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HBT Financial, Inc. Announces Fourth Quarter 2020 Financial Results

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Fourth Quarter Highlights

  • Net income of $12.6 million, or $0.46 per diluted share; return on average assets (ROAA) of 1.38%; return on average stockholders’ equity (ROAE) of 14.00%; and return on average tangible common equity (ROATCE)(1) of 15.12%
  • Adjusted net income(1) of $12.4 million; or $0.45 per diluted share, adjusted ROAA(1) of 1.36%; adjusted ROAE(1) of 13.71%; and adjusted ROATCE(1) of 14.81%

 (1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.

BLOOMINGTON, Ill., Jan. 28, 2021 — HBT Financial, Inc. (NASDAQ: HBT) (the “Company” or “HBT Financial”), the holding company for Heartland Bank and Trust Company, today reported net income of $12.6 million, or $0.46 diluted earnings per share, for the fourth quarter of 2020. This compares to net income of $10.6 million, or $0.38 diluted earnings per share, for the third quarter of 2020, and net income of $16.1 million, or $0.61 diluted earnings per share, for the fourth quarter of 2019.

Fred L. Drake, Chairman and Chief Executive Officer of HBT Financial, said, “Despite the ongoing challenges presented by the pandemic that have impacted loan demand in our markets, we continued to produce a high level of profitability. Our consistent performance reflects the strong foundation we have built upon an attractive, stable deposit base, conservative underwriting, and diverse sources of non-interest income.

“With ample liquidity, capital and reserves, we are well positioned to continue supporting our customers and communities through this crisis while generating solid results for our shareholders. As economic conditions improve, we will be well positioned to continue growing our balance sheet through our ongoing expansion in our existing markets and potential acquisition opportunities, which we believe will help us to generate earnings growth and further enhance the value of our franchise in the years ahead,” said Mr. Drake.

C Corp Equivalent Net Income

Prior to October 11, 2019, the Company operated as an S Corporation for U.S. federal and state income tax purposes. Effective October 11, 2019, the Company voluntarily revoked its S Corporation status and became a taxable entity (C Corporation). As such, any periods prior to October 11, 2019 only reflect state replacement taxes. To facilitate comparison, the Company reports its C Corp equivalent financial results, which do not reflect the additional shares issued in the initial public offering (the “IPO”) for periods prior to the IPO.

The Company reported C Corp equivalent net income of $15.1 million, or $0.58 diluted earnings per share, for the fourth quarter of 2019. Adjusted Net Income

In addition to reporting C Corp equivalent results, the Company believes adjusted net income and adjusted earnings per share, which adjust for the additional C Corp equivalent tax expense for periods prior to October 11, 2019, net earnings (losses) from closed or sold operations, charges related to termination of certain employee benefit plans, realized gains (losses) on sales of securities, and mortgage servicing rights (“MSR”) fair value adjustments, provide investors with additional insight into its operational performance. The Company reported adjusted net income of $12.4 million, or $0.45 adjusted diluted earnings per share, for the fourth quarter of 2020. This compares to adjusted net income of $10.8 million, or $0.39 adjusted diluted earnings per share, for the third quarter of 2020, and adjusted net income of $14.4 million, or $0.55 adjusted diluted earnings per share, for the fourth quarter of 2019 (see “Reconciliation of Non-GAAP Financial Measures” tables).

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2020 was $29.2 million, an increase of 1.0% from $28.9 million for the third quarter of 2020 due primarily to growth in average interest-earning assets.

Relative to the fourth quarter of 2019, net interest income decreased $3.1 million, or 9.6%. The decline was primarily attributable to lower yields on average interest-earning assets.

Net interest margin for the fourth quarter of 2020 was 3.31%, compared to 3.39% for the third quarter of 2020. The decrease was primarily attributable to a full quarter’s impact of subordinated notes issued in September 2020. The contribution of acquired loan discount accretion to net interest margin remained low at 2 basis points during both the third and fourth quarter of 2020.

Relative to the fourth quarter of 2019, net interest margin decreased from 4.09%. The decrease was due primarily to the decline in the average yield on earning assets. The contribution of acquired loan discount accretion to net interest margin was 2 basis points during the fourth quarter of 2019.

Noninterest Income

Noninterest income for the fourth quarter of 2020 was $11.1 million, an increase of 10.3% from $10.1 million for the third quarter of 2020. The increase was partially attributable to a $0.6 million increase in wealth management fees. Fourth quarter 2020 results included a positive $0.4 million mortgage servicing rights (“MSR”) fair value adjustment compared to a negative $0.3 million fair value adjustment in the third quarter of 2020.

Relative to the fourth quarter of 2019, noninterest income increased 7.3% from $10.3 million. The increase was primarily attributable to higher gains on sale of mortgage loans and higher wealth management fees. Partially offsetting these increases were a $0.5 million decline in service charges on deposit accounts and a $0.4 million decline in other noninterest income.

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 was $22.7 million, an increase of 0.8% from $22.5 million for the third quarter of 2020. The increase was primarily attributable to a $0.3 million increase in data processing costs, including $0.2 million of nonrecurring costs related to systems conversion for the consolidation of State Bank of Lincoln into Heartland Bank and Trust Company.

Relative to the third quarter of 2019, noninterest expense increased 3.3% from $22.0 million. Lower loan collection and servicing expense was more than offset by increases in FDIC insurance, data processing and other noninterest expenses. 

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.25 billion at December 31, 2020, compared with $2.28 billion at September 30, 2020 and $2.16 billion at December 31, 2019. The $32.6 million decrease in loans from September 30, 2020 includes a $16.2 million decrease in PPP loans. The remaining decrease was not attributable to any specific factor. The $80.3 million decrease in total loans outstanding, net of PPP loans from December 31, 2019 was primarily due to a $43.2 million reduction in balances on existing lines of credit and a $19.0 million decrease in balances of participation loans purchased.

Deposits

Total deposits were $3.13 billion at December 31, 2020, compared with $3.02 billion at September 30, 2020 and $2.78 billion at December 31, 2019. Relative to the previous quarter, increases in interest-bearing demand, noninterest-bearing and savings balances were partially offset by declines in money market and time deposit balances in the fourth quarter of 2020.

Asset Quality

Nonperforming loans totaled $10.0 million, or 0.44% of total loans, at December 31, 2020, compared with $15.2 million, or 0.67% of total loans, at September 30, 2020, and $19.0 million, or 0.88% of total loans, at December 31, 2019. The decrease in nonperforming loans from September 30, 2020 was primarily attributable to the pay down and subsequent return to accrual status of one agriculture credit that totaled $4.2 million at September 30, 2020 and $3.8 million at December 31, 2020. The $9.0 million reduction in nonperforming loans from December 31, 2019 was primarily due to the referenced agriculture credit that totaled $5.0 million at December 31, 2019, as well as the payoff/pay down of 5 loan relationships that totaled approximately $4.2 million since December 31, 2019.

The Company recorded a provision for loan losses of $0.4 million for the fourth quarter of 2020, which was primarily due to a $3.2 million increase in specific reserves on loans individually evaluated for impairment, significantly offset by adjustments to qualitative factors to reflect changes in the economic environment and improved asset quality metrics.

Net charge-offs for the fourth quarter of 2020 were $0.2 million, or 0.04% of average loans on an annualized basis, compared to net charge-offs of $0.2 million, or 0.04% of average loans on an annualized basis, for the third quarter of 2020, and net charge-offs of $0.6 million, or 0.11% of average loans on an annualized basis, for the fourth quarter of 2019.

The Company’s allowance for loan losses was 1.42% of total loans and 319.66% of nonperforming loans at December 31, 2020, compared with 1.39% of total loans and 208.14% of nonperforming loans at September 30, 2020.

Capital

At December 31, 2020, the Company exceeded all regulatory capital requirements under Basel III and was considered to be “well-capitalized,” as summarized in the following table:

    Well Capitalized
  December 31,  Regulatory
  2020 Requirements
Total capital to risk-weighted assets 17.45 % 10.00 %
Tier 1 capital to risk-weighted assets 14.55 % 8.00 %
Common equity tier 1 capital ratio 13.06 % 6.50 %
Tier 1 leverage ratio 9.94 % 5.00 %
Total stockholders’ equity to total assets 9.93 % N/A  
Tangible common equity to tangible assets (1) 9.27 % N/A  

(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.

Stock Repurchase Program

On November 3, 2020, the Company announced that its Board of Directors approved a stock repurchase program that authorizes the Company to repurchase up to $15 million of its common stock. The Company did not repurchase any shares of its common stock during the fourth quarter of 2020.

Annualization Factor

The method used to calculate annualization factors for interim period ratios changed in the third quarter of 2020 from financial information previously presented. The annualization factor is now calculated using the number of days in the year divided by the number of days in the interim period. Prior to the third quarter of 2020, annualization factors were calculated as 4 divided by the number of quarters in the interim period, or an annualization factor of 4 for a quarterly period. The change was applied retrospectively to all periods presented and did not have a material impact on the annualized interim ratios.

About HBT Financial, Inc.

HBT Financial, Inc. is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company. The bank provides a comprehensive suite of business, commercial, wealth management, and retail banking products and services to individuals, businesses and municipal entities throughout Central and Northeastern Illinois through 63 branches. As of December 31, 2020, HBT had total assets of $3.7 billion, total loans of $2.2 billion, and total deposits of $3.1 billion. HBT is a longstanding Central Illinois company, with banking roots that can be traced back 100 years.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. These non-GAAP financial measures include net interest income (tax-equivalent basis), net interest margin (tax-equivalent basis), originated loans and acquired loans and any ratios derived therefrom, efficiency ratio (tax-equivalent basis), tangible common equity to tangible assets, tangible book value per share, adjusted net income, adjusted return on average assets, adjusted return on average stockholders’ equity, and adjusted return on average tangible common equity. Our management uses these non-GAAP financial measures, together with the related GAAP financial measures, in its analysis of our performance and in making business decisions. Management believes that it is a standard practice in the banking industry to present these non-GAAP financial measures, and accordingly believes that providing these measures may be useful for peer comparison purposes. These disclosures should not be viewed as substitutes for the results determined to be in accordance with GAAP; nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures in the “Reconciliation of Non-GAAP Financial Measures” tables.

Forward-Looking Statements

Readers should note that in addition to the historical information contained herein, this press release includes “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including but not limited to statements about the Company’s plans, objectives, future performance, goals, future earnings levels, and future loan growth. These statements are subject to many risks and 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 these forward-looking statements include, but are not limited to: the severity, magnitude and duration of the COVID-19 pandemic; the direct and indirect impacts of the COVID-19 pandemic and governmental responses to the pandemic on our operations and our customers’ businesses; the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect our capital levels and earnings, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses; our asset quality and any loan charge-offs; changes in interest rates and general economic, business and political conditions in the United States generally or in Illinois in particular, including in the financial markets; changes in business plans as circumstances warrant; risks relating to acquisitions; and other risks detailed from time to time in filings made by the Company with the Securities and Exchange Commission. Readers should note that the forward-looking statements included in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “will,” “propose,” “may,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue,” or similar terminology. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

CONTACT: Matthew Keating HBTIR@hbtbank.com (310) 622-8230

HBT Financial, Inc. Consolidated Financial Summary Consolidated Statements of Income

  Three Months Ended   Year Ended
  December 31,    September 30,    December 31,    December 31, 
  2020   2020     2019     2020     2019  
                           
INTEREST AND DIVIDEND INCOME (dollars in thousands, except per share amounts)
Loans, including fees:                            
Taxable $ 25,497   $ 25,118     $ 28,039     $ 102,893     $ 117,296  
Federally tax exempt   555     542       716       2,303       2,846  
Securities:                            
Taxable   3,407     3,266       3,559       13,179       14,854  
Federally tax exempt   1,208     1,233       1,269       4,696       5,728  
Interest-bearing deposits in bank   65     65       1,003       938       2,951  
Other interest and dividend income   14     14       14       56       60  
Total interest and dividend income   30,746     30,238       34,600       124,065       143,735  
                             
INTEREST EXPENSE                            
Deposits   741     843       1,838       4,221       7,932  
Securities sold under agreements to repurchase   8     9       24       48       72  
Borrowings       1       2       2       9  
Subordinated notes   469     147             616        
Junior subordinated debentures issued to capital trusts   364     367       460       1,573       1,922  
Total interest expense   1,582     1,367       2,324       6,460       9,935  
Net interest income   29,164     28,871       32,276       117,605       133,800  
PROVISION FOR LOAN LOSSES   430     2,174       138       10,532       3,404  
Net interest income after provision for loan losses   28,734     26,697       32,138       107,073       130,396  
                             
NONINTEREST INCOME                            
Card income   2,151     2,146       1,952       8,087       7,765  
Service charges on deposit accounts   1,527     1,493       2,065       5,987       7,870  
Wealth management fees   2,270     1,646       1,911       7,237       6,827  
Mortgage servicing   803     724       801       2,978       3,143  
Mortgage servicing rights fair value adjustment   363     (268 )     582       (2,584 )     (2,400 )
Gains on sale of mortgage loans   2,980     3,184       915       8,835       3,092  
Gains (losses) on securities   30     (2 )     (47 )     33       (5 )
Gains (losses) on foreclosed assets   22     27       808       142       940  
Gains (losses) on other assets       1             (71 )     1,244  
Title insurance activity                         167  
Other noninterest income   946     1,101       1,349       3,812       4,108  
Total noninterest income   11,092     10,052       10,336       34,456       32,751  
                             
NONINTEREST EXPENSE                            
Salaries   12,593     12,595       12,581       50,616       49,003  
Employee benefits   1,490     1,666       1,663       8,045       9,883  
Occupancy of bank premises   1,501     1,609       1,607       6,580       6,867  
Furniture and equipment   556     679       763       2,447       2,813  
Data processing   1,901     1,583       1,547       6,742       5,570  
Marketing and customer relations   925     690       1,036       3,476       3,873  
Amortization of intangible assets   305     305       336       1,232       1,423  
FDIC insurance   231     222       (237 )     707       198  
Loan collection and servicing   463     450       732       1,755       2,633  
Foreclosed assets   154     226       151       557       676  
Other noninterest expense   2,546     2,460       1,771       9,799       8,087  
Total noninterest expense   22,665     22,485       21,950       91,956       91,026  
INCOME BEFORE INCOME TAX EXPENSE   17,161     14,264       20,524       49,573       72,121  
INCOME TAX EXPENSE   4,519     3,701       4,437       12,728       5,256  
NET INCOME $ 12,642   $ 10,563     $ 16,087     $ 36,845     $ 66,865  
                             
EARNINGS PER SHARE – BASIC $ 0.46   $ 0.38     $ 0.61     $ 1.34     $ 3.33  
EARNINGS PER SHARE – DILUTED $ 0.46   $ 0.38     $ 0.61     $ 1.34     $ 3.33  
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING   27,457,306     27,457,306       26,211,282       27,457,306       20,090,270  
                             
PRO FORMA C CORP EQUIVALENT INFORMATION                            
Historical income before income tax expense             $ 20,524           $ 72,121  
Pro forma C Corp equivalent income tax expense               5,436             18,749  
Pro forma C Corp equivalent net income             $ 15,088           $ 53,372  
                             
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE – BASIC           $ 0.58           $ 2.66  
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE – DILUTED           $ 0.58           $ 2.66  

HBT Financial, Inc. Consolidated Financial Summary Consolidated Balance Sheets

  December 31,    September 30,    December 31, 
  2020     2020     2019  
                 
  (dollars in thousands)
ASSETS                
Cash and due from banks $ 24,912     $ 22,347     $ 22,112  
Interest-bearing deposits with banks   287,539       214,377       261,859  
Cash and cash equivalents   312,451       236,724       283,971  
                 
Interest-bearing time deposits with banks               248  
Debt securities available-for-sale, at fair value   922,869       814,798       592,404  
Debt securities held-to-maturity   68,395       74,510       88,477  
Equity securities   4,844       4,814       4,389  
Restricted stock, at cost   2,498       2,498       2,425  
Loans held for sale   14,713       23,723       4,531  
                 
Loans, before allowance for loan losses   2,247,006       2,279,639       2,163,826  
Allowance for loan losses   (31,838 )     (31,654 )     (22,299 )
Loans, net of allowance for loan losses   2,215,168       2,247,985       2,141,527  
                 
Bank premises and equipment, net   52,904       53,271       53,987  
Bank premises held for sale   121       121       121  
Foreclosed assets   4,168       3,857       5,099  
Goodwill   23,620       23,620       23,620  
Core deposit intangible assets, net   2,798       3,103       4,030  
Mortgage servicing rights, at fair value   5,934       5,571       8,518  
Investments in unconsolidated subsidiaries   1,165       1,165       1,165  
Accrued interest receivable   14,255       13,820       13,951  
Other assets   20,664       25,643       16,640  
Total assets $ 3,666,567     $ 3,535,223     $ 3,245,103  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Liabilities                
Deposits:                
Noninterest-bearing $ 882,939     $ 850,306     $ 689,116  
Interest-bearing   2,247,595       2,166,355       2,087,739  
Total deposits   3,130,534       3,016,661       2,776,855  
                 
Securities sold under agreements to repurchase   45,736       45,438       44,433  
Subordinated notes   39,238       39,218        
Junior subordinated debentures issued to capital trusts   37,648       37,632       37,583  
Other liabilities   49,494       40,980       53,314  
Total liabilities   3,302,650       3,179,929       2,912,185  
                 
Stockholders’ Equity                
Common stock   275       275       275  
Surplus   190,875       190,787       190,524  
Retained earnings   154,614       146,101       134,287  
Accumulated other comprehensive income   18,153       18,131       7,832  
Total stockholders’ equity   363,917       355,294       332,918  
Total liabilities and stockholders’ equity $ 3,666,567     $ 3,535,223     $ 3,245,103  
                 
SHARE INFORMATION                
Ending number shares of common stock outstanding   27,457,306       27,457,306       27,457,306  

HBT Financial, Inc. Consolidated Financial Summary

  December 31,    September 30,    December 31, 
  2020   2020   2019
           
  (dollars in thousands)
LOANS                
Commercial and industrial $ 393,312   $ 389,231   $ 307,175
Agricultural and farmland   222,723     235,597     207,776
Commercial real estate – owner occupied   222,360     225,345     231,162
Commercial real estate – non-owner occupied   520,395     532,454     579,757
Multi-family   236,391     199,441     179,073
Construction and land development   225,652     265,758     224,887
One-to-four family residential   306,775     308,365     313,580
Municipal, consumer, and other   119,398     123,448     120,416
Loans, before allowance for loan losses $ 2,247,006   $ 2,279,639   $ 2,163,826
                 
PPP LOANS (included above)                
Commercial and industrial $ 153,860   $ 168,466   $
Agricultural and farmland   3,049     4,179    
Municipal, consumer, and other   6,587     7,095    
Total PPP Loans $ 163,496   $ 179,740   $
  December 31,    September 30,    December 31, 
  2020   2020   2019
           
  (dollars in thousands)
DEPOSITS                
Noninterest-bearing $ 882,939   $ 850,306   $ 689,116
Interest-bearing demand   968,592     885,719     814,639
Money market   462,056     475,047     477,765
Savings   517,473     497,682     438,927
Time   299,474     307,907     356,408
Total deposits $ 3,130,534   $ 3,016,661   $ 2,776,855

HBT Financial, Inc. Consolidated Financial Summary

  Three Months Ended  
  December 31, 2020   September 30, 2020   December 31, 2019  
  Average             Average             Average            
  Balance   Interest   Yield/Cost *   Balance   Interest   Yield/Cost *   Balance   Interest   Yield/Cost *  
                                     
  (dollars in thousands)  
ASSETS                                                
Loans $ 2,295,569     $ 26,052   4.51 % $ 2,277,826     $ 25,660   4.48 % $ 2,162,975     $ 28,755   5.27 %
Securities   932,698       4,615   1.97     831,120       4,499   2.15     700,441       4,828   2.73  
Deposits with banks   277,363       65   0.09     274,022       65   0.09     265,237       1,003   1.50  
Other   2,498       14   2.26     2,498       14   2.29     2,425       14   2.37  
Total interest-earning assets   3,508,128     $ 30,746   3.49 %   3,385,466     $ 30,238   3.55 %   3,131,078     $ 34,600   4.38 %
Allowance for loan losses   (31,749 )               (30,221 )               (22,766 )            
Noninterest-earning assets   157,208                 157,446                 152,961              
Total assets $ 3,633,587               $ 3,512,691               $ 3,261,273              
                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                                                
Liabilities                                                
Interest-bearing deposits:                                                
Interest-bearing demand $ 930,494     $ 111   0.05 % $ 888,941     $ 123   0.05 % $ 820,390     $ 299   0.14 %
Money market   475,183       89   0.07     479,314       96   0.08     486,288       481   0.39  
Savings   506,381       39   0.03     493,278       37   0.03     434,241       71   0.06  
Time   303,617       502   0.66     306,154       587   0.76     359,731       987   1.09  
Total interest-bearing deposits   2,215,675       741   0.13     2,167,687       843   0.15     2,100,650       1,838   0.35  
Securities sold under agreements to repurchase   51,297       8   0.06     51,686       9   0.06     46,028       24   0.21  
Borrowings   326         0.51     1,196       1   0.47     272       2   2.58  
Subordinated notes   39,219       469   4.76     11,976       147   4.87              
Junior subordinated debentures issued to capital trusts   37,638       364   3.84     37,621       367   3.89     37,577       460   4.86  
Total interest-bearing liabilities   2,344,155     $ 1,582   0.27 %   2,270,166     $ 1,367   0.24 %   2,184,527     $ 2,324   0.42 %
Noninterest-bearing deposits   888,390                 846,808                 699,373              
Noninterest-bearing liabilities   41,730                 40,421                 45,589              
Total liabilities   3,274,275                 3,157,395                 2,929,489              
Stockholders’ Equity   359,312                 355,296                 331,784              
Total liabilities and stockholders’ equity $ 3,633,587               $ 3,512,691               $ 3,261,273              
                                                 
Net interest income/Net interest margin (3)       $ 29,164   3.31 %       $ 28,871   3.39 %       $ 32,276   4.09 %
Tax-equivalent adjustment (2)         502   0.05           495   0.06           534   0.07  
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)       $ 29,666   3.36 %       $ 29,366   3.45 %       $ 32,810   4.16 %
Net interest rate spread (4)             3.22 %             3.31 %             3.96 %
Net interest-earning assets (5) $ 1,163,973               $ 1,115,300               $ 946,551              
Ratio of interest-earning assets to interest-bearing liabilities   1.50                 1.49                 1.43              
Cost of total deposits             0.09 %             0.11 %             0.26 %

* Annualized measure.
(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

HBT Financial, Inc. Consolidated Financial Summary

  Year Ended  
  December 31, 2020   December 31, 2019  
  Average           Average          
  Balance   Interest   Yield/Cost   Balance   Interest   Yield/Cost  
                         
  (dollars in thousands)
ASSETS                                
Loans $ 2,245,093     $ 105,196   4.69 % $ 2,178,897     $ 120,142   5.51 %
Securities   789,062       17,875   2.27     759,479       20,582   2.71  
Deposits with banks   282,130       938   0.33     164,986       2,951   1.79  
Other   2,479       56   2.28     2,501       60   2.41  
Total interest-earning assets   3,318,764     $ 124,065   3.74 %   3,105,863     $ 143,735   4.63 %
Allowance for loan losses   (27,661 )               (21,704 )            
Noninterest-earning assets   156,397                 149,227              
Total assets $ 3,447,500               $ 3,233,386              
                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                                
Liabilities                                
Interest-bearing deposits:                                
Interest-bearing demand $ 873,060     $ 647   0.07 % $ 821,480     $ 1,474   0.18 %
Money market   474,033       697   0.15     463,233       1,837   0.40  
Savings   477,260       196   0.04     430,220       278   0.06  
Time   317,308       2,681   0.84     396,560       4,343   1.10  
Total interest-bearing deposits   2,141,661       4,221   0.20     2,111,493       7,932   0.38  
Securities sold under agreements to repurchase   49,714       48   0.10     41,177       72   0.18  
Borrowings   1,080       2   0.22     351       9   2.60  
Subordinated notes   12,869       616   4.79              
Junior subordinated debentures issued to capital trusts   37,613       1,573   4.18     37,553       1,922   5.12  
Total interest-bearing liabilities   2,242,937     $ 6,460   0.29 %   2,190,574     $ 9,935   0.45 %
Noninterest-bearing deposits   807,864                 666,055              
Noninterest-bearing liabilities   45,996                 35,213              
Total liabilities   3,096,797                 2,891,842              
Stockholders’ Equity   350,703                 341,544              
Total liabilities and stockholders’ equity $ 3,447,500                 3,233,386              
                                 
Net interest income/Net interest margin (3)       $ 117,605   3.54 %       $ 133,800   4.31 %
Tax-equivalent adjustment (2)         1,943   0.06           2,309   0.07  
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)       $ 119,548   3.60 %       $ 136,109   4.38 %
Net interest rate spread (4)             3.45 %             4.18 %
Net interest-earning assets (5) $ 1,075,827               $ 915,289              
Ratio of interest-earning assets to interest-bearing liabilities   1.48                 1.42              
Cost of total deposits             0.14 %             0.29 %

(1) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3) Net interest margin represents net interest income divided by average total interest-earning assets.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

HBT Financial, Inc. Consolidated Financial Summary

  December 31,    September 30,    December 31,   
  2020   2020   2019  
             
  (dollars in thousands)  
NONPERFORMING ASSETS                  
Nonaccrual $ 9,939   $ 15,191   $ 19,019  
Past due 90 days or more, still accruing (1)   21     17     30  
Total nonperforming loans   9,960     15,208     19,049  
Foreclosed assets   4,168     3,857     5,099  
Total nonperforming assets $ 14,128   $ 19,065   $ 24,148  
                   
NONPERFORMING ASSETS (Originated) (2)                  
Nonaccrual $ 2,908   $ 10,179   $ 10,811  
Past due 90 days or more, still accruing   21     17     30  
Total nonperforming loans (originated)   2,929     10,196     10,841  
Foreclosed assets   674     939     1,022  
Total nonperforming (originated) $ 3,603   $ 11,135   $ 11,863  
                   
NONPERFORMING ASSETS (Acquired) (2)                  
Nonaccrual $ 7,031   $ 5,012   $ 8,208  
Past due 90 days or more, still accruing (1)            
Total nonperforming loans (acquired)   7,031     5,012     8,208  
Foreclosed assets   3,494     2,918     4,077  
Total nonperforming assets (acquired) $ 10,525   $ 7,930   $ 12,285  
                   
Allowance for loan losses $ 31,838   $ 31,654   $ 22,299  
                   
Loans, before allowance for loan losses $ 2,247,006   $ 2,279,639   $ 2,163,826  
Loans, before allowance for loan losses (originated) (2)   2,126,323     2,148,074     1,998,496  
Loans, before allowance for loan losses (acquired) (2)   120,683     131,565     165,330  
                   
CREDIT QUALITY RATIOS                  
Allowance for loan losses to loans, before allowance for loan losses   1.42 %   1.39 %   1.03 %
Allowance for loan losses to nonperforming loans   319.66     208.14     117.06  
Nonperforming loans to loans, before allowance for loan losses   0.44     0.67     0.88  
Nonperforming assets to total assets   0.39     0.54     0.74  
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets   0.63     0.83     1.11  
                   
CREDIT QUALITY RATIOS (Originated) (2)                  
Nonperforming loans to loans, before allowance for loan losses   0.14 %   0.47 %   0.54 %
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets   0.17     0.52     0.59  
                   
CREDIT QUALITY RATIOS (Acquired) (2)                  
Nonperforming loans to loans, before allowance for loan losses   5.83 %   3.81 %   4.96 %
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets   8.48     5.90     7.25  

(1) Excludes loans acquired with deteriorated credit quality that are past due 90 or more days, still accruing totaling $0.6 million, $30 thousand, and $0.1 million as of December 31, 2020, September 30, 2020, and December 31, 2019, respectively.
(2) Originated loans and acquired loans along with the related credit quality ratios such as nonperforming loans to loans, before allowance for loan losses (originated and acquired) and nonperforming assets to loans, before allowance for loan losses and foreclosed assets (originated and acquired) are non-GAAP financial measures. Originated loans represent loans initially originated by the Company and acquired loans that were refinanced using the Company’s underwriting criteria. Acquired loans represent loans originated under the underwriting criteria used by a bank that was acquired by the Company. We believe these non-GAAP financial measures provide investors with information regarding the credit quality of loans underwritten using the Company’s policies and procedures.

HBT Financial, Inc. Consolidated Financial Summary

  Three Months Ended   Year Ended  
  December 31,    September 30,    December 31,    December 31,   
  2020     2020     2019     2020     2019    
                               
ALLOWANCE FOR LOAN LOSSES (dollars in thousands)  
Beginning balance $ 31,654     $ 29,723     $ 22,761     $ 22,299     $ 20,509    
Provision   430       2,174       138       10,532       3,404    
Charge-offs   (509 )     (1,078 )     (837 )     (2,968 )     (3,273 )  
Recoveries   263       835       237       1,975       1,659    
Ending balance $ 31,838     $ 31,654     $ 22,299     $ 31,838     $ 22,299    
                               
Net charge-offs (recoveries) $ 246     $ 243     $ 600     $ 993     $ 1,614    
Net charge-offs (recoveries) – (originated) (1)   190       (20 )     550       345       732    
Net charge-offs (recoveries) – (acquired) (1)   56       263       50       648       882    
                               
Average loans, before allowance for loan losses $ 2,295,569     $ 2,277,826     $ 2,162,975     $ 2,245,093     $ 2,178,897    
Average loans, before allowance for loan losses (originated) (1)   2,169,256       2,140,376       1,988,658       2,102,904       1,981,658    
Average loans, before allowance for loan losses (acquired) (1)   126,313       137,450       174,317       142,189       197,239    
                               
Net charge-offs to average loans, before allowance for loan losses *   0.04   %   0.04   %   0.11   %   0.04   %   0.07   %
Net charge-offs to average loans, before allowance for loan losses (originated) * (1)   0.03             0.11       0.02       0.04    
Net charge-offs to average loans, before allowance for loan losses (acquired) * (1)   0.18       0.76       0.11       0.46       0.45    

* Annualized measure.
(1) Originated loans and acquired loans along with the related credit quality ratios such as net charge-offs (originated and acquired), average loans, before allowance for loan losses (originated and acquired), and net charge-offs to average loans, before allowance for loan losses (originated and acquired) are non-GAAP financial measures. Originated loans represent loans initially originated by the Company and acquired loans that were refinanced using the Company’s underwriting criteria. Acquired loans represent loans originated under the underwriting criteria used by a bank that was acquired by the Company. We believe these non-GAAP financial measures provide investors with information regarding the credit quality of loans underwritten using the Company’s policies and procedures.

HBT Financial, Inc. Consolidated Financial Summary

  As of or for the Three Months Ended   Year Ended  
  December 31,    September 30,    December 31,    December 31,   
  2020   2020   2019   2020   2019  
                     
  (dollars in thousands, except per share amounts)  
EARNINGS AND PER SHARE INFORMATION                              
Net income $ 12,642   $ 10,563   $ 16,087   $ 36,845   $ 66,865  
Earnings per share – Basic   0.46     0.38     0.61     1.34     3.33  
Earnings per share – Diluted   0.46     0.38     0.61     1.34     3.33  
                               
C Corp equivalent net income (1)   N/A     N/A   $ 15,088     N/A   $ 53,372  
C Corp equivalent earnings per share – Basic (1)   N/A     N/A     0.58     N/A     2.66  
C Corp equivalent earnings per share – Diluted (1)   N/A     N/A     0.58     N/A     2.66  
                               
Book value per share $ 13.25   $ 12.94   $ 12.12              
                               
Ending number shares of common stock outstanding   27,457,306     27,457,306     27,457,306              
Weighted average shares of common stock outstanding   27,457,306     27,457,306     26,211,282     27,457,306     20,090,270  
                               
SUMMARY RATIOS                              
Net interest margin *   3.31 %   3.39 %   4.09 %   3.54 %   4.31 %
Efficiency ratio   55.54     56.98     50.72     59.66     53.80  
Loan to deposit ratio   71.78     75.57     77.92              
                               
Return on average assets *   1.38 %   1.20 %   1.96 %   1.07 %   2.07 %
Return on average stockholders’ equity *   14.00     11.83     19.24     10.51     19.58  
                               
C Corp equivalent return on average assets * (1)   N/A     N/A     1.84 %   N/A     1.65 %
C Corp equivalent return on average stockholders’ equity * (1)   N/A     N/A     18.04     N/A     15.63  
                               
NON-GAAP FINANCIAL MEASURES                              
Adjusted net income (2) $ 12,382   $ 10,755   $ 14,417   $ 39,734   $ 57,427  
Adjusted earnings per share – Basic (2)   0.45     0.39     0.55     1.44     2.86  
Adjusted earnings per share – Diluted (2)   0.45     0.39     0.55     1.44     2.86  
                               
Tangible book value per share (2) $ 12.29   $ 11.97   $ 11.12              
                               
Net interest margin (tax equivalent basis) * (2)   3.36 %   3.45 %   4.16 %   3.60 %   4.38 %
Efficiency ratio (tax equivalent basis) (2)   54.86     56.27     50.10     58.91     53.06  
                               
Adjusted return on average assets * (2)   1.36 %   1.22 %   1.75 %   1.15 %   1.78 %
Adjusted return on average stockholders’ equity * (2)   13.71     12.04     17.24     11.33     16.81  
                               
Return on average tangible common equity * (2)   15.12 %   12.80 %   21.00 %   11.38 %   21.35 %
C Corp equivalent return on average tangible common equity * (1) (2)   N/A     N/A     19.69     N/A     17.04  
Adjusted return on average tangible common equity * (2)   14.81     13.03     18.82     12.28     18.34  

 * Annualized measure.
(1) Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
(2) See “Reconciliation of Non-GAAP Financial Measures” below for reconciliation of non-GAAP financial measures to their most comparable GAAP financial measures.
N/A  Not applicable. 

Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income and Adjusted Return on Average Assets

  Three Months Ended   Year Ended  
  December 31,    September 30,    December 31,    December 31,   
  2020     2020     2019     2020     2019    
                               
  (dollars in thousands)  
Net income $ 12,642     $ 10,563     $ 16,087     $ 36,845     $ 66,865    
C Corp equivalent adjustment (2)               (999 )           (13,493 )  
C Corp equivalent net income (2)   12,642       10,563       15,088       36,845       53,372    
Adjustments:                              
Net earnings (losses) from closed or sold operations, including gains on sale (1)               (9 )           524    
Charges related to termination of certain employee benefit plans               365       (1,457 )     (3,796 )  
Mortgage servicing rights fair value adjustment   363       (268 )     582       (2,584 )     (2,400 )  
Total adjustments   363       (268 )     938       (4,041 )     (5,672 )  
Tax effect of adjustments   (103 )     76       (267 )     1,152       1,617    
Less adjustments after tax effect   260       (192 )     671       (2,889 )     (4,055 )  
Adjusted net income $ 12,382     $ 10,755     $ 14,417     $ 39,734     $ 57,427    
                               
Average assets $ 3,633,587     $ 3,512,691     $ 3,261,273     $ 3,447,500     $ 3,233,386    
                               
Return on average assets *   1.38   %   1.20   %   1.96   %   1.07       2.07   %
C Corp equivalent return on average assets * (2)   N/A       N/A       1.84       N/A       1.65    
Adjusted return on average assets *   1.36       1.22       1.75       1.15       1.78    

* Annualized measure.
(1) Closed or sold operations include HB Credit Company, HBT Insurance, and First Community Title Services, Inc.
(2) Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
N/A  Not applicable. 

Reconciliation of Non-GAAP Financial Measures – Adjusted Earnings Per Share

  Three Months Ended   Year Ended
  December 31,    September 30,    December 31,    December 31, 
  2020     2020     2019   2020     2019
                         
  (dollars in thousands, except per share amounts)
Numerator:                            
Net income $ 12,642     $ 10,563     $ 16,087   $ 36,845     $ 66,865
Earnings allocated to unvested restricted stock units (1)   (31 )     (28 )         (93 )    
Numerator for earnings per share – basic and diluted $ 12,611     $ 10,535     $ 16,087   $ 36,752     $ 66,865
                             
C Corp equivalent net income (3)   N/A       N/A     $ 15,088     N/A     $ 53,372
Earnings allocated to unvested restricted stock units (1) (3)   N/A       N/A           N/A      
Numerator for C Corp equivalent earnings per share – basic and diluted (3)   N/A       N/A     $ 15,088     N/A     $ 53,372
                             
Adjusted net income $ 12,382     $ 10,755     $ 14,417   $ 39,734     $ 57,427
Earnings allocated to unvested restricted stock units (1)   (32 )     (28 )         (101 )    
Numerator for adjusted earnings per share – basic and diluted $ 12,350     $ 10,727     $ 14,417   $ 39,633     $ 57,427
                             
Denominator:                            
Weighted average common shares outstanding   27,457,306       27,457,306       26,211,282     27,457,306       20,090,270
Dilutive effect of outstanding restricted stock units (2)                        
Weighted average common shares outstanding, including all dilutive potential shares   27,457,306       27,457,306       26,211,282     27,457,306       20,090,270
                             
Earnings per share – Basic $ 0.46     $ 0.38     $ 0.61   $ 1.34     $ 3.33
Earnings per share – Diluted $ 0.46     $ 0.38     $ 0.61   $ 1.34     $ 3.33
                             
C Corp equivalent earnings per share – Basic (3)   N/A       N/A     $ 0.58     N/A     $ 2.66
C Corp equivalent earnings per share – Diluted (3)   N/A       N/A     $ 0.58     N/A     $ 2.66
                             
Adjusted earnings per share – Basic $ 0.45     $ 0.39     $ 0.55   $ 1.44     $ 2.86
Adjusted earnings per share – Diluted $ 0.45     $ 0.39     $ 0.55   $ 1.44     $ 2.86

(1) The Company has granted restricted stock units that contain non-forfeitable rights to dividend equivalents. Such restricted stock units are considered participating securities. As such, we have included these restricted stock units in the calculation of basic earnings per share and calculate basic earnings per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings.
(2) Restricted stock units were anti-dilutive and excluded from the calculation of common stock equivalents during the three months ended December 31, 2020 and September 30, 2020 and during the year ended December 31, 2020. There were no restricted stock units outstanding during the three months and year ended December 31, 2019.
(3) Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
N/A  Not applicable. 

Reconciliation of Non-GAAP Financial Measures – Net Interest Margin (Tax Equivalent Basis)

  Three Months Ended   Year Ended  
  December 31,    September 30,    December 31,    December 31,   
  2020   2020   2019   2020   2019  
                     
  (dollars in thousands)  
Net interest income (tax equivalent basis)                              
Net interest income $ 29,164   $ 28,871   $ 32,276   $ 117,605   $ 133,800  
Tax-equivalent adjustment (1)   502     495     534     1,943     2,309  
Net interest income (tax equivalent basis) (1) $ 29,666   $ 29,366   $ 32,810   $ 119,548   $ 136,109  
                               
Net interest margin (tax equivalent basis)                              
Net interest margin *   3.31 %   3.39 %   4.09 %   3.54 %   4.31 %
Tax-equivalent adjustment * (1)   0.05     0.06     0.07     0.06     0.07  
Net interest margin (tax equivalent basis) * (1)   3.36 %   3.45 %   4.16 %   3.60 %   4.38 %
                               
Average interest-earning assets $ 3,508,128   $ 3,385,466   $ 3,131,078   $ 3,318,764   $ 3,105,863  

* Annualized measure.
(1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

Reconciliation of Non-GAAP Financial Measures – Efficiency Ratio (Tax Equivalent Basis)

  Three Months Ended   Year Ended  
  December 31,    September 30,    December 31,    December 31,   
  2020   2020   2019   2020   2019  
                     
  (dollars in thousands)  
Efficiency ratio (tax equivalent basis)                              
Total noninterest expense $ 22,665   $ 22,485   $ 21,950   $ 91,956   $ 91,026  
Less: amortization of intangible assets   305     305     336     1,232     1,423  
Adjusted noninterest expense $ 22,360   $ 22,180   $ 21,614   $ 90,724   $ 89,603  
                               
Net interest income $ 29,164   $ 28,871   $ 32,276   $ 117,605   $ 133,800  
Total noninterest income   11,092     10,052     10,336     34,456     32,751  
Operating revenue   40,256     38,923     42,612     152,061     166,551  
Tax-equivalent adjustment (1)   502     495     534     1,943     2,309  
Operating revenue (tax equivalent basis) (1) $ 40,758   $ 39,418   $ 43,146   $ 154,004   $ 168,860  
                               
Efficiency ratio   55.54 %   56.98 %   50.72 %   59.66 %   53.80 %
Efficiency ratio (tax equivalent basis) (1)   54.86     56.27     50.10     58.91     53.06  

(1) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state tax rate of 9.5%.

Reconciliation of Non-GAAP Financial Measures – Tangible Common Equity to Tangible Assets and Tangible Book Value Per Share

  December 31,    September 30,    December 31,   
  2020   2020   2019  
             
  (dollars in thousands)  
Tangible Common Equity                  
Total stockholders’ equity $ 363,917   $ 355,294   $ 332,918  
Less: Goodwill   23,620     23,620     23,620  
Less: Core deposit intangible assets, net   2,798     3,103     4,030  
Tangible common equity $ 337,499   $ 328,571   $ 305,268  
                   
Tangible assets                  
Total assets $ 3,666,567   $ 3,535,223   $ 3,245,103  
Less: Goodwill   23,620     23,620     23,620  
Less: Core deposit intangible assets, net   2,798     3,103     4,030  
Tangible assets $ 3,640,149   $ 3,508,500   $ 3,217,453  
                   
Total stockholders’ equity to total assets   9.93 %   10.05 %   10.26 %
Tangible common equity to tangible assets   9.27     9.36     9.49  
                   
Ending number shares of common stock outstanding   27,457,306     27,457,306     27,457,306  
                   
Book value per share $ 13.25   $ 12.94   $ 12.12  
Tangible book value per share   12.29     11.97     11.12  

Reconciliation of Non-GAAP Financial Measures – Adjusted Return on Average Stockholders’ Equity and Adjusted Return on Tangible Common Equity

  Three Months Ended   Year Ended  
  December 31,    September 30,    December 31,    December 31,   
  2020   2020   2019   2020   2019  
                     
  (dollars in thousands)  
Average Tangible Common Equity                              
Total stockholders’ equity $ 359,312   $ 355,296   $ 331,784   $ 350,703   $ 341,544  
Less: Goodwill   23,620     23,620     23,620     23,620     23,620  
Less: Core deposit intangible assets, net   2,979     3,284     4,224     3,436     4,748  
Average tangible common equity $ 332,713   $ 328,392   $ 303,940   $ 323,647   $ 313,176  
                               
Net income $ 12,642   $ 10,563   $ 16,087   $ 36,845   $ 66,865  
C Corp equivalent net income (1)   N/A     N/A     15,088     N/A     53,372  
Adjusted net income   12,382     10,755     14,417     39,734     57,427  
                               
Return on average stockholders’ equity *   14.00 %   11.83 %   19.24 %   10.51 %   19.58 %
C Corp equivalent return on average stockholders’ equity * (1)   N/A     N/A     18.04     N/A     15.63  
Adjusted return on average stockholders’ equity *   13.71     12.04     17.24     11.33     16.81  
                               
Return on average tangible common equity *   15.12 %   12.80 %   21.00 %   11.38 %   21.35 %
C Corp equivalent return on average tangible common equity * (1)   N/A     N/A     19.69     N/A     17.04  
Adjusted return on average tangible common equity *   14.81     13.03     18.82     12.28     18.34  

 * Annualized measure.
(1) Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent income tax expense for such period. No such adjustment is necessary for periods subsequent to 2019.
N/A  Not applicable.

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