosed assets	293	908	557
Other noninterest expense	20,243	11,270	10,330
Total noninterest expense	105,107	91,246	91,956
INCOME BEFORE INCOME TAX EXPENSE	76,190	76,562	49,573
INCOME TAX EXPENSE	19,734	20,291	12,728
NET INCOME	$ 56,456	$ 56,271	$ 36,845
EARNINGS PER SHARE - BASIC	$ 1.95	$ 2.02	$ 1.34
EARNINGS PER SHARE - DILUTED	$ 1.95	$ 2.02	$ 1.34
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Basic	28,853,697	27,795,806	27,457,306
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING - Diluted	28,919,316	27,811,293	27,457,306
Card income
NONINTEREST INCOME
Revenue	$ 10,329	$ 9,734	$ 8,087
Service charges on deposit accounts
NONINTEREST INCOME
Revenue	7,072	6,080	5,987
Wealth management fees
NONINTEREST INCOME
Revenue	$ 9,155	$ 8,384	$ 7,237

LOANS AND THE ALLOWANCE FOR LOAN LOSSES - Categories of loans (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	$ 2,620,253	$ 2,499,689
Allowance for loan losses	(25,333)	(23,936)	$ (31,838)	$ (22,299)
Loans, net of allowance for loan losses	2,594,920	2,475,753
Paycheck Protection Program (PPP) Loans
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	28	29,488
Commercial and industrial
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	266,757	286,946
Allowance for loan losses	(3,279)	(2,440)	(3,929)	(4,441)
Commercial and industrial \| Paycheck Protection Program (PPP) Loans
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	28	28,404
Agricultural and farmland
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	237,746	247,796
Allowance for loan losses	(796)	(845)	(793)	(2,766)
Agricultural and farmland \| Paycheck Protection Program (PPP) Loans
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses		913
Commercial real estate - owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	218,503	234,544
Allowance for loan losses	(1,193)	(1,840)	(3,141)	(1,779)
Commercial real estate - non-owner occupied
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	713,202	684,023
Allowance for loan losses	(6,721)	(8,145)	(11,251)	(3,663)
Multi-family
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	287,865	263,911
Allowance for loan losses	(1,472)	(1,263)	(1,957)	(1,024)
Construction and land development
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	360,824	298,048
Allowance for loan losses	(4,223)	(4,914)	(4,232)	(2,977)
One-to-four family residential
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	338,253	327,837
Allowance for loan losses	(1,759)	(1,311)	(1,801)	(2,540)
Municipal, consumer, and other
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses	197,103	156,584
Allowance for loan losses	$ (5,890)	(3,178)	$ (4,734)	$ (3,109)
Municipal, consumer, and other \| Paycheck Protection Program (PPP) Loans
LOANS AND THE ALLOWANCE FOR LOAN LOSSES
Loans, before allowance for loan losses		$ 171

STOCK-BASED COMPENSATION PLANS (Tables)

12 Months Ended

Dec. 31, 2022

STOCK-BASED COMPENSATION PLANS

Summary of stock-based compensation expense


	Year Ended December 31,
	2022		2021		2020

	(dollars in thousands)
Restricted stock units	$	1,334	$	579	$	351
Performance restricted stock units		615		185		—
Total awards classified as equity		1,949		764		351
Stock appreciation rights		88		226		(137)
Total stock-based compensation expense	$	2,037	$	990	$	214

Schedule of the summary of outstanding restricted stock units


		Weighted
		Average
	Restricted	Grant Date
	Stock Units	Fair Value
Balance, December 31, 2019	—	$	—
Granted	73,700		18.98
Vested	—		—
Forfeited	(2,700)		19.03
Balance, December 31, 2020	71,000	$	18.98
Granted	59,994		15.81
Vested	(20,225)		18.86
Forfeited	(1,525)		18.11
Balance, December 31, 2021	109,244	$	17.27
Granted	66,995		18.81
Vested	(34,925)		17.26
Forfeited	(1,328)		18.35
Balance, December 31, 2022	139,986	$	18.01

Schedule of the summary of performance outstanding restricted stock units


		Weighted
	Performance	Average
	Restricted	Grant Date
	Stock Units	Fair Value
Balance, December 31, 2019	—	$	—
Granted	—		—
Vested	—		—
Forfeited	—		—
Balance, December 31, 2020	—	$	—
Granted	38,344		15.72
Vested	—		—
Forfeited	—		—
Balance, December 31, 2021	38,344	$	15.72
Granted	23,723		19.14
Vested	—		—
Forfeited	—		—
Balance, December 31, 2022	62,067	$	17.02

Schedule of the status of stock appreciation rights and changes


		Weighted
	Stock	Average
	Appreciation	Grant Date
	Rights	Assigned Value
Balance, December 31, 2019	110,160	$	16.32
Granted	—		—
Exercised	—		—
Expired	—		—
Forfeited	(4,590)		16.32
Balance, December 31, 2020	105,570	$	16.32
Granted	—		—
Exercised	(6,120)		16.32
Expired	(1,530)		16.32
Forfeited	—		—
Balance, December 31, 2021	97,920	$	16.32
Granted	—		—
Exercised	(24,480)		16.32
Expired	—		—
Forfeited	—		—
Balance, December 31, 2022	73,440	$	16.32

A further summary of outstanding stock appreciation rights as of December 31, 2022, is as follows:


			Weighted Average
	Stock Appreciation Rights		Remaining
Grant Date Assigned Values	Outstanding	Exercisable	Contractual Term
$ 16.32	73,440	67,320	6.7	years

Schedule of assumptions used in valuing stock appreciation rights


	December 31, 2022			December 31, 2021
Risk-free interest rate		3.95	%		1.40	%
Expected volatility		36.54	%		35.52	%
Expected life (in years)		6.7			7.7
Expected dividend yield		3.27	%		3.20	%

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2022

GOODWILL AND OTHER INTANGIBLE ASSETS

Schedule of goodwill and finite lived intangible assets


	Year Ended December 31,
	2022				2021				2020
			Core Deposit				Core Deposit				Core Deposit
	Goodwill		Intangible		Goodwill		Intangible		Goodwill		Intangible

	(dollars in thousands)
Beginning balance	$	29,322	$	1,943	$	23,620	$	2,798	$	23,620	$	4,030
Additions		—		—		5,702		199		—		—
Amortization		—		(873)		—		(1,054)		—		(1,232)
Ending balance	$	29,322	$	1,070	$	29,322	$	1,943	$	23,620	$	2,798
Accumulated amortization	$	—	$	20,847	$	—	$	19,974	$	—	$	18,920

Schedule of future amortization of core deposit intangible assets


Year ended December 31,
2023	$	353
2024		337
2025		275
2026		20
2027		20
Thereafter		65
Total	$	1,070

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2022

FAIR VALUE OF FINANCIAL INSTRUMENTS

Summary of assets measured at fair value on a recurring basis


December 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Debt securities available-for-sale:
U.S. Treasury	$	154,515	$	—	$	—	$	154,515
U.S. government agency		—		55,157		—		55,157
Municipal		—		243,829		—		243,829
Mortgage-backed:
Agency residential		—		195,441		—		195,441
Agency commercial		—		132,888		—		132,888
Corporate		—		61,694		—		61,694
Equity securities with readily determinable fair values		3,029		—		—		3,029
Mortgage servicing rights		—		—		10,147		10,147
Derivative financial assets		—		7,610		—		7,610
Derivative financial liabilities		—		6,981		—		6,981


December 31, 2021	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Debt securities available-for-sale:
U.S. Treasury	$	108,976	$	—	$	—	$	108,976
U.S. government agency		—		128,105		—		128,105
Municipal		—		297,077		—		297,077
Mortgage-backed:
Agency residential		—		179,466		—		179,466
Agency commercial		—		164,061		—		164,061
Corporate		—		64,483		—		64,483
Equity securities with readily determinable fair values		3,443		—		—		3,443
Mortgage servicing rights		—		—		7,994		7,994
Derivative financial assets		—		8,697		—		8,697
Derivative financial liabilities		—		9,377		—		9,377

Schedule of quantitative information about the unobservable inputs used in recurring Level 3 fair value measurements

The following tables present additional information about the unobservable inputs used in the fair value measurement of the mortgage servicing rights (dollars in thousands):


December 31, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Mortgage servicing rights	$	10,147	Discounted cash flows	Constant pre-payment rates (CPR)	5.3% to 59.7% (8.2%)
				Discount rate	9.0% to 11.7% (9.3%)

December 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Mortgage servicing rights	$	7,994	Discounted cash flows	Constant pre-payment rates (CPR)	7.0% to 88.9% (11.7%)
				Discount rate	9.0% to 11.0% (9.0%)

Summary of assets measured at fair value on a nonrecurring basis


December 31, 2022	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Loans held for sale	$	—	$	615	$	—	$	615
Collateral-dependent impaired loans		—		—		17,460		17,460
Bank premises held for sale		—		—		235		235
Foreclosed assets		—		—		3,030		3,030


December 31, 2021	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value

		(dollars in thousands)
Loans held for sale	$	—	$	4,942	$	—	$	4,942
Collateral-dependent impaired loans		—		—		22,423		22,423
Bank premises held for sale		—		—		1,452		1,452
Foreclosed assets		—		—		3,278		3,278

Schedule of quantitative information about the unobservable inputs used in non-recurring Level 3 fair value measurements

The following tables present quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements (dollars in thousands).


December 31, 2022	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral-dependent impaired loans	$	17,460	Appraisal of collateral	Appraisal adjustments	Not meaningful
Bank premises held for sale		235	Appraisal	Appraisal adjustments	7% (7%)
Foreclosed assets		3,030	Appraisal	Appraisal adjustments	7% (7%)

December 31, 2021	Fair Value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Collateral-dependent impaired loans	$	22,423	Appraisal of collateral	Appraisal adjustments	Not meaningful
Bank premises held for sale		1,452	Appraisal	Appraisal adjustments	7% (7%)
Foreclosed assets		3,278	Appraisal	Appraisal adjustments	7% (7%)

Summary information on the carrying amounts and estimated fair values of the Company's financial instruments


	Fair Value	December 31, 2022				December 31, 2021
	Hierarchy	Carrying		Estimated		Carrying		Estimated
	Level	Amount		Fair Value		Amount		Fair Value

			(dollars in thousands)
Financial assets:
Cash and cash equivalents	Level 1	$	114,159	$	114,159	$	409,268	$	409,268
Debt securities held-to-maturity	Level 2		541,600		478,801		336,185		336,027
Restricted stock	Level 3		7,965		7,965		2,739		2,739
Loans, net	Level 3		2,594,920		2,566,930		2,475,753		2,494,686
Investments in unconsolidated subsidiaries	Level 3		1,165		1,165		1,165		1,165
Accrued interest receivable	Level 2		19,506		19,506		14,901		14,901

Financial liabilities:
Time deposits	Level 3		262,968		253,619		328,208		327,779
Securities sold under agreements to repurchase	Level 2		43,081		43,081		61,256		61,256
Subordinated notes	Level 3		39,395		37,205		39,316		41,602
Junior subordinated debentures	Level 3		37,780		37,030		37,714		33,640
Accrued interest payable	Level 2		1,363		1,363		1,043		1,043