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HBT Financial, Inc. Announces First Quarter 2020 Financial Results

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First Quarter Highlights

  • Net income of $6.2 million, or $0.23 per diluted share; return on average assets (ROAA) of 0.78%; return on average stockholders' equity (ROAE) of 7.29%; and return on average tangible common equity (ROATCE)(1) of 7.92%

  • Adjusted net income(1) of $8.4 million; or $0.30 per diluted share, adjusted ROAA(1) of 1.05%; adjusted ROAE(1) of 9.81%; and adjusted ROATCE(1) of 10.67%

  • $141 million in Paycheck Protection Program loans approved and funded subsequent to March 31, 2020 through April 24, 2020

_______________________

(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., April 30, 2020 (GLOBE NEWSWIRE) -- HBT Financial, Inc. (NASDAQ: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 $6.2 million, or $0.23 diluted earnings per share, for the first quarter of 2020. This compares to net income of $16.1 million, or $0.61 diluted earnings per share, for the fourth quarter of 2019, and net income of $18.7 million, or $1.04 diluted earnings per share, for the first quarter of 2019.

Fred L. Drake, Chairman and Chief Executive Officer of HBT Financial, said, "The COVID-19 pandemic has presented unprecedented challenges for our team and for our customers.  However, for several generations, our banks have been a source of strength for our customers and communities during difficult times.  Our top priority is supporting our employees and customers and maintaining the health and safety of all involved.  Many of our employees have been able to work remotely and we took the difficult step of closing our lobbies, with visits limited to appointment only. Our team has worked hard to minimize customer impact and continue our commitment to excellent service. Our retail staff continues to assist our clients with essential banking needs, and our lenders are in regular contact with our borrowers, working closely with them for the best solutions under the current circumstances.  Through April 24, 2020, we had funded $141 million of PPP (Payroll Protection Program) loans, for 1,129 businesses in our communities.   HBT Financial is well positioned, with an attractive deposit base, strong capital levels and a track record of safety and soundness. We are committed to uphold our Midwestern values of hard work, perseverance and doing the right thing as we continue to support our stakeholders in this crisis."

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 and C Corp equivalent net income of $14.0 million, or $0.78 diluted earnings per share, for the first 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 $8.4 million, or $0.30 adjusted diluted earnings per share, for the first quarter of 2020. This compares to adjusted net income of $14.4 million, or $0.55 adjusted diluted earnings per share, for the fourth quarter of 2019, and adjusted net income of $14.4 million, or $0.80 adjusted diluted earnings per share, for the first quarter of 2019 (see "Reconciliation of Non-GAAP Financial Measures" tables).

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2020 was $30.7 million, a decrease of 5.0% from $32.3 million for the fourth quarter of 2019. The decrease was primarily attributable to lower yields on loans and securities and a decrease in average interest-earning assets.

Relative to the first quarter of 2019, net interest income decreased $3.8 million, or 11.0%. The decline was primarily attributable to lower yields on average interest-earning assets.

Net interest margin for the first quarter of 2020 was 4.00%, including 5 basis points attributable to acquired loan discount accretion, compared to 4.12%, including 2 basis points attributable to acquired loan discount accretion, for the fourth quarter of 2019. The decrease was primarily attributable to a decline in average loan yields, lower average loan balances, and lower securities yields and balances.

Relative to the first quarter of 2019, net interest margin decreased from 4.44%, including 18 basis points attributable to acquired loan discount accretion, due primarily to lower loan yields and an increase in lower-yielding cash balances, partially offset by lower balances in time deposits and a lower cost of interest-bearing demand deposits.

The Federal Open Market Committee lowered its target federal funds rate 50 basis points on March 3, 2020 and 100 basis points on March 16, 2020. The Company expects the cumulative decrease of 150 basis points in the target federal funds rate in March 2020 to continue placing downward pressure on its net interest margin in 2020.

Noninterest Income

Noninterest income for the first quarter of 2020 was $5.3 million, a decrease of 49.2% from $10.3 million for the fourth quarter of 2019. First quarter 2020 results included a negative $2.2 million mortgage servicing rights ("MSR") fair value adjustment compared to $0.6 million gain on the fair value adjustment of the MSR asset in the fourth quarter of 2019. Lower gains on foreclosed assets and reduced fees on customer-related interest rate swaps, included in other noninterest income, also contributed to noninterest income decline.

Relative to the first quarter of 2019, noninterest income decreased 29.9% from $7.5 million. The decline was primarily attributable to a larger negative MSR fair value adjustment and nonrecurring gains on sales of First Community Title Services, Inc. and HBT Insurance of $0.8 million in the first quarter 2019.

Noninterest Expense

Noninterest expense for the first quarter of 2020 was $23.3 million, compared with $22.0 million for the fourth quarter of 2019. The increase was primarily attributable to higher employee benefits expense, as first quarter of 2020 results included a $0.8 million charge for the supplemental executive retirement plan (SERP) which was terminated in June 2019. The SERP liability varies inversely with interest rates and resulted in a $0.4 million benefit in the fourth quarter of 2019. The SERP will be liquidated in June 2020. In addition, an increase in medical benefit expenses were partially offset by a decrease in the cash-settled stock appreciation rights (SAR) liability due primarily to changes in the Company's stock price. The employee benefits expense related to the cash-settled SAR liability resulted in a benefit of $0.3 million in the first quarter of 2020, an expense of $0.4 million in the fourth quarter 2019, and a benefit of $0.1 million in the first quarter of 2019. FDIC insurance expense was higher in the first quarter of 2020 due to the impact of the application of small bank assessment credits in the fourth quarter of 2019. Other noninterest and occupancy expenses increased in the first quarter of 2020, but were largely offset by lower loan collection and servicing and furniture and equipment expenses.

Relative to the first quarter of 2019, noninterest expense increased 4.9% from $22.2 million. The increase was primarily due to higher employee benefits costs associated with the SERP charge in the first quarter of 2020 and an increase in medical benefit expenses, as higher salaries and data processing costs were offset by lower furniture and equipment, FDIC insurance, and loan collection and servicing expenses.

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.13 billion at March 31, 2020, compared with $2.16 billion at December 31, 2019 and $2.18 billion at March 31, 2019. The $30.9 million decline in loans from December 31, 2019 was primarily due to a $39.2 million reduction in CRE – non-owner occupied balances, a $9.0 million decline in municipal, consumer and other loans, and a $7.9 million reduction in commercial and industrial balances, which were partially offset by a $20.9 million increase in agricultural and farmland loans, primarily due to the addition of a new senior lender in one of our markets at the beginning of the year, and a $7.4 million increase in construction and land development loans.

Deposits

Total deposits were $2.73 billion at March 31, 2020, compared with $2.78 billion at December 31, 2019, and $2.82 billion at March 31, 2019. The $46.6 million decrease in total deposits from December 31, 2019 included expected outflows from a small number of retail deposit accounts that had increased by $40.2 million in the fourth quarter of 2019. Declines in time, noninterest-bearing, interest-bearing demand and money market balances more than offset a modest increase in savings deposit balances in the first quarter of 2020.

Asset Quality

Nonperforming loans totaled $15.4 million, or 0.72% of total loans, at March 31, 2020, compared with $19.0 million, or 0.88% of total loans, at December 31, 2019, and $13.9 million, or 0.64% of total loans, at March 31, 2019. The decline in nonperforming loans from the end of the prior quarter was primarily attributable to payoffs and paydowns.

The Company recorded a provision for loan losses of $4.4 million for the first quarter of 2020, compared with $0.1 million for the fourth quarter of 2019. The increase in provision for loan losses was primarily due to $3.3 million reserve build related to adjustments to qualitative factors to reflect the economic weakness resulting from the COVID-19 pandemic. The remaining $1.1 million of the provision was primarily due to a $1.3 million increase in a specific reserve related to one credit offset by a decrease in specific reserves related to several other credits.

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

The Company's allowance for loan losses was 1.22% of total loans and 169.70% of nonperforming loans at March 31, 2020, compared with 1.03% of total loans and 117.06% of nonperforming loans at December 31, 2019.

Capital

At March 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
  March 31, Regulatory
  2020 Requirements
Total capital to risk-weighted assets 15.03% 10.00%
Tier 1 capital to risk-weighted assets 13.95% 8.00%
Common equity tier 1 capital ratio 12.44% 6.50%
Tier 1 leverage ratio 10.70% 5.00%
Total stockholders' equity to total assets 10.58% N/A
Tangible common equity to tangible assets (1) 9.81% 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.

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 64 branches. As of March 31, 2020, HBT had total assets of $3.2 billion, total loans of $2.1 billion, and total deposits of $2.7 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
    March 31,    December 31,    March 31, 
    2020
  2019
  2019
             
INTEREST AND DIVIDEND INCOME   (dollars in thousands, except per share amounts)
Loans, including fees:                  
Taxable   $ 26,941     $ 28,039     $ 30,063  
Federally tax exempt     674       716       710  
Securities:                  
Taxable     3,334       3,556       3,922  
Federally tax exempt     1,028       1,269       1,552  
Interest-bearing deposits in bank     729       1,006       687  
Other interest and dividend income     14       14       15  
Total interest and dividend income     32,720       34,600       36,949  
                   
INTEREST EXPENSE                  
Deposits     1,595       1,838       1,983  
Securities sold under agreements to repurchase     20       24       14  
Borrowings           2       3  
Subordinated debentures     443       460       497  
Total interest expense     2,058       2,324       2,497  
Net interest income     30,662       32,276       34,452  
PROVISION FOR LOAN LOSSES     4,355       138       776  
Net interest income after provision for loan losses     26,307       32,138       33,676  
                   
NONINTEREST INCOME                  
Card income     1,792       1,952       1,832  
Service charges on deposit accounts     1,834       2,065       1,763  
Wealth management fees     1,814       1,911       1,747  
Mortgage servicing     724       801       729  
Mortgage servicing rights fair value adjustment     (2,171 )     582       (1,002 )
Gains on sale of mortgage loans     536       915       525  
Gains (losses) on securities     (52 )     (47 )     79  
Gains (losses) on foreclosed assets     35       808       (17 )
Gains (losses) on other assets     (3 )           905  
Title insurance activity                 129  
Other noninterest income     743       1,349       797  
Total noninterest income     5,252       10,336       7,487  
                   
NONINTEREST EXPENSE                  
Salaries     12,754       12,581       12,522  
Employee benefits     2,434       1,663       1,244  
Occupancy of bank premises     1,828       1,607       1,837  
Furniture and equipment     603       763       789  
Data processing     1,586       1,547       1,162  
Marketing and customer relations     1,044       1,036       933  
Amortization of intangible assets     317       336       376  
FDIC insurance     36       (237 )     219  
Loan collection and servicing     348       732       742  
Foreclosed assets     89       151       164  
Other noninterest expense     2,268       1,771       2,224  
Total noninterest expense     23,307       21,950       22,212  
INCOME BEFORE INCOME TAX EXPENSE     8,252       20,524       18,951  
INCOME TAX EXPENSE     2,031       4,437       215  
NET INCOME   $ 6,221     $ 16,087     $ 18,736  
                   
EARNINGS PER SHARE - BASIC   $ 0.23     $ 0.61     $ 1.04  
EARNINGS PER SHARE - DILUTED   $ 0.23     $ 0.61     $ 1.04  
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING     27,457,306       26,211,282       18,027,512  
                   
PRO FORMA C CORP EQUIVALENT INFORMATION                  
Historical income before income tax expense         $ 20,524     $ 18,951  
Pro forma C Corp equivalent income tax expense           5,436       4,915  
Pro forma C Corp equivalent net income         $ 15,088     $ 14,036  
                   
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - BASIC         $ 0.58     $ 0.78  
PRO FORMA C CORP EQUIVALENT EARNINGS PER SHARE - DILUTED         $ 0.58     $ 0.78  

HBT Financial, Inc.
Consolidated Financial Summary
Consolidated Balance Sheets

                   
    March 31,    December 31,    March 31, 
    2020
  2019
   2019
                   
    (dollars in thousands)
ASSETS                  
Cash and due from banks   $ 34,782     $ 22,112     $ 17,984  
Interest-bearing deposits with banks     230,654       261,859       142,518  
Cash and cash equivalents     265,436       283,971       160,502  
                   
Interest-bearing time deposits with banks           248       248  
Debt securities available-for-sale, at fair value     615,565       592,404       681,233  
Debt securities held-to-maturity     79,741       88,477       116,745  
Equity securities     4,759       4,389       3,994  
Restricted stock, at cost     2,425       2,425       2,719  
Loans held for sale     4,805       4,531       2,496  
                   
Loans, before allowance for loan losses     2,132,952       2,163,826       2,183,322  
Allowance for loan losses     (26,087 )     (22,299 )     (21,013 )
Loans, net of allowance for loan losses     2,106,865       2,141,527       2,162,309  
                   
Bank premises and equipment, net     54,135       53,987       54,185  
Bank premises held for sale     121       121       208  
Foreclosed assets     4,469       5,099       10,151  
Goodwill     23,620       23,620       23,620  
Core deposit intangible assets, net     3,713       4,030       5,077  
Mortgage servicing rights, at fair value     6,347       8,518       9,916  
Investments in unconsolidated subsidiaries     1,165       1,165       1,165  
Accrued interest receivable     12,096       13,951       15,256  
Other assets     27,847       16,640       7,843  
Total assets   $ 3,213,109     $ 3,245,103     $ 3,257,667  
                   
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Liabilities                  
Deposits:                  
Noninterest-bearing   $ 676,341     $ 689,116     $ 661,527  
Interest-bearing     2,053,962       2,087,739       2,159,916  
Total deposits     2,730,303       2,776,855       2,821,443  
                   
Securities sold under agreements to repurchase     40,811       44,433       40,528  
Subordinated debentures     37,599       37,583       37,533  
Other liabilities     64,583       53,314       29,570  
Total liabilities     2,873,296       2,912,185       2,929,074  
                   
Stockholders' Equity                  
Common stock     275       275       181  
Surplus     190,591       190,524       32,288  
Retained earnings     136,378       134,287       298,131  
Accumulated other comprehensive income     12,569       7,832       1,012  
Less cost of treasury stock held                 (3,019 )
Total stockholders' equity     339,813       332,918       328,593  
Total liabilities and stockholders' equity   $ 3,213,109     $ 3,245,103     $ 3,257,667  
                   
SHARE INFORMATION                  
Ending number shares of common stock outstanding     27,457,306       27,457,306       18,027,512  

HBT Financial, Inc.
Consolidated Financial Summary

                   
    March 31,    December 31,    March 31, 
             
    2020   2019   2019
             
    (dollars in thousands)
LOANS                  
Commercial and industrial   $ 299,266   $ 307,175   $ 363,918
Agricultural and farmland     228,701     207,776     207,817
Commercial real estate - owner occupied     229,608     231,162     250,274
Commercial real estate - non-owner occupied     540,515     579,757     556,386
Multi-family     177,172     179,073     146,374
Construction and land development     232,311     224,887     223,489
One-to-four family residential     313,925     313,580     321,224
Municipal, consumer, and other     111,454     120,416     113,840
Loans, before allowance for loan losses   $ 2,132,952   $ 2,163,826   $ 2,183,322


                   
    March 31,    December 31,    March 31, 
    2020   2019   2020
             
    (dollars in thousands)
DEPOSITS                  
Noninterest-bearing   $  676,341   $  689,116   $  661,527
Interest-bearing demand      810,074      814,639      819,313
Money market      472,532      477,765      453,117
Savings      444,137      438,927      435,353
Time      327,219      356,408      452,133
Total deposits   $  2,730,303   $  2,776,855   $  2,821,443

HBT Financial, Inc.
Consolidated Financial Summary

                                                       
    Three Months Ended  
    March 31, 2020     December 31, 2019     March 31, 2019  
    Average         *     Average         *     Average         *  
    Balance   Interest   Yield/Cost     Balance   Interest   Yield/Cost     Balance   Interest   Yield/Cost  
                                           
    (dollars in thousands)  
ASSETS                                                      
Loans   $ 2,141,031     $ 27,615   5.16 %   $ 2,162,975     $ 28,755   5.32 %   $ 2,164,330     $ 30,773   5.69 %
Securities     668,572       4,362   2.61       700,441       4,825   2.76       806,504       5,474   2.71  
Deposits with banks     251,058       729   1.16       265,237       1,006   1.51       131,663       687   2.09  
Other     2,425       14   2.37       2,425       14   2.39       2,719       15   2.24  
Total interest-earning assets     3,063,086     $ 32,720   4.27 %     3,131,078     $ 34,600   4.42 %     3,105,216     $ 36,949   4.76 %
Allowance for loan losses     (22,474 )                 (22,766 )                 (20,441 )            
Noninterest-earning assets     148,131                   152,961                   148,518              
Total assets   $ 3,188,743                 $ 3,261,273                 $ 3,233,293              
                                                       
LIABILITIES AND STOCKHOLDERS' EQUITY                                                      
Liabilities                                                      
Interest-bearing deposits:                                                      
Interest-bearing demand   $ 811,866     $ 251   0.12 %   $ 820,390     $ 299   0.15 %   $ 826,456     $ 417   0.20 %
Money market     464,124       394   0.34       486,288       481   0.40       442,520       370   0.33  
Savings     434,276       70   0.06       434,241       71   0.07       424,986       68   0.06  
Time     341,770       880   1.03       359,731       987   1.10       432,877       1,128   1.04  
Total interest-bearing deposits     2,052,036       1,595   0.31       2,100,650       1,838   0.35       2,126,839       1,983   0.37  
Securities sold under agreements to repurchase     41,968       20   0.19       46,028       24   0.21       42,089       14   0.13  
Borrowings     221         0.52       272       2   2.60       557       3   2.56  
Subordinated debentures     37,589       443   4.72       37,577       460   4.90       37,528       497   5.30  
Total interest-bearing liabilities     2,131,814     $ 2,058   0.39 %     2,184,527     $ 2,324   0.43 %     2,207,013     $ 2,497   0.45 %
Noninterest-bearing deposits     670,714                   699,373                   650,630              
Noninterest-bearing liabilities     44,696                   45,589                   28,493              
Total liabilities     2,847,224                   2,929,489                   2,886,136              
Stockholders' Equity     341,519                   331,784                   347,157              
Total liabilities and stockholders' equity   $ 3,188,743                 $ 3,261,273                 $ 3,233,293              
                                                       
Net interest income/Net interest margin (3)         $ 30,662   4.00 %         $ 32,276   4.12 %         $ 34,452   4.44 %
Tax-equivalent adjustment (2)           463   0.06             534   0.07             610   0.08  
Net interest income (tax-equivalent basis)/ Net interest margin (tax-equivalent basis) (1) (2)         $ 31,125   4.06 %         $ 32,810   4.19 %         $ 35,062   4.52 %
Net interest rate spread (4)               3.88 %               3.99 %               4.31 %
Net interest-earning assets (5)   $ 931,272                 $ 946,551                 $ 898,203              
Ratio of interest-earning assets to interest-bearing liabilities     1.44                   1.43                   1.41              
Cost of total deposits               0.23 %               0.26 %               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

                     
    March 31,    December 31,    March 31,   
    2020   2019   2019  
               
    (dollars in thousands)  
NONPERFORMING ASSETS                    
Nonaccrual   $ 15,372   $ 19,019   $ 13,877  
Past due 90 days or more, still accruing (1)         30     53  
Total nonperforming loans     15,372     19,049     13,930  
Foreclosed assets     4,469     5,099     10,151  
Total nonperforming assets   $ 19,841   $ 24,148   $ 24,081  
                     
NONPERFORMING ASSETS (Originated) (2)                    
Nonaccrual   $ 10,041   $ 10,811   $ 8,619  
Past due 90 days or more, still accruing         30     53  
Total nonperforming loans (originated)     10,041     10,841     8,672  
Foreclosed assets     965     1,022     1,439  
Total nonperforming (originated)   $ 11,006   $ 11,863   $ 10,111  
                     
NONPERFORMING ASSETS (Acquired) (2)                    
Nonaccrual   $ 5,331   $ 8,208   $ 5,258  
Past due 90 days or more, still accruing (1)              
Total nonperforming loans (acquired)     5,331     8,208     5,258  
Foreclosed assets     3,504     4,077     8,712  
Total nonperforming assets (acquired)   $ 8,835   $ 12,285   $ 13,970  
                     
Allowance for loan losses   $ 26,087   $ 22,299   $ 21,013  
                     
Loans, before allowance for loan losses   $ 2,132,952   $ 2,163,826   $ 2,183,322  
Loans, before allowance for loan losses (originated) (2)     1,982,067     1,998,496     1,974,840  
Loans, before allowance for loan losses (acquired) (2)     150,885     165,330     208,482  
                     
CREDIT QUALITY RATIOS                    
Allowance for loan losses to loans, before allowance for loan losses     1.22 %   1.03 %   0.96 %
Allowance for loan losses to nonperforming loans     169.70     117.06     150.85  
Nonperforming loans to loans, before allowance for loan losses     0.72     0.88     0.64  
Nonperforming assets to total assets     0.62     0.74     0.74  
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets     0.93     1.11     1.10  
                     
CREDIT QUALITY RATIOS (Originated) (2)                    
Nonperforming loans to loans, before allowance for loan losses     0.51 %   0.54 %   0.44 %
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets     0.56     0.59     0.51  
                     
CREDIT QUALITY RATIOS (Acquired) (2)                    
Nonperforming loans to loans, before allowance for loan losses     3.53 %   4.96 %   2.52 %
Nonperforming assets to loans, before allowance for loan losses and foreclosed assets     5.72     7.25     6.43  

____________________________

(1) Excludes loans acquired with deteriorated credit quality that are past due 90 or more days, still accruing totaling $0.3 million, $0.1 million, and $2.5 million as of March 31, 2020, December 31, 2019, and March 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 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  
    March 31,    December 31,    March 31,   
               
    2020
  2019
  2019
 
               
ALLOWANCE FOR LOAN LOSSES   (dollars in thousands)  
Beginning balance   $ 22,299     $ 22,761     $ 20,509    
Provision     4,355       138       776    
Charge-offs     (1,221 )     (837 )     (533 )  
Recoveries     654       237       261    
Ending balance   $ 26,087     $ 22,299     $ 21,013    
                     
Net charge-offs (recoveries)   $ 567     $ 600     $ 272    
Net charge-offs (recoveries) - (originated) (1)     172       550       196    
Net charge-offs (recoveries) - (acquired) (1)     395       50       76    
                     
Average loans, before allowance for loan losses   $ 2,141,031     $ 2,162,975     $ 2,164,330    
Average loans, before allowance for loan losses (originated) (1)     1,984,066       1,988,658       1,946,035    
Average loans, before allowance for loan losses (acquired) (1)     156,965       174,317       218,295    
                     
Net charge-offs to average loans, before allowance for loan losses *     0.11   %   0.11   %   0.05   %
Net charge-offs to average loans, before allowance for loan losses (originated) * (1)     0.03       0.11       0.04    
Net charge-offs to average loans, before allowance for loan losses (acquired) * (1)     1.01       0.11       0.14    

_____________________________

*   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  
    March 31,    December 31,    March 31,   
    2020   2019   2019  
               
    (dollars in thousands, except per share amounts)  
EARNINGS AND PER SHARE INFORMATION                    
Net income   $ 6,221   $ 16,087   $ 18,736  
Earnings per share - Basic     0.23     0.61     1.04  
Earnings per share - Diluted     0.23     0.61     1.04  
                     
C Corp equivalent net income (1)     N/A   $ 15,088   $ 14,036  
C Corp equivalent earnings per share - Basic (1)     N/A     0.58     0.78  
C Corp equivalent earnings per share - Diluted (1)     N/A     0.58     0.78  
                     
Book value per share   $ 12.38   $ 12.12   $ 18.23  
                     
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     26,211,282     18,027,512  
                     
PERFORMANCE RATIOS                    
Return on average assets *     0.78 %   1.97 %   2.32 %
Return on average stockholders' equity *     7.29     19.39     21.59  
                     
Net interest margin *     4.00 %   4.12 %   4.44 %
Efficiency ratio     64.01     50.72     52.07  
                     
C Corp equivalent return on average assets * (1)     N/A     1.85 %   1.74 %
C Corp equivalent return on average stockholders' equity * (1)     N/A     18.19     16.17  
                     
NON-GAAP FINANCIAL MEASURES                    
Adjusted net income (2)   $ 8,379   $ 14,417   $ 14,359  
Adjusted earnings per share - Basic (2)     0.30     0.55     0.80  
Adjusted earnings per share - Diluted (2)     0.30     0.55     0.80  
                     
Tangible book value per share (2)   $ 11.38   $ 11.12   $ 16.64  
                     
Net interest margin (tax equivalent basis) * (2)     4.06 %   4.19 %   4.52 %
Efficiency ratio (tax equivalent basis) (2)     63.20     50.10     51.32  
                     
Adjusted return on average assets * (2)     1.05 %   1.77 %   1.78 %
Adjusted return on average stockholders' equity * (2)     9.81     17.38     16.54  
                     
Return on average tangible common equity * (2)     7.92 %   21.17 %   23.55 %
C Corp equivalent return on average tangible common equity * (1) (2)     N/A     19.86     17.64  
Adjusted return on average tangible common equity * (2)     10.67     18.97     18.05  

_____________________________

*  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  
    March 31,    December 31,    March 31,   
    2020
  2019
  2019
 
               
    (dollars in thousands)  
Net income   $ 6,221     $ 16,087     $ 18,736    
C Corp equivalent adjustment (2)           (999 )     (4,700 )  
C Corp equivalent net income (2)     6,221       15,088       14,036    
Adjustments:                    
Net earnings (losses) from closed or sold operations, including gains on sale (1)           (9 )     550    
Charges related to termination of certain employee benefit plans     (848 )     365          
Mortgage servicing rights fair value adjustment     (2,171 )     582       (1,002 )  
Total adjustments     (3,019 )     938       (452 )  
Tax effect of adjustments     861       (267 )     129    
Less adjustments after tax effect     (2,158 )     671       (323 )  
Adjusted net income   $ 8,379     $ 14,417     $ 14,359    
                     
Average assets   $ 3,188,743     $ 3,261,273     $ 3,233,293    
                     
Return on average assets *     0.78   %   1.97   %   2.32   %
C Corp equivalent return on average assets * (2)     N/A       1.85       1.74    
Adjusted return on average assets *     1.05       1.77       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 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
    March 31,    December 31,    March 31, 
    2020
  2019   2019
             
    (dollars in thousands, except per share amounts)
Numerator:                  
Net income   $  6,221     $  16,087   $  18,736
Earnings allocated to unvested restricted stock units (1)      (15 )      —      —
Numerator for earnings per share - basic and diluted   $  6,206     $  16,087   $  18,736
                   
C Corp equivalent net income (3)     N/A     $  15,088   $  14,036
Earnings allocated to unvested restricted stock units (1) (3)     N/A        —      —
Numerator for C Corp equivalent earnings per share - basic and diluted (3)     N/A     $  15,088   $  14,036
                   
Adjusted net income   $  8,379     $  14,417   $  14,359
Earnings allocated to unvested restricted stock units (1)      (19 )      —      —
Numerator for adjusted earnings per share - basic and diluted   $  8,360     $  14,417   $  14,359
                   
Denominator:                  
Weighted average common shares outstanding      27,457,306        26,211,282      18,027,512
Dilutive effect of outstanding restricted stock units (2)      —        —      —
Weighted average common shares outstanding, including all dilutive potential shares      27,457,306        26,211,282      18,027,512
                   
Earnings per share - Basic   $  0.23     $  0.61   $  1.04
Earnings per share - Diluted   $  0.23     $  0.61   $  1.04
                   
C Corp equivalent earnings per share - Basic (3)     N/A     $  0.58   $  0.78
C Corp equivalent earnings per share - Diluted (3)     N/A     $  0.58   $  0.78
                   
Adjusted earnings per share - Basic   $  0.30     $  0.55   $  0.80
Adjusted earnings per share - Diluted   $  0.30     $  0.55   $  0.80

____________________________

(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 March 31, 2020. There were no restricted stock units outstanding during the three months ended December 31, 2019 and March 31, 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  
    March 31,      December 31,      March 31,   
    2020     2019     2019  
                   
    (dollars in thousands)  
Net interest income (tax equivalent basis)                        
Net interest income   $ 30,662     $ 32,276     $ 34,452  
Tax-equivalent adjustment (1)     463       534       610  
Net interest income (tax equivalent basis) (1)   $ 31,125     $ 32,810     $ 35,062  
                         
Net interest margin (tax equivalent basis)                        
Net interest margin *     4.00 %     4.12 %     4.44 %
Tax-equivalent adjustment * (1)     0.06       0.07       0.08  
Net interest margin (tax equivalent basis) * (1)     4.06 %     4.19 %     4.52 %
                         
Average interest-earning assets   $ 3,063,086     $ 3,131,078     $ 3,105,216  

_____________________________

*    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  
    March 31,      December 31,      March 31,   
    2020     2019     2019  
                   
                   
    (dollars in thousands)  
Efficiency ratio (tax equivalent basis)                        
Total noninterest expense   $ 23,307     $ 21,950     $ 22,212  
Less: amortization of intangible assets     317       336       376  
Adjusted noninterest expense   $ 22,990     $ 21,614     $ 21,836  
                         
Net interest income   $ 30,662     $ 32,276     $ 34,452  
Total noninterest income     5,252       10,336       7,487  
Operating revenue     35,914       42,612       41,939  
Tax-equivalent adjustment (1)     463       534       610  
Operating revenue (tax equivalent basis) (1)   $ 36,377     $ 43,146     $ 42,549  
                         
Efficiency ratio     64.01 %     50.72 %     52.07 %
Efficiency ratio (tax equivalent basis) (1)     63.20       50.10       51.32  

____________________________

(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

                         
    March 31,      December 31,      March 31,   
    2020     2019     2019  
                   
                   
    (dollars in thousands)  
Tangible Common Equity                        
Total stockholders' equity   $ 339,813     $ 332,918     $ 328,593  
Less: Goodwill     23,620       23,620       23,620  
Less: Core deposit intangible assets, net     3,713       4,030       5,077  
Tangible common equity   $ 312,480     $ 305,268     $ 299,896  
                         
Tangible assets                        
Total assets   $ 3,213,109     $ 3,245,103     $ 3,257,667  
Less: Goodwill     23,620       23,620       23,620  
Less: Core deposit intangible assets, net     3,713       4,030       5,077  
Tangible assets   $ 3,185,776     $ 3,217,453     $ 3,228,970  
                         
Total stockholders' equity to total assets     10.58 %     10.26 %     10.09 %
Tangible common equity to tangible assets     9.81       9.49       9.29  
                         
Ending number shares of common stock outstanding     27,457,306       27,457,306       18,027,512  
                         
Book value per share   $ 12.38     $ 12.12     $ 18.23  
Tangible book value per share     11.38       11.12       16.64  

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

                         
    Three Months Ended  
    March 31,      December 31,      March 31,   
    2020     2019     2019  
                   
    (dollars in thousands)  
Average Tangible Common Equity                        
Total stockholders' equity   $ 341,519     $ 331,784     $ 347,157  
Less: Goodwill     23,620       23,620       23,620  
Less: Core deposit intangible assets, net     3,898       4,224       5,301  
Average tangible common equity   $ 314,001     $ 303,940     $ 318,236  
                         
Net income   $ 6,221     $ 16,087     $ 18,736  
C Corp equivalent net income (1)     N/A       15,088       14,036  
Adjusted net income     8,379       14,417       14,359  
                         
Return on average stockholders' equity *     7.29 %     19.39 %     21.59 %
C Corp equivalent return on average stockholders' equity * (1)     N/A       18.19       16.17  
Adjusted return on average stockholders' equity *     9.81       17.38       16.54  
                         
Return on average tangible common equity *     7.92 %     21.17 %     23.55 %
C Corp equivalent return on average tangible common equity * (1)     N/A       19.86       17.64  
Adjusted return on average tangible common equity *     10.67       18.97       18.05  

_____________________________

*   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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