HBT Financial(HBT) - 2024 Q1 - Quarterly Results

First Quarter Highlights HBT Financial reported a net income of $15.3 million ($0.48 per diluted share) for Q1 2024, a decrease from $18.4 million in Q4 2023 but a significant increase from $9.2 million in Q1 2023 Q1 2024 Key Financial Results | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Income | $15.3M | $18.4M | $9.2M | | Diluted EPS | $0.48 | $0.58 | $0.30 | | Adjusted Net Income | $18.1M | $19.3M | $19.9M | | Adjusted Diluted EPS | $0.57 | $0.60 | $0.64 | - The CEO highlighted a strong start to 2024, with an adjusted ROAA of 1.45% and an adjusted ROATCE of 17.57%[4] - Net interest margin (tax-equivalent basis) was stable at 3.99% as the increase in funding costs slowed[4][5] - Asset quality remained strong, with nonperforming assets to total assets at 0.20%, and the company recorded a net recovery for the quarter[4][5] - Tangible book value per share increased by $0.29 during the quarter to $13.19, representing a 15.2% growth since March 31, 2023[4] Financial Performance Analysis The company's financial performance in Q1 2024 was characterized by a slight decrease in net interest income due to higher funding costs, a significant drop in noninterest income driven by losses on securities sales, and a modest increase in noninterest expenses from seasonal salary adjustments Net Interest Income and Net Interest Margin Net interest income for Q1 2024 was $46.7 million, a slight decrease of 0.8% from Q4 2023, primarily due to increased funding costs Net Interest Income and Margin Performance | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $46.7M | $47.1M | $46.8M | | Net Interest Margin | 3.94% | 3.93% | 4.20% | | Net Interest Margin (Tax-Equivalent) | 3.99% | 3.99% | 4.26% | - The slight QoQ decrease in net interest income was driven by higher funding costs, which were partially offset by increased asset yields from higher cash balances following the sale of $66.8 million of municipal securities with a book yield of 1.87%[7] - The cost of funds increased to 1.37% in Q1 2024, up from 1.26% in Q4 2023[9] Noninterest Income Noninterest income fell sharply to $5.6 million in Q1 2024, a 38.9% decrease from Q4 2023 Noninterest Income Comparison | Period | Noninterest Income | | :--- | :--- | | Q1 2024 | $5.6M | | Q4 2023 | $9.2M | | Q1 2023 | $7.4M | - Key drivers for the QoQ decrease include $3.4 million in realized losses on securities sales and $0.6 million in impairment losses on bank premises[10] - A positive mortgage servicing rights fair value adjustment of $0.1 million in Q1 2024 partially offset losses, compared to a negative adjustment of $1.2 million in Q4 2023[10] Noninterest Expense Noninterest expense increased by 2.9% to $31.3 million in Q1 2024 compared to Q4 2023, mainly due to seasonal increases in salaries and higher medical benefit costs Noninterest Expense Comparison | Period | Noninterest Expense | | :--- | :--- | | Q1 2024 | $31.3M | | Q4 2023 | $30.4M | | Q1 2023 | $35.9M | - The QoQ increase was driven by a $0.9 million rise in salaries (due to seasonal factors, merit increases, and payroll tax resets) and a $0.4 million increase in employee benefit expenses[12] - The YoY decrease was primarily due to the absence of $7.1 million in Town and Country acquisition-related expenses that were incurred in Q1 2023[13] Balance Sheet Analysis As of March 31, 2024, total loans decreased to $3.35 billion from the previous quarter, influenced by reduced line utilization and early payoffs of lower-rate loans Loan Portfolio Total loans outstanding were $3.35 billion at the end of Q1 2024, down $58.5 million from Q4 2023 Total Loans Outstanding | Date | Total Loans (before allowance) | | :--- | :--- | | Mar 31, 2024 | $3.35B | | Dec 31, 2023 | $3.40B | | Mar 31, 2023 | $3.20B | - The quarterly decrease was driven by several factors, including a $28.3 million decrease in line utilization, $14.4 million in early payoffs of loans with fixed rates of 4.00% or less, and an $18.0 million decrease in construction and land development loans[15] Deposits Total deposits decreased by $40.9 million to $4.36 billion at the end of Q1 2024 compared to the prior quarter Total Deposits | Date | Total Deposits | | :--- | :--- | | Mar 31, 2024 | $4.36B | | Dec 31, 2023 | $4.40B | | Mar 31, 2023 | $4.31B | - The quarterly decrease was mainly due to an $89.1 million reduction in brokered deposits[16] - The decrease was partially offset by the addition of $33.9 million in lower-cost time deposits from a State of Illinois loan matching program[16] Asset Quality Asset quality remained strong in Q1 2024, despite a slight increase in nonperforming loans to 0.29% of total loans Asset Quality Metrics | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Nonperforming Loans to Total Loans | 0.29% | 0.23% | 0.20% | | Net Recoveries / (Charge-offs) | $0.2M | ($0.5M) | $0.1M | | Allowance for Credit Losses to Total Loans | 1.22% | 1.18% | 1.21% | - Nonperforming loans increased by $1.8 million from Q4 2023, primarily due to a few commercial credits moving to nonaccrual status[17] - Of the $9.7 million in nonperforming loans, $2.7 million is guaranteed by the U.S. government[17] - The company recorded a provision for credit losses of $0.5 million for Q1 2024[18] - The allowance for credit losses stood at 423% of nonperforming loans at the end of the quarter[20] Capital The company strengthened its capital position in Q1 2024, with the tangible common equity to tangible assets ratio increasing to 8.40% from 8.19% in the prior quarter Capital Ratios and Book Value | Metric | Mar 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Tangible Common Equity to Tangible Assets | 8.40% | 8.19% | | Tangible Book Value Per Share | $13.19 | $12.90 | - The company repurchased 179,281 shares of its common stock at a weighted average price of $18.93 during Q1 2024[21] - As of March 31, 2024, $11.6 million remained available under the stock repurchase program, which is effective until January 1, 2025[21] Unaudited Consolidated Financial Summary Consolidated Statements of Income For Q1 2024, HBT Financial reported total interest and dividend income of $62.0 million and interest expense of $15.3 million, resulting in net interest income of $46.7 million Q1 2024 Income Statement Highlights ($ millions) | Line Item | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $46.688M | $47.084M | $46.837M | | Provision for Credit Losses | $0.527M | $1.113M | $6.210M | | Noninterest Income | $5.626M | $9.205M | $7.437M | | Noninterest Expense | $31.268M | $30.387M | $35.933M | | Net Income | $15.258M | $18.446M | $9.208M | - A key component of noninterest income was a realized loss on the sale of securities of $3.4 million in Q1 2024, compared to no such loss in Q4 2023 and a $1.0 million loss in Q1 2023[32] Consolidated Balance Sheets As of March 31, 2024, HBT Financial had total assets of $5.04 billion, a slight decrease from $5.07 billion at year-end 2023 Key Balance Sheet Items ($ millions) | Account | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $5,040.510M | $5,073.170M | $5,013.821M | | Loans, net | $3,305.147M | $3,364.369M | $3,156.764M | | Total Deposits | $4,360.574M | $4,401.437M | $4,310.521M | | Total Liabilities | $4,543.829M | $4,583.674M | $4,563.723M | | Total Stockholders' Equity | $496.681M | $489.496M | $450.098M | Loan and Deposit Composition At the end of Q1 2024, the loan portfolio was led by commercial real estate - non-owner occupied ($890.3M) and one-to-four family residential ($485.9M) Loan Composition as of March 31, 2024 ($ millions) | Loan Category | Amount | | :--- | :--- | | Commercial real estate - non-owner occupied | $890.251M | | One-to-four family residential | $485.948M | | Multi-family | $421.573M | | Commercial and industrial | $402.206M | Deposit Composition as of March 31, 2024 ($ millions) | Deposit Category | Amount | | :--- | :--- | | Interest-bearing demand | $1,139.172M | | Noninterest-bearing deposits | $1,047.074M | | Money market | $802.685M | | Time | $713.142M | | Brokered | $55.762M | Analysis of Net Interest Income and Margin In Q1 2024, the average yield on interest-earning assets was 5.23%, up from 5.13% in Q4 2023, driven by higher yields on loans and deposits with banks Yield and Cost Analysis (Annualized) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Yield on Interest-Earning Assets | 5.23% | 5.13% | 4.64% | | Cost of Interest-Bearing Liabilities | 1.79% | 1.66% | 0.63% | | Cost of Total Deposits | 1.26% | 1.05% | 0.24% | | Net Interest Rate Spread | 3.44% | 3.47% | 4.01% | | Net Interest Margin (Tax-Equivalent) | 3.99% | 3.99% | 4.26% | Asset Quality Details As of March 31, 2024, total nonperforming assets were $9.9 million, or 0.20% of total assets, consistent with the prior year but up slightly from 0.17% in Q4 2023 Nonperforming Assets ($ millions) | Category | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total nonperforming loans | $9.657M | $7.857M | $6.518M | | Foreclosed assets | $0.277M | $0.852M | $3.356M | | Total nonperforming assets | $9.934M | $8.709M | $9.874M | Allowance for Credit Losses Roll-Forward ($ millions) | Description | Q1 2024 | | :--- | :--- | | Beginning balance | $40.048M | | Provision for credit losses | $0.560M | | Charge-offs | ($0.227M) | | Recoveries | $0.434M | | Ending balance | $40.815M | Reconciliation of Non-GAAP Financial Measures Adjusted Net Income and Adjusted ROAA HBT Financial's GAAP net income of $15.3 million for Q1 2024 was adjusted for items such as losses on closed branch premises, realized losses on securities sales, and mortgage servicing rights fair value adjustments Reconciliation of Net Income to Adjusted Net Income ($ millions) | Description | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net income (GAAP) | $15.258M | $18.446M | $9.208M | | Total adjustments after tax | $2.815M | $0.826M | $10.651M | | Adjusted net income (Non-GAAP) | $18.073M | $19.272M | $19.859M | Return on Average Assets (ROAA) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | ROAA (GAAP) | 1.23% | 1.46% | 0.78% | | Adjusted ROAA (Non-GAAP) | 1.45% | 1.53% | 1.69% | Tangible Common Equity and Tangible Book Value Per Share After deducting goodwill ($59.8M) and intangible assets ($20.0M) from total stockholders' equity ($496.7M), the tangible common equity was $416.9 million as of March 31, 2024 Tangible Book Value Per Share Reconciliation | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Book value per share (GAAP) | $15.71 | $15.44 | $14.02 | | Tangible book value per share (Non-GAAP) | $13.19 | $12.90 | $11.45 | | Tangible common equity to tangible assets | 8.40% | 8.19% | 7.45% | Return on Average Tangible Common Equity (ROATCE) For Q1 2024, the company's return on average tangible common equity (ROATCE) was 14.83% on a GAAP basis ROAE and ROATCE Performance (Annualized) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | ROAE (GAAP) | 12.42% | 15.68% | 8.84% | | ROATCE (Non-GAAP) | 14.83% | 18.96% | 10.45% | | Adjusted ROAE (Non-GAAP) | 14.72% | 16.38% | 19.08% | | Adjusted ROATCE (Non-GAAP) | 17.57% | 19.81% | 22.55% |