HBT Financial(HBT) - 2025 Q2 - Quarterly Results

HBT Financial, Inc. Second Quarter 2025 Financial Results Second Quarter 2025 Highlights The company reported strong Q2 2025 earnings with stable asset quality and an expanded net interest margin Q2 2025 Key Financial Results | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $19.2M | $19.1M | $18.1M | | Diluted EPS | $0.61 | $0.60 | $0.57 | | Adjusted Net Income | $19.8M | $19.3M | $18.1M | | Adjusted Diluted EPS | $0.63 | $0.61 | $0.57 | Q2 2025 Key Performance Ratios | Ratio | Value | | :--- | :--- | | Adjusted ROAA | 1.58% | | Adjusted ROATCE | 16.02% | | Net Interest Margin (Tax-Equivalent) | 4.19% | | Nonperforming Assets to Total Assets | 0.13% | - Tangible book value per share increased by $0.59 during the quarter to $16.02, representing a 3.8% quarterly increase and a 17.4% increase over the last 12 months[4] - Loans decreased during the quarter due to seasonal paydowns, but management expects loan growth to resume in Q3 2025[4] Adjusted Net Income (Non-GAAP) Adjusted net income rose to $19.8 million, a non-GAAP measure used to clarify operational performance - Management believes non-GAAP measures like adjusted net income provide investors with better insight into operational performance by excluding certain items[7] Adjusted Net Income Comparison | Period | Adjusted Net Income | Adjusted Diluted EPS | | :--- | :--- | :--- | | Q2 2025 | $19.8 million | $0.63 | | Q1 2025 | $19.3 million | $0.61 | | Q2 2024 | $18.1 million | $0.57 | Net Interest Income and Net Interest Margin Net interest income and the net interest margin both increased due to improved yields and lower funding costs Net Interest Income (NII) and Margin (NIM) Performance | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $49.7M | $48.7M | $47.0M | | NIM (Tax-Equivalent) | 4.19% | 4.16% | 4.00% | - The QoQ increase in NII was primarily due to improved yields on debt securities and lower funding costs[8] - The YoY increase in NII was driven by lower funding costs, improved yields, higher loan balances, and a $0.5 million increase in nonaccrual interest recoveries[9] Noninterest Income Noninterest income decreased to $9.1 million, primarily driven by a negative MSR fair value adjustment Noninterest Income Comparison | Period | Noninterest Income | | :--- | :--- | | Q2 2025 | $9.1 million | | Q1 2025 | $9.3 million | | Q2 2024 | $9.6 million | - The primary driver for the decrease from both prior periods was a negative MSR fair value adjustment of $0.8 million in Q2 2025[11][12] - Partially offsetting the QoQ decrease were seasonal increases in card income ($0.2M) and gains on sale of mortgage loans ($0.2M)[11] Noninterest Expense Noninterest expense remained stable quarter-over-quarter at $31.9 million but rose from the prior year - QoQ noninterest expense was stable as a $0.6 million decrease in salaries was offset by increases in other expenses and employee benefits[13] - YoY noninterest expense increased by 4.6%, mainly due to a $0.7 million rise in employee benefits from higher medical costs[14] Income Taxes The effective tax rate rose to 27.0% in Q2 2025 due to a nonrecurring expense and a non-repeating tax benefit - The effective tax rate increased to 27.0% in Q2 2025, compared to 25.2% in Q1 2025[15] - The increase was driven by a $0.3 million nonrecurring tax expense and the absence of a prior quarter's $0.2 million tax benefit[15] Loan Portfolio Total loans decreased to $3.35 billion, driven by property sale paydowns and seasonal line reductions Total Loans Outstanding | Date | Total Loans (before allowance) | | :--- | :--- | | June 30, 2025 | $3.35 billion | | March 31, 2025 | $3.46 billion | | June 30, 2024 | $3.39 billion | - The $113.6 million quarterly decrease was mainly due to $72.0 million in paydowns from property sales and a $25.1 million seasonal reduction in C&I lines[16] Deposits Total deposits decreased to $4.31 billion, primarily due to outflows for depositor tax payments Total Deposits | Date | Total Deposits | | :--- | :--- | | June 30, 2025 | $4.31 billion | | March 31, 2025 | $4.38 billion | | June 30, 2024 | $4.32 billion | - The $78.1 million quarterly decrease was mainly due to higher outflows for depositor tax payments and lower balances in existing retail accounts[17] Asset Quality Asset quality remained strong and stable, with nonperforming assets at a low 0.13% of total assets Asset Quality Metrics | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets / Total Assets | 0.13% | 0.11% | 0.17% | | Allowance for Credit Losses / Total Loans | 1.24% | 1.22% | 1.21% | | Net Charge-offs / Average Loans (Annualized) | 0.12% | 0.05% | 0.08% | - The provision for credit losses in Q2 2025 was $0.5 million, reflecting a mix of economic forecast changes and portfolio-specific adjustments[19] - Of the $5.6 million in nonperforming loans, $1.9 million were either wholly or partially guaranteed by the U.S. government[18] Capital The company's capital position strengthened, with all regulatory ratios increasing and share repurchases continuing Capital Adequacy Ratios (June 30, 2025) | Ratio | Company Ratio | Requirement with Buffer | | :--- | :--- | :--- | | Total capital to risk-weighted assets | 17.74% | 10.50% | | Tier 1 capital to risk-weighted assets | 15.60% | 8.50% | | Common equity tier 1 capital ratio | 14.26% | 7.00% | | Tier 1 leverage ratio | 11.86% | 4.00% | - The ratio of tangible common equity to tangible assets increased to 10.21% from 9.73% at the end of Q1 2025[22] - The company repurchased 135,997 shares, with $12.1 million remaining available for repurchase under its program[22] Consolidated Financial Statements Unaudited Consolidated Financial Summary This section provides a comprehensive overview of HBT Financial's unaudited consolidated financial results Consolidated Financial Summary - Q2 2025 | Metric | Q2 2025 | | :--- | :--- | | Net Income | $19.2M | | Diluted EPS | $0.61 | | Return on Average Assets | 1.53% | | Return on Average Stockholders' Equity | 13.47% | | Net Interest Margin | 4.14% | | Total Assets (at period end) | $5.02B | | Total Loans (at period end) | $3.35B | | Total Deposits (at period end) | $4.31B | Consolidated Statements of Income The company reported net income of $19.2 million on net interest income of $49.7 million for Q2 2025 Detailed Income Statement - Q2 2025 (in thousands) | Line Item | Q2 2025 | | :--- | :--- | | Total interest and dividend income | $63,919 | | Total interest expense | $14,261 | | Net interest income | $49,658 | | Provision for credit losses | $526 | | Total noninterest income | $9,140 | | Total noninterest expense | $31,914 | | Net income | $19,230 | Consolidated Balance Sheets Total assets were $5.02 billion as of June 30, 2025, supported by $4.31 billion in deposits Balance Sheet Summary (in thousands) | Account | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $5,018,398 | $5,092,192 | | Loans, net of allowance | $3,306,552 | $3,419,667 | | Total Deposits | $4,306,531 | $4,384,590 | | Total Stockholders' Equity | $580,897 | $565,057 | Loan and Deposit Composition The loan portfolio is led by commercial real estate, while the deposit base is 76% interest-bearing - As of June 30, 2025, the largest loan categories were Commercial Real Estate - Non-owner Occupied ($907.1M) and Multi-family ($453.8M)[38] - Total deposits of $4.31 billion were composed of 24% noninterest-bearing and 76% interest-bearing deposits[38] Average Balances, Yields, and Rates The net interest rate spread widened to 3.64% in Q2 2025 as the cost of funds decreased Q2 2025 Average Yields and Costs | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Yield on Interest-Earning Assets | 5.33% | 5.34% | 5.28% | | Cost of Interest-Bearing Liabilities | 1.69% | 1.72% | 1.85% | | Net Interest Rate Spread | 3.64% | 3.62% | 3.43% | | Cost of Funds | 1.29% | 1.32% | 1.42% | Asset Quality Details Total nonperforming assets remained low at $6.5 million, with an allowance for credit losses of $41.7 million Nonperforming Assets (in thousands) | Category | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Nonperforming loans | $5,624 | $5,106 | $8,432 | | Foreclosed assets | $890 | $460 | $320 | | Total nonperforming assets | $6,514 | $5,566 | $8,752 | Allowance for Credit Losses Activity - Q2 2025 (in thousands) | Line Item | Amount | | :--- | :--- | | Beginning Balance (Mar 31, 2025) | $42,111 | | Provision for credit losses | $595 | | Charge-offs | ($1,252) | | Recoveries | $205 | | Ending Balance (June 30, 2025) | $41,659 | Reconciliation of Non-GAAP Financial Measures Reconciliation: Adjusted Net Income and Adjusted ROA GAAP net income of $19.2 million is reconciled to adjusted net income of $19.8 million for Q2 2025 Reconciliation of Net Income to Adjusted Net Income - Q2 2025 (in thousands) | Line Item | Amount | | :--- | :--- | | Net income (GAAP) | $19,230 | | MSR fair value adjustment | ($751) | | Gains (losses) on closed branch premises | ($50) | | Tax effect of adjustments | $228 | | Adjusted net income (Non-GAAP) | $19,803 | Reconciliation: Adjusted Earnings Per Share Adjusted diluted EPS was $0.63 for Q2 2025, compared to the GAAP diluted EPS of $0.61 EPS vs. Adjusted EPS - Q2 2025 | Metric | Value | | :--- | :--- | | Earnings per share - diluted (GAAP) | $0.61 | | Adjusted earnings per share - diluted (Non-GAAP) | $0.63 | Reconciliation: Pre-Provision Net Revenue Adjusted pre-provision net revenue (PPNR) was $27.7 million, an increase from the prior quarter Pre-Provision Net Revenue (PPNR) - Q2 2025 (in thousands) | Metric | Amount | | :--- | :--- | | Pre-provision net revenue (GAAP-based) | $26,884 | | Adjustments | $801 | | Adjusted pre-provision net revenue (Non-GAAP) | $27,685 | Reconciliation: Net Interest Margin (Tax-equivalent Basis) The tax-equivalent adjustment resulted in a net interest margin of 4.19% for Q2 2025 NIM vs. NIM (Tax-equivalent) - Q2 2025 | Metric | Value | | :--- | :--- | | Net interest margin (GAAP) | 4.14% | | Tax-equivalent adjustment | 0.05% | | Net interest margin (tax-equivalent basis) | 4.19% | Reconciliation: Efficiency Ratio (Tax-equivalent Basis) The adjusted efficiency ratio improved to 51.91% on a tax-equivalent basis for Q2 2025 Efficiency Ratios - Q2 2025 | Ratio | Value | | :--- | :--- | | Efficiency ratio (GAAP) | 53.10% | | Efficiency ratio (tax-equivalent basis) | 52.61% | | Adjusted efficiency ratio (tax-equivalent basis) | 51.91% | Reconciliation: Tangible Common Equity and Tangible Book Value Tangible book value per share increased to $16.02, and the TCE to TA ratio improved to 10.21% Tangible Book Value Per Share | Date | Tangible Book Value Per Share | | :--- | :--- | | June 30, 2025 | $16.02 | | March 31, 2025 | $15.43 | | June 30, 2024 | $13.64 | Tangible Common Equity to Tangible Assets | Date | Ratio | | :--- | :--- | | June 30, 2025 | 10.21% | | March 31, 2025 | 9.73% | | June 30, 2024 | 8.74% | Reconciliation: Return on Average Tangible Common Equity (ROATCE) The adjusted return on average tangible common equity (ROATCE) was 16.02% for Q2 2025 ROATCE and Adjusted ROATCE (Annualized) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | ROATCE | 15.55% | 16.20% | 17.21% | | Adjusted ROATCE | 16.02% | 16.36% | 17.27% |