UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
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TABLE OF CONTENTS
HBT Financial, Inc.
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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 the current expected credit losses (“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) |
| ||||
June 30, | December 31, | |||||
2023 | 2022 | |||||
ASSETS | ||||||
Cash and due from banks | $ | | $ | | ||
Interest-bearing deposits with banks | | | ||||
Cash and cash equivalents | | | ||||
Debt securities available-for-sale, at fair value (allowance for credit losses of $ | | | ||||
Debt securities held-to-maturity (fair value of $ | | | ||||
Equity securities with readily determinable fair value | | | ||||
Equity securities with no readily determinable fair value | | | ||||
Restricted stock, at cost | | | ||||
Loans held for sale | | | ||||
Loans, before allowance for credit losses | | | ||||
Allowance for credit losses | ( | ( | ||||
Loans, net of allowance for credit losses | | | ||||
Bank owned life insurance | | | ||||
Bank premises and equipment, net | | | ||||
Bank premises held for sale | | | ||||
Foreclosed assets | | | ||||
Goodwill | | | ||||
Intangible assets, net | | | ||||
Mortgage servicing rights, at fair value | | | ||||
Investments in unconsolidated subsidiaries | | | ||||
Accrued interest receivable | | | ||||
Other assets | | | ||||
Total assets | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Liabilities | ||||||
Deposits: | ||||||
Noninterest-bearing | $ | | $ | | ||
Interest-bearing | | | ||||
Total deposits | | | ||||
Securities sold under agreements to repurchase | | | ||||
Federal Home Loan Bank advances | | | ||||
Subordinated notes | | | ||||
Junior subordinated debentures issued to capital trusts | | | ||||
Other liabilities | | | ||||
Total liabilities | | | ||||
COMMITMENTS AND CONTINGENCIES (Note 15) | ||||||
Stockholders' Equity | ||||||
Preferred stock, $ | ||||||
Common stock, $ | | | ||||
Surplus | | | ||||
Retained earnings | | | ||||
Accumulated other comprehensive income (loss) | ( | ( | ||||
Treasury stock at cost, | ( | ( | ||||
Total stockholders’ equity | | | ||||
Total liabilities and stockholders’ equity | $ | | $ | | ||
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 June 30, | Six Months Ended June 30, | ||||||||||||
2023 |
| 2022 |
| 2023 |
| 2022 | |||||||
INTEREST AND DIVIDEND INCOME | (dollars in thousands, except per share data) | ||||||||||||
Loans, including fees: | |||||||||||||
Taxable | $ | | $ | | $ | | $ | | |||||
Federally tax exempt | | | | | |||||||||
Securities: | |||||||||||||
Taxable | | | | | |||||||||
Federally tax exempt | | | | | |||||||||
Interest-bearing deposits in bank | | | | | |||||||||
Other interest and dividend income | | | | | |||||||||
Total interest and dividend income | | | | | |||||||||
INTEREST EXPENSE | |||||||||||||
Deposits | | | | | |||||||||
Securities sold under agreements to repurchase | | | | | |||||||||
Borrowings | | | | | |||||||||
Subordinated notes | | | | | |||||||||
Junior subordinated debentures issued to capital trusts | | | | | |||||||||
Total interest expense | | | | | |||||||||
Net interest income | | | | | |||||||||
PROVISION FOR CREDIT LOSSES | ( | | | ( | |||||||||
Net interest income after provision for credit losses | | | | | |||||||||
NONINTEREST INCOME | |||||||||||||
Card income | | | | | |||||||||
Wealth management fees | | | | | |||||||||
Service charges on deposit accounts | | | | | |||||||||
Mortgage servicing | | | | | |||||||||
Mortgage servicing rights fair value adjustment | | | ( | | |||||||||
Gains on sale of mortgage loans | | | | | |||||||||
Realized gains (losses) on sales of securities | — | — | ( | — | |||||||||
Unrealized gains (losses) on equity securities | | ( | ( | ( | |||||||||
Gains (losses) on foreclosed assets | ( | ( | ( | | |||||||||
Gains (losses) on other assets | | ( | | | |||||||||
Income on bank owned life insurance | | | | | |||||||||
Other noninterest income | | | | | |||||||||
Total noninterest income | | | | | |||||||||
NONINTEREST EXPENSE | |||||||||||||
Salaries | | | | | |||||||||
Employee benefits | | | | | |||||||||
Occupancy of bank premises | | | | | |||||||||
Furniture and equipment | | | | | |||||||||
Data processing | | | | | |||||||||
Marketing and customer relations | | | | | |||||||||
Amortization of intangible assets | | | | | |||||||||
FDIC insurance | | | | | |||||||||
Loan collection and servicing | | | | | |||||||||
Foreclosed assets | | | | | |||||||||
Other noninterest expense | | | | | |||||||||
Total noninterest expense | | | | | |||||||||
INCOME BEFORE INCOME TAX EXPENSE | | | | | |||||||||
INCOME TAX EXPENSE | | | | | |||||||||
NET INCOME | $ | | $ | | $ | | $ | | |||||
EARNINGS PER SHARE - BASIC | $ | | $ | | $ | | $ | | |||||
EARNINGS PER SHARE - DILUTED | $ | | $ | | $ | | $ | | |||||
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | | | | | |||||||||
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 June 30, | Six Months Ended June 30, | |||||||||||
2023 |
| 2022 |
| 2023 |
| 2022 | ||||||
(dollars in thousands) | ||||||||||||
NET INCOME | $ | | $ | | $ | | $ | | ||||
OTHER COMPREHENSIVE (LOSS) INCOME | ||||||||||||
Unrealized (losses) on debt securities available-for-sale | ( | ( | ( | ( | ||||||||
Reclassification adjustment for losses on securities available-for-sale realized in income | | — | | — | ||||||||
Reclassification adjustment for amortization of net unrealized losses on debt securities transferred to held-to-maturity | | | | | ||||||||
Unrealized gains on derivative instruments | | | | | ||||||||
Reclassification adjustment for net settlements on derivative instruments | ( | | ( | | ||||||||
Total other comprehensive (loss) income, before tax | ( | ( | | ( | ||||||||
Income tax (benefit) expense | ( | ( | | ( | ||||||||
Total other comprehensive (loss) income | ( | ( | | ( | ||||||||
TOTAL COMPREHENSIVE INCOME (LOSS) | $ | | $ | ( | $ | | $ | ( | ||||
See accompanying Notes to Consolidated Financial Statements (Unaudited)
5
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, March 31, 2023 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Net income | — | — | — | | — | — | | |||||||||||||
Other comprehensive loss | — | — | — | — | ( | — | ( | |||||||||||||
Stock-based compensation | — | — | | — | — | — | | |||||||||||||
Repurchase of common stock | ( | — | — | — | — | ( | ( | |||||||||||||
Cash dividends and dividend equivalents ($ | — | — | — | ( | — | — | ( | |||||||||||||
Balance, June 30, 2023 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Balance, March 31, 2022 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
Net income | — | — | — | | — | — | | |||||||||||||
Other comprehensive loss | — | — | — | |||||||||||||||||