HBT Financial, Inc. Announces Second Quarter 2020 Financial Results

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Second Quarter Highlights

  • Net income of $7.4 million, or $0.27 per diluted share; return on average assets (ROAA) of 0.86%; return on average stockholders' equity (ROAE) of 8.56%; and return on average tangible common equity (ROATCE)(1) of 9.29%
  • Adjusted net income(1) of $8.2 million; or $0.30 per diluted share, adjusted ROAA(1) of 0.95%; adjusted ROAE(1) of 9.49%; and adjusted ROATCE(1) of 10.29%

(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., July 27, 2020 (GLOBE NEWSWIRE) -- HBT Financial, Inc. HBT (the "Company" or "HBT Financial"), the holding company for Heartland Bank and Trust Company and State Bank of Lincoln, today reported net income of $7.4 million, or $0.27 diluted earnings per share, for the second quarter of 2020. This compares to net income of $6.2 million, or $0.23 diluted earnings per share, for the first quarter of 2020, and net income of $14.6 million, or $0.81 diluted earnings per share, for the second quarter of 2019.

Fred L. Drake, Chairman and Chief Executive Officer of HBT Financial, said, "I am proud of our team's efforts to serve our customers and communities during the challenging circumstances of the last several months. We have worked hard to provide the high service levels our customers have come to expect while prioritizing health and safety. Our lenders continue to work closely with borrowers to find the best solutions to help them manage through this economic downturn. We are pleased to have approved and funded $184 million of Paycheck Protection Program (PPP) loans to 2,245 businesses supporting approximately 24,000 employees."

"Although our second quarter results were impacted by the low interest rate environment and reserve build, we remained solidly profitable, which is a reflection of the strength and consistency of our franchise. While we remain cautious about the future impact of the pandemic on our borrowers, so far we have not experienced a significant impact on our portfolio. Our delinquent and nonperforming loans decreased during the second quarter and a relatively small number of our borrowers, for whom we provided a COVID-19 related loan modification, are requiring a second modification. Our strong capital and liquidity levels, solid asset quality trends, and attractive deposit base position us well to continue supporting our stakeholders through this crisis," 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 $11.1 million, or $0.62 diluted earnings per share, for the second 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 $8.2 million, or $0.30 adjusted diluted earnings per share, for the second quarter of 2020. This compares to adjusted net income of $8.4 million, or $0.30 adjusted diluted earnings per share, for the first quarter of 2020, and adjusted net income of $14.3 million, or $0.79 adjusted diluted earnings per share, for the second quarter of 2019 (see "Reconciliation of Non-GAAP Financial Measures" tables).

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2020 was $28.9 million, a decrease of 5.7% from $30.7 million for the first quarter of 2020. The decrease was primarily attributable to lower yields on loans, securities and cash balances offset by an increase in average loans, due to PPP loans, and securities.

Relative to the second quarter of 2019, net interest income decreased $5.0 million, or 14.8%. The decline was primarily attributable to lower yields on average interest-earning assets offset by an increase in average loans due to PPP loans.

Net interest margin for the second quarter of 2020 was 3.49% compared to 4.00% for the first quarter of 2020. The decrease was primarily attributable to the decline in the average yield on earning assets; however, 4 basis points of the decline was due to less acquired loan discount accretion and approximately 15 basis points of the decline was due to excess liquidity that was used to fund the PPP loans and held in overnight funds at the Federal Reserve.

Relative to the second quarter of 2019, net interest margin decreased from 4.36%. The decrease was due primarily to the decline in the average yield on earning assets; however, 5 basis points of the decline was due to less acquired loan accretion and approximately 15 basis points of the decline was due to excess liquidity that was used to fund the PPP loans and held in overnight funds at the Federal Reserve.

Noninterest Income

Noninterest income for the second quarter of 2020 was $8.1 million, an increase of 53.5% from $5.3 million for the first quarter of 2020. Second quarter 2020 results included a negative $0.5 million mortgage servicing rights ("MSR") fair value adjustment compared to a negative $2.2 million fair value adjustment in the first quarter of 2020. A $1.6 million increase in gains on sale of mortgage loans attributable to a strong mortgage refinancing environment more than offset a $0.7 million decline in service charges on deposit accounts associated with lower overdraft incidences and fee waivers.

Relative to the second quarter of 2019, noninterest income increased 9.7% from $7.3 million. The increase was primarily attributable to higher gains on sale of mortgage loans and a less negative MSR fair value adjustment. Partially offsetting these increases was a $0.8 million decline in service charges on deposit accounts associated with lower overdraft incidences and fee waivers.

Noninterest Expense

Noninterest expense for the second quarter of 2020 was $23.5 million, an increase of 0.8% from $23.3 million for the first quarter of 2020. The increase was primarily attributable to higher other noninterest expense, FDIC insurance, and loan collection and servicing expenses. Second quarter of 2020 results included a $0.6 million charge related to the termination of the supplemental executive retirement plan (SERP). The SERP was terminated in June 2019 and was liquidated in June 2020. During the period between termination and liquidation of the SERP, the SERP liability varied inversely with interest rates and resulted in a $0.8 million charge in the first quarter of 2020. The SERP liability will no longer affect earnings in periods subsequent to the second quarter of 2020.

Relative to the second quarter of 2019, noninterest expense decreased 4.3% from $24.6 million. The decrease was primarily due to lower employee benefits costs, which included a $3.3 million charge related to the termination of the SERP in the second quarter of 2019, that was partially offset by higher salaries and medical benefit expenses. Increased other noninterest expenses include higher legal and professional fees associated with public company costs not incurred in the second quarter of 2019.

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.28 billion at June 30, 2020, compared with $2.13 billion at March 31, 2020 and $2.20 billion at June 30, 2019. The $142.8 million increase in loans from March 31, 2020 was primarily due to PPP loans which totaled $178.0 million as of June 30, 2020. Net of PPP loans, the $35.1 million decrease in total loans outstanding, before allowance for loan losses, from March 31, 2020 was primarily attributed to a $49.4 million reduction in balances on existing business lines of credit and a $13.7 million reduction in participation loan balances. The decrease was concentrated in a $57.9 million reduction in commercial and industrial loans partially offset by a $15.3 million increase in construction and land development loans. The $105.3 million decrease in total loans outstanding, net of PPP loans, from June 30, 2019 was primarily due to a $67.1 million reduction in participation loan balances and a $36.6 million reduction in balances on existing business lines of credit.

Deposits

Total deposits were $3.02 billion at June 30, 2020, compared with $2.73 billion at March 31, 2020, and $2.77 billion at June 30, 2019. The $284.8 million increase in total deposits from June 30, 2020 was primarily due to PPP loan proceeds received by commercial customers and federal economic stimulus payments received by retail customers.

Asset Quality

Nonperforming loans totaled $14.0 million, or 0.61% of total loans, at June 30, 2020, compared with $15.4 million, or 0.72% of total loans, at March 31, 2020, and $25.1 million, or 1.14% of total loans, at June 30, 2019. The decrease in nonperforming loans from the end of the prior quarter was primarily attributable to the pay-off of two loans, and to a lesser extent, the transfer of one loan to foreclosed assets. The reduction in nonperforming loans from June 30, 2019 was primarily due to the pay-down or pay-off of several loans, and to a significantly lesser degree, the charge-down and transfer to foreclosed assets of a few loans.

The Company recorded a provision for loan losses of $3.6 million for the second quarter of 2020, which was primarily due to adjustments to qualitative factors to reflect the economic weakness resulting from the COVID-19 pandemic.

Net recoveries for the second quarter of 2020 were $63 thousand, or 0.01% of average loans on an annualized basis compared to net charge-offs of $0.6 million, or 0.11% of average loans on an annualized basis, for the first quarter of 2020, and net charge-offs of $0.3 million, or 0.05% of average loans on an annualized basis, for the second quarter of 2019.

The Company's allowance for loan losses was 1.31% of total loans and 213.04% of nonperforming loans at June 30, 2020, compared with 1.22% of total loans and 169.70% of nonperforming loans at March 31, 2020.

Capital

At June 30, 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
 June 30, Regulatory
 2020Requirements
Total capital to risk-weighted assets 15.13 10.00%
Tier 1 capital to risk-weighted assets 13.92 8.00%
Common equity tier 1 capital ratio 12.43 6.50%
Tier 1 leverage ratio 10.00 5.00%
Total stockholders' equity to total assets 9.93%N/A 
Tangible common equity to tangible assets (1) 9.23N/A 

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

About HBT Financial, Inc.

HBT Financial, Inc. is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company and State Bank of Lincoln. The banks provide 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 June 30, 2020, HBT had total assets of $3.5 billion, total loans of $2.3 billion, and total deposits of $3.0 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  Six Months Ended
  June 30,  March 31,  June 30,  June 30, 
  2020
 2020  2019
 2020
 2019
INTEREST AND DIVIDEND INCOME (dollars in thousands, except per share amounts)
Loans, including fees:               
Taxable $25,337  $26,941  $29,886  $52,278  $59,949 
Federally tax exempt  532   674   736   1,206   1,446 
Securities:               
Taxable  3,172   3,334   3,801   6,506   7,723 
Federally tax exempt  1,227   1,028   1,512   2,255   3,064 
Interest-bearing deposits in bank  79   729   599   808   1,286 
Other interest and dividend income  14   14   16   28   31 
Total interest and dividend income  30,361   32,720   36,550   63,081   73,499 
                
INTEREST EXPENSE               
Deposits  1,042   1,595   2,111   2,637   4,094 
Securities sold under agreements to repurchase  11   20   17   31   31 
Borrowings  1      4   1   7 
Subordinated debentures  399   443   487   842   984 
Total interest expense  1,453   2,058   2,619   3,511   5,116 
Net interest income  28,908   30,662   33,931   59,570   68,383 
PROVISION FOR LOAN LOSSES  3,573   4,355   1,806   7,928   2,582 
Net interest income after provision for loan losses  25,335   26,307   32,125   51,642   65,801 
                
NONINTEREST INCOME               
Card income  1,998   1,792   1,996   3,790   3,828 
Service charges on deposit accounts  1,133   1,834   1,931   2,967   3,694 
Wealth management fees  1,507   1,814   1,493   3,321   3,240 
Mortgage servicing  727   724   818   1,451   1,547 
Mortgage servicing rights fair value adjustment  (508)  (2,171)  (1,120)  (2,679)  (2,122)
Gains on sale of mortgage loans  2,135   536   660   2,671   1,185 
Gains (losses) on securities  57   (52)  36   5   115 
Gains (losses) on foreclosed assets  58   35   169   93   152 
Gains (losses) on other assets  (69)  (3)  368   (72)  1,273 
Title insurance activity        38      167 
Other noninterest income  1,022   743   957   1,765   1,754 
Total noninterest income  8,060   5,252   7,346   13,312   14,833 
                
NONINTEREST EXPENSE               
Salaries  12,674   12,754   11,597   25,428   24,119 
Employee benefits  2,455   2,434   4,723   4,889   5,967 
Occupancy of bank premises  1,642   1,828   1,638   3,470   3,475 
Furniture and equipment  609   603   716   1,212   1,505 
Data processing  1,672   1,586   1,390   3,258   2,552 
Marketing and customer relations  817   1,044   1,103   1,861   2,036 
Amortization of intangible assets  305   317   376   622   752 
FDIC insurance  218   36   208   254   427 
Loan collection and servicing  494   348   612   842   1,354 
Foreclosed assets  88   89   165   177   329 
Other noninterest expense  2,525   2,268   2,033   4,793   4,257 
Total noninterest expense  23,499   23,307   24,561   46,806   46,773 
INCOME BEFORE INCOME TAX EXPENSE  9,896   8,252   14,910   18,148   33,861 
INCOME TAX EXPENSE  2,477   2,031   305   4,508   520 
NET INCOME $7,419  $6,221  $14,605  $13,640  $33,341 
                
EARNINGS PER SHARE - BASIC $0.27  $0.23  $0.81  $0.50  $1.85 
EARNINGS PER SHARE - DILUTED $0.27  $0.23  $0.81  $0.50  $1.85 
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING  27,457,306   27,457,306   18,027,512   27,457,306   18,027,512 
                
PRO FORMA C CORP EQUIVALENT INFORMATION               
Historical income before income tax expense       $14,910     $33,861 
Pro forma C Corp equivalent income tax expense        3,784      8,699 
Pro forma C Corp equivalent net income       $11,126     $25,162 
                
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - BASIC       $0.62     $1.40 
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - DILUTED       $0.62     $1.40 


HBT Financial, Inc.
Consolidated Financial Summary
Consolidated Balance Sheets

          
  June 30,  March 31,  June 30, 
  2020  2020   2019 
  (dollars in thousands)
ASSETS         
Cash and due from banks $21,789  $34,782  $17,151 
Interest-bearing deposits with banks  292,576   230,654   124,575 
Cash and cash equivalents  314,365   265,436   141,726 
          
Interest-bearing time deposits with banks        248 
Debt securities available-for-sale, at fair value  701,353   615,565   651,967 
Debt securities held-to-maturity  73,823   79,741   108,829 
Equity securities  4,815   4,759   4,030 
Restricted stock, at cost  2,498   2,425   2,425 
Loans held for sale  25,934   4,805   5,303 
          
Loans, before allowance for loan losses  2,275,795   2,132,952   2,203,096 
Allowance for loan losses  (29,723)  (26,087)  (22,542)
Loans, net of allowance for loan losses  2,246,072   2,106,865   2,180,554 
          
Bank premises and equipment, net  53,883   54,135   53,993 
Bank premises held for sale  121   121   149 
Foreclosed assets  4,450   4,469   9,707 
Goodwill  23,620   23,620   23,620 
Core deposit intangible assets, net  3,408   3,713   4,701 
Mortgage servicing rights, at fair value  5,839   6,347   8,796 
Investments in unconsolidated subsidiaries  1,165   1,165   1,165 
Accrued interest receivable  12,661   12,096   14,609 
Other assets  27,405   27,847   12,338 
Total assets $3,501,412  $3,213,109  $3,224,160 
          
LIABILITIES AND STOCKHOLDERS' EQUITY         
Liabilities         
Deposits:         
Noninterest-bearing $856,030  $676,341  $662,405 
Interest-bearing  2,159,083   2,053,962   2,111,363 
Total deposits  3,015,113   2,730,303   2,773,768 
          
Securities sold under agreements to repurchase  51,354   40,811   35,646 
Subordinated debentures  37,616   37,599   37,550 
Other liabilities  49,489   64,583   37,326 
Total liabilities  3,153,572   2,873,296   2,884,290 
          
Stockholders' Equity         
Common stock  275   275   181 
Surplus  190,687   190,591   32,288 
Retained earnings  139,667   136,378   302,984 
Accumulated other comprehensive income  17,211   12,569   7,436 
Less cost of treasury stock held        (3,019)
Total stockholders' equity  347,840   339,813   339,870 
Total liabilities and stockholders' equity $3,501,412  $3,213,109  $3,224,160 
          
SHARE INFORMATION         
Ending number shares of common stock outstanding  27,457,306   27,457,306   18,027,512 



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HBT Financial, Inc.
Consolidated Financial Summary

          
  June 30,  March 31,  June 30, 
  2020 2020 2019
  (dollars in thousands)
LOANS         
Commercial and industrial $408,230 $299,266 $352,326
Agricultural and farmland  239,101  228,701  208,923
Commercial real estate - owner occupied  228,506  229,608  244,954
Commercial real estate - non-owner occupied  535,339  540,515  543,444
Multi-family  186,440  177,172  191,734
Construction and land development  247,640  232,311  236,902
One-to-four family residential  308,133  313,925  323,135
Municipal, consumer, and other  122,406  111,454  101,678
Loans, before allowance for loan losses $2,275,795 $2,132,952 $2,203,096
          
PPP LOANS (included above)         
Commercial and industrial $166,868      
Agricultural and farmland  4,027      
Municipal, consumer, and other  7,063      
Total PPP Loans $177,958      


          
  June 30,  March 31,  June 30, 
  2020 2020 2019
  (dollars in thousands)
DEPOSITS         
Noninterest-bearing $856,030 $676,341 $662,405
Interest-bearing demand  880,007  810,074  815,770
Money market  480,497  472,532  472,738
Savings  487,761  444,137  428,439
Time  310,818  327,219  394,416
Total deposits $3,015,113 $2,730,303 $2,773,768



HBT Financial, Inc.
Consolidated Financial Summary

                          
  Three Months Ended  
  June 30, 2020 March 31, 2020 June 30, 2019 
  Average      Average      Average      
  Balance Interest Yield/Cost * Balance Interest Yield/Cost * Balance Interest Yield/Cost * 
  (dollars in thousands) 
ASSETS                         
Loans $2,265,032  $25,869 4.57%$2,141,031  $27,615 5.16%$2,196,934  $30,622 5.58%
Securities  721,817   4,399 2.44  668,572   4,362 2.61  786,759   5,313 2.70 
Deposits with banks  326,216   79 0.10  251,058   729 1.16  125,263   599 1.91 
Other  2,496   14 2.19  2,425   14 2.37  2,439   16 2.64 
Total interest-earning assets  3,315,561  $30,361 3.66% 3,063,086  $32,720 4.27% 3,111,395  $36,550 4.70%
Allowance for loan losses  (26,125)       (22,474)       (21,250)      
Noninterest-earning assets  163,713        148,131        146,208       
Total assets $3,453,149       $3,188,743       $3,236,353       
                          
LIABILITIES AND STOCKHOLDERS' EQUITY                         
Liabilities                         
Interest-bearing deposits:                         
Interest-bearing demand $860,131  $162 0.08%$811,866  $251 0.12%$826,715  $411 0.20%
Money market  477,441   118 0.10  464,124   394 0.34  455,454   489 0.43 
Savings  474,609   50 0.04  434,276   70 0.06  433,125   69 0.06 
Time  317,965   712 0.90  341,770   880 1.03  411,514   1,142 1.11 
Total interest-bearing deposits  2,130,146   1,042 0.20  2,052,036   1,595 0.31  2,126,808   2,111 0.40 
Securities sold under agreements to repurchase  53,867   11 0.08  41,968   20 0.19  40,851   17 0.17 
Borrowings  2,582   1 0.03  221    0.52  549   4 2.62 
Subordinated debentures  37,605   399 4.24  37,589   443 4.72  37,544   487 5.19 
Total interest-bearing liabilities  2,224,200  $1,453 0.26% 2,131,814  $2,058 0.39% 2,205,752  $2,619 0.47%
Noninterest-bearing deposits  824,232        670,714        662,731       
Noninterest-bearing liabilities  58,177        44,696        29,257       
Total liabilities  3,106,609        2,847,224        2,897,740       
Stockholders' Equity  346,540        341,519        338,613       
Total liabilities and stockholders' equity $3,453,149       $3,188,743       $3,236,353       
                          
Net interest income/Net interest margin (3)    $28,908 3.49%   $30,662 4.00%   $33,931 4.36%
Tax-equivalent adjustment (2)     483 0.06     463 0.06     606 0.08 
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)    $29,391 3.55%   $31,125 4.06%   $34,537 4.44%
Net interest rate spread (4)       3.40%      3.88%      4.23%
Net interest-earning assets (5) $1,091,361       $931,272       $905,643       
Ratio of interest-earning assets to interest-bearing liabilities  1.49        1.44        1.41       
Cost of total deposits       0.14%      0.23%      0.30%

* 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

                  
  Six Months Ended  
  June 30, 2020 June 30, 2019 
  Average     Average     
  Balance Interest Yield/Cost * Balance Interest Yield/Cost * 
  (dollars in thousands)
ASSETS                 
Loans $2,203,031  $53,484 4.86%$2,180,722  $61,395 5.63%
Securities  695,194   8,761 2.52  796,577   10,787 2.70 
Deposits with banks  288,637   808 0.56  128,445   1,286 2.00 
Other  2,461   28 2.28  2,578   31 2.43 
Total interest-earning assets  3,189,323  $63,081 3.96% 3,108,322  $73,499 4.73%
Allowance for loan losses  (24,300)       (20,848)      
Noninterest-earning assets  155,923        147,357       
Total assets $3,320,946       $3,234,831       
                  
LIABILITIES AND STOCKHOLDERS' EQUITY                 
Liabilities                 
Interest-bearing deposits:                 
Interest-bearing demand $835,999  $413 0.10%$826,586  $828 0.20%
Money market  470,782   512 0.22  449,021   859 0.38 
Savings  454,442   120 0.05  429,078   137 0.06 
Time  329,867   1,592 0.97  422,137   2,270 1.08 
Total interest-bearing deposits  2,091,090   2,637 0.25  2,126,822   4,094 0.38 
Securities sold under agreements to repurchase  47,917   31 0.13  41,466   31 0.15 
Borrowings  1,402   1 0.07  553   7 2.59 
Subordinated debentures  37,597   842 4.48  37,536   984 5.24 
Total interest-bearing liabilities  2,178,006  $3,511 0.32% 2,206,377  $5,116 0.46%
Noninterest-bearing deposits  747,473        656,714       
Noninterest-bearing liabilities  51,437        28,879       
Total liabilities  2,976,916        2,891,970       
Stockholders' Equity  344,030        342,861       
Total liabilities and stockholders' equity $3,320,946        3,234,831       
                  
Net interest income/Net interest margin (3)    $59,570 3.74%   $68,383 4.40%
Tax-equivalent adjustment (2)     946 0.05     1,216 0.08 
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)    $60,516 3.79%   $69,599 4.48%
Net interest rate spread (4)       3.64%      4.27%
Net interest-earning assets (5) $1,011,317       $901,945       
Ratio of interest-earning assets to interest-bearing liabilities  1.46        1.41       
Cost of  total deposits       0.19%      0.29%

* 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

           
  June 30,  March 31,  June 30,  
  2020 2020 2019 
  (dollars in thousands) 
NONPERFORMING ASSETS          
Nonaccrual $13,945 $15,372 $25,051 
Past due 90 days or more, still accruing (1)  7    2 
Total nonperforming loans  13,952  15,372  25,053 
Foreclosed assets  4,450  4,469  9,707 
Total nonperforming assets $18,402 $19,841 $34,760 
           
NONPERFORMING ASSETS (Originated) (2)          
Nonaccrual $9,059 $10,041 $15,985 
Past due 90 days or more, still accruing  7    2 
Total nonperforming loans (originated)  9,066  10,041  15,987 
Foreclosed assets  1,092  965  1,510 
Total nonperforming (originated) $10,158 $11,006 $17,497 
           
NONPERFORMING ASSETS (Acquired) (2)          
Nonaccrual $4,886 $5,331 $9,066 
Past due 90 days or more, still accruing (1)       
Total nonperforming loans (acquired)  4,886  5,331  9,066 
Foreclosed assets  3,358  3,504  8,197 
Total nonperforming assets (acquired) $8,244 $8,835 $17,263 
           
Allowance for loan losses $29,723 $26,087 $22,542 
           
Loans, before allowance for loan losses $2,275,795 $2,132,952 $2,203,096 
Loans, before allowance for loan losses (originated) (2)  2,132,189  1,982,067  2,005,250 
Loans, before allowance for loan losses (acquired) (2)  143,606  150,885  197,846 
           
CREDIT QUALITY RATIOS          
Allowance for loan losses to loans, before allowance for loan losses  1.31% 1.22% 1.02%
Allowance for loan losses to nonperforming loans  213.04  169.70  89.98 
Nonperforming loans to loans, before allowance for loan losses  0.61  0.72  1.14 
Nonperforming assets to total assets  0.53  0.62  1.08 
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets  0.81  0.93  1.57 
           
CREDIT QUALITY RATIOS (Originated) (2)          
Nonperforming loans to loans, before allowance for loan losses  0.43% 0.51% 0.80%
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets  0.48  0.56  0.87 
           
CREDIT QUALITY RATIOS (Acquired) (2)          
Nonperforming loans to loans, before allowance for loan losses  3.40% 3.53% 4.58%
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets  5.61  5.72  8.38 

(1) Excludes loans acquired with deteriorated credit quality that are past due 90 or more days, still accruing totaling $0.1 million, $0.3 million, and $0.5 million as of June 30, 2020, March 31, 2020, and June 30, 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 Heartland Bank and Trust Company or State Bank of Lincoln. 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  Six Months Ended
  June 30,  March 31,  June 30,  June 30, 
  2020
 2020
 2019
 2020
 2019
ALLOWANCE FOR LOAN LOSSES (dollars in thousands)
Beginning balance $26,087  $22,299  $21,013  $22,299  $20,509 
Provision  3,573   4,355   1,806   7,928   2,582 
Charge-offs  (160)  (1,221)  (966)  (1,381)  (1,499)
Recoveries  223   654   689   877   950 
Ending balance $29,723  $26,087  $22,542  $29,723  $22,542 
                
Net charge-offs (recoveries) $(63) $567  $277  $504  $549 
Net charge-offs (recoveries) - (originated) (1)  3   172   (238)  175   (42)
Net charge-offs (recoveries) - (acquired) (1)  (66)  395   515   329   591 
                
Average loans, before allowance for loan losses $2,265,032  $2,141,031  $2,196,934  $2,203,031  $2,180,722 
Average loans, before allowance for loan losses (originated) (1)  2,117,131   1,984,066   1,990,015   2,050,377   1,968,147 
Average loans, before allowance for loan losses (acquired) (1)  147,901   156,965   206,919   152,654   212,575 
                
Net charge-offs to average loans, before allowance for loan losses *  (0.01)%  0.11  0.05%  0.05  0.05%
Net charge-offs to average loans, before allowance for loan losses (originated) * (1)     0.03   (0.05)  0.02    
Net charge-offs to average loans, before allowance for loan losses (acquired) * (1)  (0.18)  1.01   1.00   0.43   0.56 

* 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 Heartland Bank and Trust Company or State Bank of Lincoln. 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  Six Months Ended  
  June 30,  March 31,  June 30,  June 30,  
  2020 2020 2019 2020 2019 
  (dollars in thousands, except per share amounts) 
EARNINGS AND PER SHARE INFORMATION                
Net income $7,419 $6,221 $14,605 $13,640 $33,341 
Earnings per share - Basic  0.27  0.23  0.81  0.50  1.85 
Earnings per share - Diluted  0.27  0.23  0.81  0.50  1.85 
                 
C Corp equivalent net income (1)  N/A  N/A $11,126  N/A $25,162 
C Corp equivalent earnings per share - Basic (1)  N/A  N/A  0.62  N/A  1.40 
C Corp equivalent earnings per share - Diluted (1)  N/A  N/A  0.62  N/A  1.40 
                 
Book value per share $12.67 $12.38 $18.85       
                 
Ending number shares of common stock outstanding  27,457,306  27,457,306  18,027,512       
Weighted average shares of common stock outstanding  27,457,306  27,457,306  18,027,512  27,457,306  18,027,512 
                 
SUMMARY RATIOS                
Net interest margin *  3.49% 4.00% 4.36% 3.74% 4.40%
Efficiency ratio  62.74  64.01  58.59  63.37  55.30 
Loan to deposit ratio  75.48  78.12  79.43       
                 
Return on average assets *  0.86% 0.78% 1.81% 0.82% 2.06%
Return on average stockholders' equity *  8.56  7.29  17.25  7.93  19.45 
                 
C Corp equivalent return on average assets * (1)  N/A  N/A  1.38% N/A  1.56%
C Corp equivalent return on average stockholders' equity * (1)  N/A  N/A  13.14  N/A  14.68 
                 
NON-GAAP FINANCIAL MEASURES                
Adjusted net income (2) $8,218 $8,379 $14,308 $16,597 $28,667 
Adjusted earnings per share - Basic (2)  0.30  0.30  0.79  0.60  1.59 
Adjusted earnings per share - Diluted (2)  0.30  0.30  0.79  0.60  1.59 
                 
Tangible book value per share (2) $11.68 $11.38 $17.28       
                 
Net interest margin (tax equivalent basis) * (2)  3.55% 4.06% 4.44% 3.79% 4.48%
Efficiency ratio (tax equivalent basis) (2)  61.93  63.20  57.74  62.56  54.51 
                 
Adjusted return on average assets * (2)  0.95% 1.05% 1.77% 1.00% 1.77%
Adjusted return on average stockholders' equity * (2)  9.49  9.81  16.90  9.65  16.72 
                 
Return on average tangible common equity * (2)  9.29% 7.92% 18.84% 8.61% 21.23%
C Corp equivalent return on average tangible common equity * (1) (2)  N/A  N/A  14.35  N/A  16.02 
Adjusted return on average tangible common equity * (2)  10.29  10.67  18.46  10.48  18.25 

* Annualized measure.
(1) Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent provision for income tax 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  Six Months Ended
  June 30,  March 31,  June 30,  June 30, 
  2020
 2020
 2019
 2020
 2019
  (dollars in thousands)
Net income $7,419  $6,221  $14,605  $13,640  $33,341 
C Corp equivalent adjustment (2)        (3,479)     (8,179)
C Corp equivalent net income (2)  7,419   6,221   11,126   13,640   25,162 
Adjustments:               
Net earnings (losses) from closed or sold operations, including gains on sale (1)        (14)     536 
Charges related to termination of certain employee benefit plans  (609)  (848)  (3,316)  (1,457)  (3,316)
Mortgage servicing rights fair value adjustment  (508)  (2,171)  (1,120)  (2,679)  (2,122)
Total adjustments  (1,117)  (3,019)  (4,450)  (4,136)  (4,902)
Tax effect of adjustments  318   861   1,268   1,179   1,397 
Less adjustments after tax effect  (799)  (2,158)  (3,182)  (2,957)  (3,505)
Adjusted net income $8,218  $8,379  $14,308  $16,597  $28,667 
                
Average assets $3,453,149  $3,188,743  $3,236,353  $3,320,946  $3,234,831 
                
Return on average assets *  0.86%  0.78  1.81%  0.82   2.06%
C Corp equivalent return on average assets * (2)  N/A  N/A  1.38   N/A  1.56 
Adjusted return on average assets *  0.95   1.05   1.77   1.00   1.77 

* 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 provision for income tax 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  Six Months Ended
  June 30,  March 31,  June 30,  June 30, 
  2020
 2020
 2019 2020  2019
  (dollars in thousands, except per share amounts)
Numerator:               
Net income $7,419  $6,221  $14,605 $13,640  $33,341
Earnings allocated to unvested restricted stock units (1)  (19)  (15)    (34)  
Numerator for earnings per share - basic and diluted $7,400  $6,206  $14,605 $13,606  $33,341
                
C Corp equivalent net income (3)  N/A  N/A $11,126  N/A $25,162
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 $11,126  N/A $25,162
                
Adjusted net income $8,218  $8,379  $14,308 $16,597  $28,667
Earnings allocated to unvested restricted stock units (1)  (22)  (19)    (41)  
Numerator for adjusted earnings per share - basic and diluted $8,196  $8,360  $14,308 $16,556  $28,667
                
Denominator:               
Weighted average common shares outstanding  27,457,306   27,457,306   18,027,512 $27,457,306  $18,027,512
Dilutive effect of outstanding restricted stock units (2)             
Weighted average common shares outstanding, including all dilutive potential shares  27,457,306   27,457,306   18,027,512 $27,457,306  $18,027,512
                
Earnings per share - Basic $0.27  $0.23  $0.81 $0.50  $1.85
Earnings per share - Diluted $0.27  $0.23  $0.81 $0.50  $1.85
                
C Corp equivalent earnings per share - Basic (3)  N/A  N/A $0.62  N/A $1.40
C Corp equivalent earnings per share - Diluted (3)  N/A  N/A $0.62  N/A $1.40
                
Adjusted earnings per share - Basic $0.30  $0.30  $0.79 $0.60  $1.59
Adjusted earnings per share - Diluted $0.30  $0.30  $0.79 $0.60  $1.59

(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 June 30, 2020 and March 31, 2020 and during the six months ended June 30, 2020. There were no restricted stock units outstanding during the three and six months ended June 30, 2019.
(3) Reflects adjustment to our historical net income for each period to give effect to the C Corp equivalent provision for income tax 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  Six Months Ended  
  June 30,  March 31,  June 30,  June 30,  
  2020 2020 2019 2020 2019 
  (dollars in thousands) 
Net interest income (tax equivalent basis)                
Net interest income $28,908 $30,662 $33,931 $59,570 $68,383 
Tax-equivalent adjustment (1)  483  463  606  946  1,216 
Net interest income (tax equivalent basis) (1) $29,391 $31,125 $34,537 $60,516 $69,599 
                 
Net interest margin (tax equivalent basis)                
Net interest margin *  3.49% 4.00% 4.36% 3.74% 4.40%
Tax-equivalent adjustment * (1)  0.06  0.06  0.08  0.05  0.08 
Net interest margin (tax equivalent basis) * (1)  3.55% 4.06% 4.44% 3.79% 4.48%
                 
Average interest-earning assets $3,315,561 $3,063,086 $3,111,395 $3,189,323 $3,108,322 

* 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  Six Months Ended  
  June 30,  March 31,  June 30,  June 30,  
  2020 2020 2019 2020 2019 
  (dollars in thousands) 
Efficiency ratio (tax equivalent basis)                
Total noninterest expense $23,499 $23,307 $24,561 $46,806 $46,773 
Less: amortization of intangible assets  305  317  376  622  752 
Adjusted noninterest expense $23,194 $22,990 $24,185 $46,184 $46,021 
                 
Net interest income $28,908 $30,662 $33,931 $59,570 $68,383 
Total noninterest income  8,060  5,252  7,346  13,312  14,833 
Operating revenue  36,968  35,914  41,277  72,882  83,216 
Tax-equivalent adjustment (1)  483  463  606  946  1,216 
Operating revenue (tax equivalent basis) (1) $37,451 $36,377 $41,883 $73,828 $84,432 
                 
Efficiency ratio  62.74% 64.01% 58.59% 63.37% 55.30%
Efficiency ratio (tax equivalent basis) (1)  61.93  63.20  57.74  62.56  54.51 

(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

           
  June 30,  March 31,  June 30,  
  2020 2020 2019 
  (dollars in thousands) 
Tangible Common Equity          
Total stockholders' equity $347,840 $339,813 $339,870 
Less: Goodwill  23,620  23,620  23,620 
Less: Core deposit intangible assets, net  3,408  3,713  4,701 
Tangible common equity $320,812 $312,480 $311,549 
           
Tangible assets          
Total assets $3,501,412 $3,213,109 $3,224,160 
Less: Goodwill  23,620  23,620  23,620 
Less: Core deposit intangible assets, net  3,408  3,713  4,701 
Tangible assets $3,474,384 $3,185,776 $3,195,839 
           
Total stockholders' equity to total assets  9.93% 10.58% 10.54%
Tangible common equity to tangible assets  9.23  9.81  9.75 
           
Ending number shares of common stock outstanding  27,457,306  27,457,306  18,027,512 
           
Book value per share $12.67 $12.38 $18.85 
Tangible book value per share  11.68  11.38  17.28 


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

                 
  Three Months Ended  Six Months Ended  
  June 30,  March 31,  June 30,  June 30,  
  2020 2020 2019 2020 2019 
  (dollars in thousands) 
Average Tangible Common Equity                
Total stockholders' equity $346,540 $341,519 $338,613 $344,030 $342,861 
Less: Goodwill  23,620  23,620  23,620  23,620  23,620 
Less: Core deposit intangible assets, net  3,589  3,898  4,919  3,743  5,109 
Average tangible common equity $319,331 $314,001 $310,074 $316,667 $314,132 
                 
Net income $7,419 $6,221 $14,605 $13,640 $33,341 
C Corp equivalent net income (1)  N/A  N/A  11,126  N/A  25,162 
Adjusted net income  8,218  8,379  14,308  16,597  28,667 
                 
Return on average stockholders' equity *  8.56% 7.29% 17.25% 7.93% 19.45%
C Corp equivalent return on average stockholders' equity * (1)  N/A  N/A  13.14  N/A  14.68 
Adjusted return on average stockholders' equity *  9.49  9.81  16.90  9.65  16.72 
                 
Return on average tangible common equity *  9.29% 7.92% 18.84% 8.61% 21.23%
C Corp equivalent return on average tangible common equity * (1)  N/A  N/A  14.35  N/A  16.02 
Adjusted return on average tangible common equity *  10.29  10.67  18.46  10.48  18.25 

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

 

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Actual Rev
Rev Surprise
Posted In: EarningsPress Releases
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