HBT Financial(HBT) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section highlights forward-looking statements, subject to uncertainties and various economic, policy, and credit risk factors - The report contains forward-looking statements about plans, strategies, expectations, and financial performance, which are subject to numerous uncertainties that could cause actual results to differ materially[8] - Key risk factors include economic and financial market strength, effects of government policies, impact of global events (e.g., war, pandemics), changes in accounting policies and regulations, interest rate fluctuations, increased competition, technological changes (including AI), and credit risks within the loan portfolio[8][10] PART I. Financial Information This part presents the Company's comprehensive financial information, including statements, notes, and management's analysis Item 1. Consolidated Financial Statements This section presents the Company's unaudited consolidated financial statements, including balance sheets, statements of income, comprehensive income, changes in stockholders' equity, and cash flows, along with detailed notes Consolidated Balance Sheets This section presents the Company's consolidated balance sheets, detailing assets, liabilities, and equity at specific dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total Assets | $5,018,398 | $5,032,902 | $(14,504) | (0.3)% | | Cash and cash equivalents | $195,742 | $137,692 | $58,050 | 42.2% | | Debt securities available-for-sale | $773,206 | $698,049 | $75,157 | 10.8% | | Loans, net | $3,306,552 | $3,424,102 | $(117,550) | (3.4)% | | Total Deposits | $4,306,531 | $4,318,254 | $(11,723) | (0.3)% | | Total Stockholders' Equity | $580,897 | $544,605 | $36,292 | 6.7% | Consolidated Statements of Income This section presents the Company's consolidated statements of income, outlining revenues, expenses, and net income | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Interest Income | $49,658 | $47,028 | $98,366 | $93,716 | | Provision for Credit Losses | $526 | $1,176 | $1,102 | $1,703 | | Total Noninterest Income | $9,140 | $9,610 | $18,446 | $15,236 | | Total Noninterest Expense | $31,914 | $30,509 | $63,849 | $61,777 | | Net Income | $19,230 | $18,070 | $38,305 | $33,328 | | Diluted EPS | $0.61 | $0.57 | $1.21 | $1.05 | Consolidated Statements of Comprehensive Income This section presents the Company's consolidated statements of comprehensive income, including net income and other comprehensive income | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $19,230 | $18,070 | $38,305 | $33,328 | | Unrealized gains (losses) on debt securities available-for-sale | $7,069 | $1,524 | $18,154 | $(731) | | Total Other Comprehensive Income | $5,707 | $1,392 | $14,026 | $2,507 | | Total Comprehensive Income | $24,937 | $19,462 | $52,331 | $35,835 | Consolidated Statement of Changes in Stockholders' Equity This section details changes in stockholders' equity, reflecting net income, other comprehensive income, and capital transactions | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total Stockholders' Equity | $580,897 | $544,605 | | Net Income (6 months) | $38,305 | N/A | | Other Comprehensive Income (6 months) | $14,026 | N/A | | Repurchase of common stock (6 months) | $(2,903) | N/A | | Cash dividends paid (6 months) | $(13,319) | N/A | Consolidated Statements of Cash Flows This section presents consolidated cash flows, categorizing cash movements from operating, investing, and financing activities | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | | Net cash provided by operating activities | $43,993 | $46,569 | | Net cash provided by investing activities | $77,194 | $119,174 | | Net cash used in financing activities | $(63,137) | $(111,755) | | Net increase in cash and cash equivalents | $58,050 | $53,988 | | Cash and cash equivalents at end of period | $195,742 | $195,240 | Notes to Consolidated Financial Statements This section provides detailed explanatory notes supporting the consolidated financial statements NOTE 1 – Accounting Policies This note outlines the significant accounting policies and critical estimates used in preparing the financial statements - The financial statements are prepared in accordance with GAAP interim reporting requirements, with certain footnote disclosures condensed or omitted per SEC rules[26] - Management makes estimates and assumptions, particularly for the allowance for credit losses, which could significantly differ from actual results[28][29] - Recent legislation, the 'One Big Beautiful Bill Act' (H.R. 1) signed on July 4, 2025, includes federal tax law changes (e.g., immediate expensing of R&D, 100% bonus depreciation) that were not reflected in the Q2 2025 income tax provision but are being evaluated for future periods[32] NOTE 2 – Securities This note details the Company's debt and equity securities, including cost, fair value, and unrealized gains or losses | Debt Securities (in thousands) | June 30, 2025 Amortized Cost | June 30, 2025 Fair Value | June 30, 2025 Gross Unrealized Losses | Dec 31, 2024 Amortized Cost | Dec 31, 2024 Fair Value | Dec 31, 2024 Gross Unrealized Losses | | :----------------------------- | :--------------------------- | :----------------------- | :------------------------------------ | :-------------------------- | :---------------------- | :----------------------------------- | | Available-for-sale | $814,495 | $773,206 | $(43,917) | $757,492 | $698,049 | $(59,855) | | Held-to-maturity | $481,942 | $442,064 | $(40,035) | $499,858 | $445,186 | $(54,720) | - As of June 30, 2025, the Company did not intend to sell debt securities in an unrealized loss position and expected to recover the amortized cost[48] NOTE 3 – Loans and Related Allowance for Credit Losses This note details the loan portfolio, allowance for credit losses, and economic forecasts impacting credit risk | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Loans, before allowance for credit losses | $3,348,211 | $3,466,146 | $(117,935) | (3.4)% | | Allowance for credit losses | $(41,659) | $(42,044) | $385 | (0.9)% | | Loans, net | $3,306,552 | $3,424,102 | $(117,550) | (3.4)% | | Nonaccrual Loans | $5,615 | $7,652 | $(2,037) | (26.6)% | - Management's economic forecast anticipates a mild economic slowdown over the next four quarters, with a slight increase in unemployment and slowing GDP growth in 2025, followed by an increase in 2026[57] | Loan Category (in thousands) | June 30, 2025 Loans | June 30, 2025 Allowance for Credit Losses | Dec 31, 2024 Loans | Dec 31, 2024 Allowance for Credit Losses | | :--------------------------- | :------------------ | :---------------------------------------- | :----------------- | :--------------------------------------- | | Commercial and industrial | $419,430 | $6,310 | $428,389 | $5,357 | | Commercial real estate - owner occupied | $317,475 | $3,311 | $322,316 | $3,107 | | Commercial real estate - non-owner occupied | $907,073 | $11,635 | $899,565 | $11,707 | | Construction and land development | $310,252 | $3,450 | $374,657 | $4,302 | | Multi-family | $453,812 | $4,554 | $431,524 | $4,331 | | One-to-four family residential | $451,197 | $3,677 | $463,968 | $3,908 | | Agricultural and farmland | $271,644 | $1,558 | $293,375 | $1,170 | | Municipal, consumer, and other | $217,328 | $7,164 | $252,352 | $8,162 | NOTE 4 – Loan Servicing This note provides information on mortgage loans serviced for others and related mortgage servicing rights | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Mortgage loans serviced for others | $1,490,000 | $1,550,000 | | Mortgage Servicing Rights (Ending Balance) | $17,768 | $18,827 | - Fair value adjustments for mortgage servicing rights for the six months ended June 30, 2025, included a negative adjustment of $1.02 million due to payments and principal reductions and a negative adjustment of $317 thousand due to changes in valuation inputs and assumptions[96] NOTE 5 – Foreclosed Assets This note details the Company's foreclosed assets, including balances, transfers, and gains or losses on sales | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Ending Balance | $890 | $367 | | Transfers from loans (6 months) | $965 | $374 | | Net gain (loss) on sales (6 months) | $41 | $95 | - As of June 30, 2025, there were 6 one-to-four family residential real estate loans in the process of foreclosure totaling $0.6 million, a decrease from 19 loans totaling $1.8 million at December 31, 2024[98] NOTE 6 – Deposits This note provides a breakdown of deposit types, balances, and associated interest expenses and costs | Deposit Type (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------- | :------------ | :---------------- | :----- | :------- | | Noninterest-bearing | $1,034,387 | $1,046,405 | $(12,018) | (1.1)% | | Interest-bearing | $3,272,144 | $3,271,849 | $295 | 0.0% | | Total Deposits | $4,306,531 | $4,318,254 | $(11,723) | (0.3)% | | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | | Total interest expense on deposits | $25,774 | $27,726 | | Cost of total deposits (annualized) | 1.20% | 1.28% | NOTE 7 – Derivative Financial Instruments This note describes the Company's derivative financial instruments, including interest rate swaps and their fair values - An interest rate swap agreement designated as a cash flow hedge matured in April 2025, resulting in a reclassification adjustment of $38 thousand to junior subordinated debentures interest expense for the six months ended June 30, 2025[104] | Derivative Type (in thousands) | June 30, 2025 Notional Amount | June 30, 2025 Fair Value | Dec 31, 2024 Notional Amount | Dec 31, 2024 Fair Value | | :----------------------------- | :---------------------------- | :----------------------- | :--------------------------- | :---------------------- | | Interest rate swaps with financial institution counterparty (assets) | $75,419 | $3,427 | $79,416 | $5,515 | | Interest rate swaps with commercial borrower counterparty (liabilities) | $75,419 | $(3,427) | $79,416 | $(5,515) | NOTE 8 – Accumulated Other Comprehensive Income (Loss) This note details the components and changes in accumulated other comprehensive income (loss) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Balance, Accumulated Other Comprehensive Income (Loss) | $(32,739) | $(46,765) | | Other comprehensive income (loss) before reclassifications (6 months) | $18,154 | $(731) | NOTE 9 – Earnings Per Share This note presents the calculation of basic and diluted earnings per share for the reporting periods | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $0.61 | $0.57 | $1.21 | $1.05 | | Diluted EPS | $0.61 | $0.57 | $1.21 | $1.05 | NOTE 10 – Stock-Based Compensation Plans This note outlines the Company's stock-based compensation plans and related expenses and unrecognized costs | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total stock-based compensation expense | $602 | $446 | $1,012 | $826 | - As of June 30, 2025, unrecognized compensation cost for non-vested restricted stock units was $1.4 million, expected to be recognized over 1.6 years[124] - For performance restricted stock units, it was $0.5 million, expected over 1.1 years[128] NOTE 11 – Regulatory Capital This note details the Company's and Bank's compliance with regulatory capital requirements and capital ratios - As of June 30, 2025, both the Company and the Bank met all capital adequacy requirements and the Bank was 'well capitalized'[137][140] | Capital Ratio | HBT Financial, Inc. (June 30, 2025) | HBT Financial, Inc. (Dec 31, 2024) | Heartland Bank (June 30, 2025) | Heartland Bank (Dec 31, 2024) | Minimum for Capital Adequacy (with buffer) | Minimum for Well Capitalized (Bank only) | | :------------ | :---------------------------------- | :--------------------------------- | :----------------------------- | :----------------------------- | :----------------------------------------- | :--------------------------------------- | | Total Capital (to RWA) | 17.74% | 16.51% | 16.84% | 16.11% | 10.50% | 10.00% | | Tier 1 Capital (to RWA) | 15.60% | 14.50% | 15.74% | 15.10% | 8.50% | 8.00% | | Common Equity Tier 1 Capital (to RWA) | 14.26% | 13.21% | 15.74% | 15.10% | 7.00% | 6.50% | | Tier 1 Capital (to Average Assets) | 11.86% | 11.51% | 11.97% | 11.98% | 4.00% | 5.00% | NOTE 12 – Segment Information This note clarifies that HBT Financial, Inc. operates as a single reportable segment - HBT Financial, Inc. operates as one reportable segment, with the chief operating decision maker using consolidated financial information for resource allocation and performance assessment[143] NOTE 13 – Fair Value of Financial Instruments This note describes the fair value hierarchy and measurements for various financial instruments - The Company uses a three-level hierarchy for fair value measurements: Level 1 (quoted prices in active markets), Level 2 (significant observable inputs), and Level 3 (significant unobservable inputs)[144][145] | Asset/Liability (in thousands) | June 30, 2025 Fair Value | Level | | :----------------------------- | :----------------------- | :---- | | Debt securities available-for-sale | $773,206 | Level 2 | | Equity securities with readily determinable fair values | $3,346 | Level 1 | | Mortgage servicing rights | $17,768 | Level 3 | | Derivative financial assets | $3,427 | Level 2 | | Derivative financial liabilities | $3,437 | Level 2 | | Loans held for sale | $2,316 | Level 2 | | Collateral-dependent loans | $29,692 | Level 3 | | Bank premises held for sale | $140 | Level 3 | | Foreclosed assets | $890 | Level 3 | NOTE 14 – Commitments and Contingencies This note details the Company's commitments to extend credit, standby letters of credit, and related allowances | Commitment Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Commitments to extend credit | $803,887 | $845,413 | | Standby letters of credit | $31,032 | $18,329 | - The allowance for credit losses on unfunded lending-related commitments was $3.1 million as of June 30, 2025, and December 31, 2024[185] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition as of June 30, 2025, compared to December 31, 2024, and results of operations for the three and six months ended June 30, 2025 and 2024. It covers key financial metrics, loan and deposit trends, liquidity, capital resources, and critical accounting estimates, including reconciliations of non-GAAP financial measures Overview This section provides a high-level overview of HBT Financial, Inc.'s total assets, loans, deposits, and branch network - HBT Financial, Inc. is a bank holding company with $5.0 billion in total assets, $3.3 billion in loans, and $4.3 billion in deposits as of June 30, 2025[189] - The Company operates 66 full-service branches in Illinois and eastern Iowa and holds a leading deposit share in many central Illinois markets[190] Results of Operations This section analyzes the Company's net income and diluted EPS, highlighting key drivers of changes over periods | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $19,230 | $18,070 | $38,305 | $33,328 | | Diluted EPS | $0.61 | $0.57 | $1.21 | $1.05 | - For the three months ended June 30, 2025, net income increased by $1.2 million (6.4%) due to a $2.6 million increase in net interest income, partially offset by an $0.8 million negative mortgage servicing rights fair value adjustment and a $0.7 million increase in benefits expense[193][196] - For the six months ended June 30, 2025, net income increased by $5.0 million (14.9%) due to a $4.7 million increase in net interest income and the absence of $3.4 million losses on securities sales in 2024, partially offset by a $1.7 million increase in salaries and benefits and a $1.1 million negative mortgage servicing rights fair value adjustment[193][196] Net Interest Income This section analyzes net interest income and margin, detailing factors influencing interest revenue and expense | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Interest Income | $49,658 | $47,028 | $98,366 | $93,716 | | Net Interest Margin | 4.14% | 3.95% | 4.13% | 3.95% | | Yield on Loans | 6.38% | 6.35% | 6.39% | 6.34% | | Cost of Total Deposits | 1.19% | 1.31% | 1.20% | 1.28% | - The increase in net interest income was primarily due to lower funding costs, improved yields on debt securities, and higher average loan balances[212][214] - The Federal Open Market Committee (FOMC) began lowering interest rates in September 2024, decreasing the federal funds rate target range by 100 basis points by the end of 2024, which contributed to lower funding costs and higher net interest margin in H1 2025[216] Provision for Credit Losses This section discusses the provision for credit losses, explaining changes due to economic forecasts and portfolio adjustments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total provision for credit losses | $526 | $1,176 | $1,102 | $1,703 | - The Q2 2025 provision for credit losses reflects a $1.0 million increase from economic forecasts, an $0.8 million increase from qualitative factor changes, a $1.2 million decrease from reduced loan balances and portfolio changes, and a $0.1 million decrease in specific reserves[221] - The H1 2025 provision for credit losses reflects a $1.6 million increase from qualitative factors, a $1.0 million increase from economic forecasts, a $1.1 million decrease from portfolio changes, and a $0.4 million decrease in specific reserves[222] Noninterest Income This section analyzes noninterest income, including mortgage servicing rights adjustments and wealth management fees | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Noninterest Income | $9,140 | $9,610 | $18,446 | $15,236 | | Mortgage servicing rights fair value adjustment | $(751) | $(97) | $(1,059) | $(17) | | Wealth management fees | $2,826 | $2,623 | $5,667 | $5,170 | | Realized gains (losses) on sales of securities | $0 | $0 | $0 | $(3,382) | - The Q2 2025 decrease in noninterest income was primarily due to an $0.8 million negative mortgage servicing rights fair value adjustment, partially offset by a $0.2 million increase in wealth management fees[225] - The H1 2025 increase in noninterest income was largely due to the absence of $3.4 million losses on sales of securities in Q1 2024 and a $0.5 million increase in wealth management fees[226] Noninterest Expense This section details noninterest expenses, focusing on changes in employee benefits and salaries | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Noninterest Expense | $31,914 | $30,509 | $63,849 | $61,777 | | Employee benefits | $3,580 | $2,860 | $6,865 | $5,665 | | Salaries | $16,452 | $16,364 | $33,505 | $33,021 | - The Q2 2025 increase in noninterest expense was primarily due to a $0.7 million increase in benefits expense and a $0.3 million increase in other noninterest expense[228] - The H1 2025 increase in noninterest expense was primarily due to a $1.2 million increase in employee benefits and a $0.5 million increase in salaries[229] Income Taxes This section presents income tax expense and effective tax rates, including nonrecurring adjustments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax Expense | $7,128 | $6,883 | $13,556 | $12,144 | | Effective Tax Rate | 27.0% | 27.6% | 26.1% | 26.7% | - The Q2 2025 effective tax rate included a $0.3 million additional tax expense from the nonrecurring reversal of a stranded tax effect in accumulated other comprehensive income, linked to a derivative cash flow hedge maturity[230] Financial Condition This section analyzes the Company's financial position, including changes in total assets, loans, and equity | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total Assets | $5,018,398 | $5,032,902 | $(14,504) | (0.3)% | | Loans, before allowance for credit losses | $3,348,211 | $3,466,146 | $(117,935) | (3.4)% | | Debt securities available-for-sale, at fair value | $773,206 | $698,049 | $75,157 | 10.8% | | Cash and cash equivalents | $195,742 | $137,692 | $58,050 | 42.2% | | Total Stockholders' Equity | $580,897 | $544,605 | $36,292 | 6.7% | - The decrease in total assets was primarily driven by a $117.9 million reduction in loans, largely offset by a $57.2 million increase in debt securities (including an $18.2 million fair value increase in AFS securities) and a $58.1 million increase in cash and cash equivalents[235] Loan Portfolio This section details the composition and changes within the Company's loan portfolio by category | Loan Category (in thousands) | June 30, 2025 Balance | December 31, 2024 Balance | Change | % Change | | :--------------------------- | :-------------------- | :------------------------ | :----- | :------- | | Loans, before allowance for credit losses | $3,348,211 | $3,466,146 | $(117,935) | (3.4)% | | Commercial and industrial | $419,430 | $428,389 | $(8,959) | (2.1)% | | Construction and land development | $310,252 | $374,657 | $(64,405) | (17.2)% | | Multi-family | $453,812 | $431,524 | $22,288 | 5.2% | - The decrease in loans was primarily due to elevated paydowns from property sales and refinances, with transfers of completed construction projects out of the construction and land development segment driving increases in multi-family and commercial real estate – non-owner occupied segments[236] Commercial Real Estate Portfolios This section provides an overview of commercial real estate portfolios, including risk ratings and loan-to-value ratios | Commercial Real Estate (in thousands) | June 30, 2025 Balance | Substandard Risk Rating | Weighted Average LTV | | :------------------------------------ | :-------------------- | :---------------------- | :------------------- | | Owner Occupied | $317,475 | $10,008 | N/A | | Non-Owner Occupied | $907,073 | $27,700 | 56% | | Multi-family | $453,812 | $44 | 57% | - Management monitors commercial real estate concentrations by property class, industry, and regulatory capital, and evaluates the impact of current interest rates on underlying cash flows for loans over $1 million quarterly[240][241] Loan Portfolio Maturities This section presents the maturity distribution of the loan portfolio, categorized by interest rate type | Maturity Period (in thousands) | Total Loans | | :----------------------------- | :---------- | | 1 Year or Less | $1,027,934 | | After 1 Year Through 5 Years | $1,640,314 | | After 5 Years Through 15 Years | $482,321 | | After 15 Years | $197,642 | | Total | $3,348,211 | | Loan Type (maturing after 1 year, in thousands) | Variable Interest Rates | Predetermined (Fixed) Interest Rates | Total | | :---------------------------------------------- | :---------------------- | :----------------------------------- | :---- | | Commercial and industrial | $44,566 | $146,890 | $191,456 | | Commercial real estate - owner occupied | $98,064 | $169,888 | $267,952 | | Commercial real estate - non-owner occupied | $142,420 | $551,127 | $693,547 | | Construction and land development | $92,005 | $66,459 | $158,464 | | Multi-family | $73,249 | $295,096 | $368,345 | | One-to-four family residential | $130,405 | $230,014 | $360,419 | | Agricultural and farmland | $17,248 | $142,782 | $160,030 | | Municipal, consumer, and other | $33,249 | $86,815 | $120,064 | | Total | $631,206 | $1,689,071 | $2,320,277 | Nonperforming Assets This section details nonperforming assets, including nonaccrual loans and foreclosed assets, and their changes | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total Nonperforming Assets | $6,514 | $8,023 | $(1,509) | (18.8)% | | Nonaccrual Loans | $5,615 | $7,652 | $(2,037) | (26.6)% | | Foreclosed Assets | $890 | $367 | $523 | 142.5% | - The decrease in nonperforming assets was primarily due to the pay-off of a $1.6 million nonaccrual commercial real estate – non-owner occupied credit[246] Risk Classification of Loans This section outlines the risk ratings of the loan portfolio, including pass, pass-watch, special mention, and substandard categories | Risk Rating (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :------------------------- | :------------ | :---------------- | :----- | :------- | | Pass | $3,144,615 | $3,264,396 | $(119,781) | (3.7)% | | Pass-watch | $100,036 | $83,947 | $16,089 | 19.2% | | Special mention | $6,403 | $46,590 | $(40,187) | (86.3)% | | Substandard | $97,157 | $71,213 | $25,944 | 36.4% | | Total | $3,348,211 | $3,466,146 | $(117,935) | (3.4)% | - A $12.1 million construction and land development credit, rated substandard at June 30, 2025, was paid off in July 2025[247] Net Charge-offs (Recoveries) This section presents net charge-offs and recoveries, including their impact on average loans | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Net Charge-offs (recoveries) | $1,047 | $686 | $1,476 | $479 | | Charge-offs (recoveries) to average loans (annualized) | 0.12% | 0.08% | 0.09% | 0.03% | - Equipment finance loans purchased in 2023 contributed to heightened net charge-offs within the commercial and industrial segment[251] Securities This section details the Company's debt securities portfolio, including amortized cost, yields, and investment policy | Debt Securities (in thousands) | Amortized Cost | Weighted Average Yield | | :----------------------------- | :------------- | :--------------------- | | U.S. Treasury | $99,710 | 1.30% | | U.S. government agency | $139,163 | 2.57% | | Municipal | $184,489 | 2.06% | | Mortgage-backed: Agency residential | $390,724 | 3.85% | | Mortgage-backed: Agency commercial | $424,232 | 2.14% | | Corporate | $58,119 | 5.46% | | Total | $1,296,437 | 2.77% | - The Company's investment policy emphasizes safety of principal, liquidity needs, expected returns, cash flow targets, and consistency with its interest rate risk management strategy[253] Sources of Funds This section outlines the various sources of funding utilized by the Company Deposits This section provides a detailed analysis of deposit types, average balances, and weighted average costs | Deposit Type (in thousands) | 6 Months Ended June 30, 2025 Average Balance | 6 Months Ended June 30, 2025 Weighted Average Cost | 6 Months Ended June 30, 2024 Average Balance | 6 Months Ended June 30, 2024 Weighted Average Cost | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Noninterest-bearing | $1,045,133 | —% | $1,040,007 | —% | | Interest-bearing demand | $1,123,212 | 0.54% | $1,125,638 | 0.49% | | Money market | $810,645 | 2.20% | $800,714 | 2.38% | | Savings | $569,343 | 0.26% | $601,768 | 0.28% | | Time | $782,307 | 3.39% | $714,003 | 3.67% | | Brokered | — | —% | $60,181 | 5.48% | | Total deposits | $4,330,640 | 1.20% | $4,342,311 | 1.28% | - Average deposit balances were stable, with growth in money market and time deposits offsetting decreases in savings and the planned repayment of brokered time deposits[257] - Repurchase agreement balances were largely transitioned to reciprocal interest-bearing demand accounts[257] Liquidity This section discusses the Company's liquidity management, including on-balance sheet liquidity and borrowing capacity - The Bank continuously monitors its liquidity positions to meet daily cash flow needs and maintain an appropriate balance between assets and liabilities[261] | On-Balance Sheet Liquidity (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $195,742 | $137,692 | | Fair value of unpledged securities | $743,297 | $705,106 | | Total cash and unpledged securities | $939,039 | $842,798 | | Additional Borrowing Capacity (in thousands) | June 30, 2025 Current Balance | June 30, 2025 Additional Available Capacity | | :------------------------------------------- | :---------------------------- | :------------------------------------------ | | FHLB | $7,240 | $1,023,931 | | Federal Reserve | — | $107,118 | | Federal funds lines of credit | — | $80,000 | | Total | $7,240 | $1,211,049 | Bank Liquidity This section details the Bank's liquidity management strategies to meet cash flow needs and minimize funding costs - The Bank manages liquidity to meet deposit withdrawals, repay borrowings, and fund new loans and investments, while also minimizing costs by promoting noninterest-bearing and low-cost deposits[260][262] - As of June 30, 2025, the Bank's current liquidity and available sources were considered adequate to meet all reasonably foreseeable short-term and intermediate-term demands[264] Holding Company Liquidity This section describes the Holding Company's funding sources and liquidity needs, primarily from Bank dividends - The Holding Company's main source of funding is dividends from the Bank, which paid $30.0 million in Q2 2025 and $37.5 million in H1 2025[266] - Holding Company liquidity needs include operating expenses, interest payments on subordinated notes and junior subordinated debentures, and shareholder distributions (dividends and stock repurchases)[267] - Management believes the Holding Company's current liquidity and available sources are adequate to meet all reasonably foreseeable short-term and intermediate-term demands[269] Capital Resources This section discusses the Company's capital adequacy, regulatory compliance, and capital management activities - Both the Company and the Bank met all regulatory capital requirements as of June 30, 2025, and December 31, 2024, with the Bank being 'well capitalized'[274] - The Company increased its quarterly cash dividend to $0.21 per share in January 2025[278] | Stock Repurchase Program | Q2 2025 | | :----------------------- | :------ | | Shares repurchased | 135,997 | | Weighted average price | $21.30 | | Remaining authorization | $12.1 million | Regulatory Capital Requirements This section details the Company's and Bank's compliance with regulatory capital ratios and buffer requirements - The Company and Bank must maintain a capital conservation buffer of 2.5% of risk-weighted assets in addition to minimum capital requirements[273] | Capital Ratio | HBT Financial, Inc. (June 30, 2025) | Heartland Bank (June 30, 2025) | Minimum for Capital Adequacy (with buffer) | Minimum for Well Capitalized (Bank only) | | :------------ | :---------------------------------- | :----------------------------- | :----------------------------------------- | :--------------------------------------- | | Total Capital (to RWA) | 17.74% | 16.84% | 10.50% | 10.00% | | Tier 1 Capital (to RWA) | 15.60% | 15.74% | 8.50% | 8.00% | | Common Equity Tier 1 Capital (to RWA) | 14.26% | 15.74% | 7.00% | 6.50% | | Tier 1 Capital (to Average Assets) | 11.86% | 11.97% | 4.00% | 5.00% | Cash Dividends This section reports on the Company's cash dividend payments and recent increases - The Company increased its quarterly cash dividend to $0.21 per share in January 2025, compared to $0.19 per share paid in 2024[278] Stock Repurchase Program This section details the Company's common stock repurchases under its authorized program | Stock Repurchase Program | Q2 2025 | | :----------------------- | :------ | | Shares repurchased | 135,997 | | Weighted average price | $21.30 | | Remaining authorization | $12.1 million | Off-Balance Sheet Arrangements This section describes the Company's off-balance sheet arrangements, such as credit commitments and letters of credit - The Bank is involved in off-balance sheet arrangements such as commitments to extend credit and standby letters of credit, which carry credit and interest rate risk[281] - A significant portion of commitments to extend credit may expire without being drawn upon, and these commitments are subject to the same credit policies as originated loans[281] Critical Accounting Estimates This section defines critical accounting estimates as subjective judgments with potential for material financial impact - Critical accounting estimates are those that are difficult, subjective, or complex and involve judgments, assumptions, and uncertainties susceptible to change, potentially leading to materially different financial conditions or results[282] Allowance for Credit Losses This section explains the methodology for estimating the allowance for credit losses, including economic variables - The allowance for credit losses (ACL) estimates lifetime expected credit losses using relevant information from past events, current conditions, and reasonable and supportable forecasts[283] - The discounted cash flow method is used for most loan categories, while the weighted average remaining maturity method is used for consumer loans, incorporating macroeconomic variables like unemployment rate and GDP[284] Non-GAAP Financial Information This section explains the purpose of presenting non-GAAP financial measures for enhanced financial analysis - Non-GAAP financial measures are presented to enhance comparisons to prior periods, facilitate future projections, and provide information regarding profitability, capital adequacy, and funding stability[286][287][288] Reconciliation of Non-GAAP Financial Measure — Adjusted Net Income and Adjusted Return on Average Assets This section provides a reconciliation of net income and return on average assets to their adjusted non-GAAP counterparts | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $19,230 | $18,070 | $38,305 | $33,328 | | Adjusted net income | $19,803 | $18,139 | $39,056 | $36,212 | | Return on average assets * | 1.53% | 1.45% | 1.53% | 1.34% | | Adjusted return on average assets * | 1.58% | 1.45% | 1.56% | 1.45% | Reconciliation of Non-GAAP Financial Measure — Adjusted Earnings Per Share This section provides a reconciliation of diluted earnings per share to its adjusted non-GAAP counterpart | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Diluted EPS | $0.61 | $0.57 | $1.21 | $1.05 | | Adjusted earnings per share - diluted | $0.63 | $0.57 | $1.23 | $1.14 | Reconciliation of Non-GAAP Financial Measure — Pre-Provision Net Revenue, Pre-Provision Net Revenue Less Charge-offs (Recoveries), Adjusted Pre-Provision Net Revenue, and Adjusted Pre-Provision Net Revenue Less Charge-offs (Recoveries) This section reconciles various pre-provision net revenue metrics to their adjusted non-GAAP equivalents | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Pre-provision net revenue | $26,884 | $26,129 | $52,963 | $47,175 | | Adjusted pre-provision net revenue | $27,685 | $26,226 | $54,013 | $51,209 | | Pre-provision net revenue less net charge-offs | $25,837 | $25,443 | $51,487 | $46,696 | | Adjusted pre-provision net revenue less net charge offs | $26,638 | $25,540 | $52,537 | $50,730 | Reconciliation of Non-GAAP Financial Measure — Net Interest Income and Net Interest Margin (Tax-Equivalent Basis) This section reconciles net interest income and net interest margin to their tax-equivalent non-GAAP counterparts | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net interest income (tax-equivalent basis) | $50,206 | $47,581 | $99,459 | $94,844 | | Net interest margin (tax-equivalent basis) * | 4.19% | 4.00% | 4.18% | 3.99% | Reconciliation of Non-GAAP Financial Measure — Efficiency Ratio (Tax-Equivalent Basis) and Adjusted Efficiency Ratio (Tax-Equivalent Basis) This section reconciles efficiency ratios to their tax-equivalent and adjusted non-GAAP counterparts | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Efficiency ratio | 53.10% | 52.61% | 53.47% | 55.40% | | Efficiency ratio (tax-equivalent basis) | 52.61% | 52.10% | 52.97% | 54.83% | | Adjusted efficiency ratio (tax-equivalent basis) | 51.91% | 52.02% | 52.51% | 52.89% | Reconciliation of Non-GAAP Financial Measure — Ratio of Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share This section reconciles tangible common equity to tangible assets and tangible book value per share to non-GAAP metrics | Metric | June 30, 2025 | December 31, 2024 | | :----- | :------------ | :---------------- | | Tangible common equity (in thousands) | $504,623 | $466,942 | | Tangible assets (in thousands) | $4,942,124 | $4,955,239 | | Tangible common equity to tangible assets | 10.21% | 9.42% | | Tangible book value per share | $16.02 | $14.80 | Reconciliation of Non-GAAP Financial Measure — Return on Average Tangible Common Equity, Adjusted Return on Average Stockholders' Equity, and Adjusted Return on Average Tangible Common Equity This section reconciles various return on equity metrics to their adjusted and tangible non-GAAP counterparts | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Return on average tangible common equity * | 15.55% | 17.21% | 15.87% | 16.03% | | Adjusted return on average stockholders' equity * | 13.87% | 14.54% | 13.97% | 14.63% | | Adjusted return on average tangible common equity * | 16.02% | 17.27% | 16.18% | 17.42% | Reconciliation of Non-GAAP Financial Measure — Core Deposits This section provides a reconciliation of core deposits and their ratio to total deposits | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Core deposits | $4,103,197 | $4,116,058 | | Core deposits to total deposits | 95.28% | 95.32% | Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the Company's primary market risks: interest rate risk and credit risk. It details how these risks are monitored and managed, including the use of rate shock analysis for interest rate sensitivity and adherence to underwriting criteria for credit risk Interest Rate Risk The ALCO aims to structure the asset/liability composition to maximize net interest income while managing interest rate risk - The ALCO aims to structure the asset/liability composition to maximize net interest income while managing interest rate risk[311] | Change in Interest Rates (basis points) | June 30, 2025 Estimated Increase (Decrease) in EVE | June 30, 2025 Estimated Increase (Decrease) in Net Interest Income (Year 1) | | :-------------------------------------- | :------------------------------------------------- | :-------------------------------------------------------------------------- | | +400 | 26.5% | 5.2% | | +100 | 9.0% | 2.4% | | -100 | (10.9)% | (4.4)% | | -400 | (14.8)% | (5.0)% | - The cumulative deposit beta was 23.6% during the rising rate cycle (Q4 2021-Q2 2024) and 17.2% during the falling rate cycle (Q3 2024-Q2 2025)[314] Credit Risk Credit risk is managed by adhering to well-defined underwriting criteria, account administration standards, and active portfolio diversification to mitigate concentration risk - Credit risk is managed by adhering to well-defined underwriting criteria, account administration standards, and active portfolio diversification to mitigate concentration risk[318] - An independent loan review process assesses compliance with loan policy, documentation standards, accuracy of risk ratings, and overall credit quality[318] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures as of June 30, 2025, and states that there were no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of information - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of information[319] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[320] PART II. Other Information This part includes other required disclosures such as legal proceedings, risk factors, and equity security transactions Item 1. Legal Proceedings The Company is involved in routine legal actions incidental to its business, but management, in consultation with legal counsel, does not expect these matters to have a material adverse effect on the Company's financial statements - The Company is party to routine legal actions, but management does not expect them to have a material adverse effect on financial statements[321] - The banking industry faces heightened legal and regulatory compliance and litigation risk due to extensive laws and regulations[321] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[322] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section reports no unregistered sales of equity securities. The Company repurchased 135,997 shares of common stock during April 2025 under its stock repurchase program, with $12.1 million remaining authorized Unregistered Sales of Equity Securities This section confirms that no unregistered sales of equity securities occurred during the period - No unregistered sales of equity securities occurred[323] Issuer Purchases of Equity Securities This section details the Company's common stock repurchases under its authorized program - The Company repurchased 135,997 shares of common stock at a weighted average price of $21.30 during April 2025[325] - The stock repurchase program authorizes up to $15.0 million of common stock repurchases until January 1, 2026, with $12.1 million remaining as of June 30, 2025[324][325] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the period - None[326] Item 4. Mine Safety Disclosures There were no mine safety disclosures required for the period - None[327] Item 5. Other Information No directors or executive officers adopted or terminated any Rule 10b5-1(c) trading arrangements for Company securities during the fiscal quarter ended June 30, 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1(c) trading arrangements for Company securities during the fiscal quarter ended June 30, 2025[328] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and various Inline XBRL documents - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[330]