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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2023

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

For the transition period from to

Commission file number: 001-39085

HBT Financial, Inc.

(Exact name of registrant as specified in its charter)


Delaware	37-1117216
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

401 North Hershey Rd Bloomington, Illinois 61704	(888) 897-2276
(Address of principal executive offices, including zip code)	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	HBT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

Emerging growth company	☒

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

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

As of April 25, 2023, there were 32,040,881 shares outstanding of the registrant’s common stock, $0.01 par value.

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TABLE OF CONTENTS
HBT Financial, Inc.

		Page

PART I. FINANCIAL INFORMATION		3
Item 1.	Consolidated Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income (Loss)	5
	Consolidated Statement of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	84
Item 4.	Controls and Procedures	86
PART II. OTHER INFORMATION		87
Item 1.	Legal Proceedings	87
Item 1A.	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	88
Item 6.	Exhibits	88

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this quarterly report are forward-looking statements. Forward-looking statements may include statements relating to our plans, strategies and expectations, the economic impact of the COVID-19 pandemic and our future financial results, near-term loan growth, net interest margin, mortgage banking profits, wealth management fees, expenses, asset quality, capital levels, continued earnings, and liquidity. Forward-looking statements are generally identifiable by use of the words "believe," "may," "will," "should," "could," "expect," "estimate," "intend," "anticipate," "project," "plan" or similar expressions. Forward-looking statements are frequently based on assumptions that may or may not materialize and are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could cause actual results to differ materially from the results anticipated or projected and which could materially and adversely affect our operating results, financial condition or prospects include, but are not limited to:

●

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

●

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

●

changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board (the “FASB”) or the Public Company Accounting Oversight Board (including the Company’s adoption of CECL methodology);

●

changes in state and federal laws, regulations and governmental policies concerning the Company’s general business and any changes in response to the recent failures of other banks;

●

changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out);

●

increased competition in the financial services sector, including from non-bank competitors such as credit unions and “fintech” companies, and the inability to attract new customers;

●

changes in technology and the ability to develop and maintain secure and reliable electronic systems;

●

unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated;

●

the loss of key executives or employees;

●

changes in consumer spending;

●

unexpected outcomes of existing or new litigation involving the Company;

●

the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards;

●

fluctuations in the value of securities held in our securities portfolio;

●

concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients;

●

the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure;

●

the level of non-performing assets on our balance sheets;

●

interruptions involving our information technology and communications systems or third-party servicers;

●

breaches or failures of our information security controls or cybersecurity-related incidents;

●

our asset quality and any loan charge-offs;

●

the composition of our loan portfolio;

●

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

●

our access to sources of liquidity and capital to address our liquidity needs;

●

our inability to receive dividends from the Bank, pay dividends to our common stockholders or satisfy obligations as they become due;

●

the effects of problems encountered by other financial institutions;

●

our ability to achieve organic loan and deposit growth and the composition of such growth;

●

our ability to successfully develop and commercialize new or enhanced products and services;

●

current and future business, economic and market conditions in the United States (“U.S.”) generally or in the States of Illinois and Iowa in particular;

●

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

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●

our ability to attract and retain customer deposits;

●

our ability to maintain the Bank’s reputation;

●

possible impairment of our goodwill and other intangible assets;

●

our prior status as an S corporation;

●

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

●

the effectiveness of our risk management and internal disclosure controls and procedures;

●

market perceptions associated with certain aspects of our business;

●

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

●

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

●

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

●

the factors discussed in “Risk Factors”, "Management's Discussion and Analysis of Financial Condition and Results of Operations" or elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange (“SEC”) Commission on March 8, 2023.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update any forward-looking statement in the future, or to reflect circumstances and events that occur after the date on which the forward-looking statement was made.

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HBT FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	(Unaudited)
	March 31,		December 31,
	2023		2022
ASSETS
Cash and due from banks	$	35,244	$	18,970
Interest-bearing deposits with banks		141,868		95,189
Cash and cash equivalents		177,112		114,159

Interest-bearing time deposits with banks		249		—
Debt securities available-for-sale, at fair value (allowance for credit losses of $600 at 2023)		854,622		843,524
Debt securities held-to-maturity (fair value of $481,925 at 2023 and $478,801 at 2022)		536,429		541,600
Equity securities with readily determinable fair value		3,145		3,029
Equity securities with no readily determinable fair value		1,980		1,977
Restricted stock, at cost		4,991		7,965
Loans held for sale		5,130		615

Loans, before allowance for credit losses		3,195,540		2,620,253
Allowance for credit losses		(38,776)		(25,333)
Loans, net of allowance for credit losses		3,156,764		2,594,920

Bank owned life insurance		23,447		7,557
Bank premises and equipment, net		65,119		50,469
Bank premises held for sale		235		235
Foreclosed assets		3,356		3,030
Goodwill		59,876		29,322
Intangible assets, net		22,842		1,070
Mortgage servicing rights, at fair value		19,992		10,147
Investments in unconsolidated subsidiaries		1,614		1,165
Accrued interest receivable		20,301		19,506
Other assets		56,617		56,444
Total assets	$	5,013,821	$	4,286,734

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing	$	1,218,888	$	994,954
Interest-bearing		3,091,633		2,592,070
Total deposits		4,310,521		3,587,024

Securities sold under agreements to repurchase		34,919		43,081
Federal Home Loan Bank advances		75,183		160,000
Subordinated notes		39,415		39,395
Junior subordinated debentures issued to capital trusts		52,746		37,780
Other liabilities		50,939		45,822
Total liabilities		4,563,723		3,913,102

COMMITMENTS AND CONTINGENCIES (Note 15)

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 32,730,698 at 2023 and 29,308,491 at 2022; shares outstanding of 32,095,370 at 2023 and 28,752,626 at 2022		327		293
Surplus		294,441		222,783
Retained earnings		228,782		232,004
Accumulated other comprehensive income (loss)		(62,175)		(71,759)
Treasury stock at cost, 635,328 shares at 2023 and 555,865 at 2022		(11,277)		(9,689)
Total stockholders’ equity		450,098		373,632
Total liabilities and stockholders’ equity	$	5,013,821	$	4,286,734

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
	2023		2022

INTEREST AND DIVIDEND INCOME	(dollars in thousands, except per share data)
Loans, including fees:
Taxable	$	42,159	$	26,806
Federally tax exempt		952		662
Securities:
Taxable		6,616		4,649
Federally tax exempt		1,197		1,040
Interest-bearing deposits in bank		739		159
Other interest and dividend income		116		19
Total interest and dividend income		51,779		33,335

INTEREST EXPENSE
Deposits		2,374		569
Securities sold under agreements to repurchase		38		9
Borrowings		1,297		1
Subordinated notes		470		470
Junior subordinated debentures issued to capital trusts		763		358
Total interest expense		4,942		1,407
Net interest income		46,837		31,928
PROVISION FOR CREDIT LOSSES		6,210		(584)
Net interest income after provision for credit losses		40,627		32,512

NONINTEREST INCOME
Card income		2,658		2,404
Wealth management fees		2,338		2,289
Service charges on deposit accounts		1,871		1,652
Mortgage servicing		1,099		658
Mortgage servicing rights fair value adjustment		(624)		1,729
Gains on sale of mortgage loans		276		587
Realized gains (losses) on sales of securities		(1,007)		—
Unrealized gains (losses) on equity securities		(22)		(187)
Gains (losses) on foreclosed assets		(10)		40
Gains (losses) on other assets		—		193
Income on bank owned life insurance		115		40
Other noninterest income		743		638
Total noninterest income		7,437		10,043

NONINTEREST EXPENSE
Salaries		19,411		12,801
Employee benefits		2,335		2,444
Occupancy of bank premises		2,102		2,060
Furniture and equipment		659		552
Data processing		4,323		1,653
Marketing and customer relations		836		851
Amortization of intangible assets		510		245
FDIC insurance		563		288
Loan collection and servicing		278		157
Foreclosed assets		61		132
Other noninterest expense		4,855		2,974
Total noninterest expense		35,933		24,157
INCOME BEFORE INCOME TAX EXPENSE		12,131		18,398
INCOME TAX EXPENSE		2,923		4,794
NET INCOME	$	9,208	$	13,604

EARNINGS PER SHARE - BASIC	$	0.30	$	0.47
EARNINGS PER SHARE - DILUTED	$	0.30	$	0.47
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING		30,977,204		28,986,593

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended March 31,
	2023		2022

	(dollars in thousands)
NET INCOME	$	9,208	$	13,604

OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gains (losses) on debt securities available-for-sale		11,443		(53,422)
Reclassification adjustment for losses on securities available-for-sale realized in income		1,607		—
Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity		490		181
Unrealized (losses) gains on derivative instruments		(40)		594
Reclassification adjustment for net settlements on derivative instruments		(94)		96
Total other comprehensive income (loss), before tax		13,406		(52,551)
Income tax expense (benefit)		3,822		(14,980)
Total other comprehensive income (loss)		9,584		(37,571)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	18,792	$	(23,967)

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


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

	(dollars in thousands, except per share data)
Balance, December 31, 2022	28,752,626	$	293	$	222,783	$	232,004	$	(71,759)	$	(9,689)	$	373,632
Cumulative effect of change in accounting principle (ASU 2016-13)	—		—		—		(6,922)		—		—		(6,922)
Net income	—		—		—		9,208		—		—		9,208
Other comprehensive income	—		—		—		—		9,584		—		9,584
Stock-based compensation	—		—		517		—		—		—		517
Issuance of common stock upon vesting of restricted stock units, net of tax withholdings	43,607		—		(181)		—		—		—		(181)
Issuance of common stock in Town and Country acquisition	3,378,600		34		71,322		—		—		—		71,356
Repurchase of common stock	(79,463)		—		—		—		—		(1,588)		(1,588)
Cash dividends and dividend equivalents ($0.17 per share)	—		—		—		(5,508)		—		—		(5,508)
Balance, March 31, 2023	32,095,370	$	327	$	294,441	$	228,782	$	(62,175)	$	(11,277)	$	450,098

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

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2023		2022

	(dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	9,208	$	13,604
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		793		763
Provision for credit losses		6,210		(584)
Net amortization of debt securities		1,518		1,763
Deferred income tax (benefit) expense		(1,079)		566
Stock-based compensation		517		901
Net accretion of discount and deferred loan fees on loans		(1,635)		(1,608)
Net realized loss on sales of securities		1,007		—
Net unrealized loss on equity securities		22		187
Net loss on disposals of bank premises and equipment		—		4
Net gain on sales of bank premises held for sale		—		(197)
Net gain on sales of foreclosed assets		(20)		(105)
Write-down of foreclosed assets		30		65
Amortization of intangibles		510		245
Decrease (increase) in mortgage servicing rights		624		(1,729)
Amortization of discount and issuance costs on subordinated notes and debentures		37		37
Amortization of premium on Federal Home Loan Bank borrowings		69		—
Amortization of premium on interest-bearing time deposits with banks		—		3
Amortization of premium on time deposits		(110)		(75)
Mortgage loans originated for sale		(15,734)		(20,440)
Proceeds from sale of mortgage loans		13,107		24,192
Net gain on sale of mortgage loans		(276)		(587)
Increase in cash surrender value of bank owned life insurance		(108)		(40)
Decrease in accrued interest receivable		2,318		1,374
Decrease in other assets		7,846		1,521
(Decrease) increase in other liabilities		(3,364)		1,379
Net cash provided by operating activities		21,490		21,239

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available-for-sale		145,844		—
Proceeds from paydowns, maturities, and calls of debt securities		26,513		41,117
Purchase of securities		(51)		(189,744)
Net decrease in loans		61,964		14,649
Purchase of restricted stock		(3,545)		—
Proceeds from redemption of restricted stock		9,341		—
Purchases of bank premises and equipment		(622)		(289)
Proceeds from sales of bank premises and equipment		7		—
Proceeds from sales of bank premises held for sale		—		568
Proceeds from sales of foreclosed assets		40		294
Net cash paid for acquisition of Town and Country		(14,454)		—
Net cash provided by (used in) investing activities		225,037		(133,405)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		3,190		77,959
Net decrease in repurchase agreements		(8,162)		(10,422)
Net decrease in Federal Home Loan Bank advances		(171,325)		—
Taxes paid related to the vesting of restricted stock units		(181)		(57)
Repurchase of common stock		(1,588)		(943)
Cash dividends and dividend equivalents paid		(5,508)		(4,660)
Net cash (used in) provided by financing activities		(183,574)		61,877

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		62,953		(50,289)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		114,159		409,268
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	177,112	$	358,979

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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HBT FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Unaudited)


	Three Months Ended March 31,
	2023		2022

	(dollars in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	4,903	$