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Adjusted Net Income

In addition to reporting GAAP 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, acquisition expenses, branch closure expenses, 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 fair value adjustments, provide investors with additional insight into its operational performance. The Company reported adjusted net income of $14.2 million, or $0.49 adjusted diluted earnings per share, for the fourth quarter of 2021. This compares to adjusted net income of $14.5 million, or $0.53 adjusted diluted earnings per share, for the third quarter of 2021, and adjusted net income of $12.4 million, or $0.45 adjusted diluted earnings per share, for the fourth quarter of 2020 (see "Reconciliation of Non-GAAP Financial Measures" tables).

NXT Bancorporation, Inc. Acquisition

On October 1, 2021, HBT completed its previously announced acquisition of NXT Bancorporation, Inc. (NXT), the holding company for NXT Bank. The acquisition expands HBT’s footprint into Eastern Iowa with four locations that began operating as branches of Heartland Bank and Trust Company in December 2021. After considering business combination accounting adjustments, NXT added total assets of $234 million, total loans of $195 million, and total deposits of $182 million.

Cash consideration of $10.6 million and stock consideration of approximately 1.8 million shares of HBT common stock resulted in aggregate consideration of $39.9 million. Goodwill of $5.7 million was recorded in the acquisition.

Acquisition-related expenses totaled $1.4 million during 2021, including $0.9 million during the fourth quarter of 2021 and $0.4 million during the third quarter of 2021. Acquisition-related expenses consisted primarily of investment banker fees, legal fees, and data processing expenses.

Cash Dividend

On January 25, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.16 per share on the Company’s common stock (the “Dividend”). The Dividend is payable on February 15, 2022 to shareholders of record as of February 8, 2022. This represents an increase of $0.01 from the previous quarterly dividend of $0.15 per share.

Mr. Drake noted, “Our strong and consistent financial performance enables us to increase our quarterly cash dividend while maintaining sufficient capital to support our organic and acquisitive growth. Our quarterly dividend remains an important tool for enhancing the total return that we deliver for shareholders, while helping the Company to efficiently manage its capital.”

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2021 was $32.9 million, an increase of 7.0% from $30.7 million for the third quarter of 2021. The increase was primarily attributable to an increase in average loans due to the NXT acquisition and organic loan growth. This was partially offset by Paycheck Protection Program (“PPP”) loan fees recognized as interest income decreasing to $1.6 million during the fourth quarter of 2021, compared to $3.0 million during the third quarter of 2021.

Relative to the fourth quarter of 2020, net interest income increased $3.7 million, or 12.7%. The increase was primarily attributable to the increase in average interest-earning assets. PPP loan fees recognized as loan interest income were $1.2 million during the fourth quarter of 2020.

Net interest margin for the fourth quarter of 2021 was 3.17%, nearly unchanged from the third quarter of 2021. Lower yields on loans and securities were mostly offset by a more favorable interest-earning asset mix.

Relative to the fourth quarter of 2020, net interest margin decreased from 3.31%. The decrease was primarily due to a less favorable interest-earning asset mix, with increased balances being held in cash and lower-yielding securities.

Noninterest Income

Noninterest income for the fourth quarter of 2021 was $9.4 million, an increase of 11.5% from $8.4 million for the third quarter of 2021. The increase was primarily attributable to the third quarter results including impairment losses of $0.6 million related to our branch rationalization plan which was completed in the third quarter of 2021. Additionally, wealth management fees increased $0.3 million, primarily due to increased fees from farm management services and higher values of assets under management during the fourth quarter of 2021 relative to the third quarter of 2021. Partially offsetting this improvement was a $0.3 million decrease in gains on sale of mortgage loans due to a lower level of mortgage refinancing activity.

Relative to the fourth quarter of 2020, noninterest income decreased 15.7% from $11.1 million, primarily attributable to a $2.1 million decline in gains on sale of mortgage loans due to a lower level of mortgage refinancing activity. Partially offsetting this decline was a $0.4 million increase in card income as a result of increased card transaction volume driven by the full reopening of Illinois following COVID-19 prevention measures.

Noninterest Expense

Noninterest expense for the fourth quarter of 2021 was $24.4 million, an increase of 10.0% from $22.2 million for the third quarter of 2021. The increase was primarily attributable to the NXT acquisition, which contributed to a higher base level of noninterest expense, as well as acquisition-related expenses increasing to $0.9 million during the fourth quarter of 2021 from $0.4 million during the third quarter of 2021.

Relative to the fourth quarter of 2020, noninterest expense increased 7.6% from $22.7 million. The increase was also primarily attributable to the higher base level of noninterest expense following the NXT acquisition and acquisition-related expenses.

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.50 billion at December 31, 2021, compared with $2.15 billion at September 30, 2021 and $2.25 billion at December 31, 2020. The $351.9 million increase in loans from September 30, 2021 included $194.6 million of loans from the NXT acquisition and a $30.3 million reduction in PPP loan balances. Excluding the impact of acquired NXT and PPP loans, loans increased by $187.6 million, or 9.0%, linked quarter with growth across every category led by increases of $58.2 million in construction & land development, $31.1 million in commercial & industrial, $25.8 million in commercial real estate - non-owner occupied, $25.2 million in municipal, consumer, and other, and $21.2 million in multi-family loans.

Deposits

Total deposits were $3.74 billion at December 31, 2021, compared with $3.42 billion at September 30, 2021 and $3.13 billion at December 31, 2020. The $318.6 million increase was primarily attributable to the $181.6 million of deposits acquired from NXT and increased balances held in existing interest-bearing demand and noninterest-bearing accounts.

Asset Quality

Nonperforming loans totaled $2.8 million, or 0.11% of total loans, at December 31, 2021, compared with $5.5 million, or 0.26% of total loans, at September 30, 2021, and $10.0 million, or 0.44% of total loans, at December 31, 2020. The $2.7 million decrease in nonperforming loans from September 30, 2021 was primarily attributable to the partial pay down and return to accrual status of one relationship which totaled $1.8 million at September 30, 2021.

The Company recorded a negative provision for loan losses of $0.8 million for the fourth quarter of 2021, compared to a negative provision for loan losses of $1.7 million for the third quarter of 2021. The negative provision was primarily due to a $0.9 million decrease in specific reserves on loans individually evaluated for impairment.

Net charge-offs for the fourth quarter of 2021 were $82 thousand, or 0.01% of average loans on an annualized basis, compared to net recoveries of $21 thousand, or less than 1 basis point of average loans on an annualized basis, for the third quarter of 2021, and net charge-offs of $0.2 million, or 0.04% of average loans on an annualized basis, for the fourth quarter of 2020.

The Company’s allowance for loan losses was 0.96% of total loans and 861.32% of nonperforming loans at December 31, 2021, compared with 1.16% of total loans and 449.73% of nonperforming loans at September 30, 2021.

Capital

At December 31, 2021, the Company exceeded all regulatory capital requirements under Basel III and was considered to be “well-capitalized,” as summarized in the following table:

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

Stock Repurchase Program

During the fourth quarter of 2021, the Company repurchased 147,383 shares of its common stock at a weighted average price of $17.52 under its stock repurchase program. Purchases were conducted in accordance with Rule 10b-18 and in compliance with Regulation M under the Securities Exchange Act of 1934, as amended. The Company’s Board of Directors authorized a new stock repurchase program that took effect upon the expiration of the Company’s prior stock repurchase program on December 31, 2021. The new Program will be in effect until January 1, 2023 and authorizes the Company to repurchase up to $15 million of its common stock.

About HBT Financial, Inc.

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. HBT provides a comprehensive suite of business, commercial, wealth management, and retail banking products and services to individuals, businesses and municipal entities throughout Central and Northeastern Illinois and Eastern Iowa through 61 branches. As of December 31, 2021, HBT had total assets of $4.3 billion, total loans of $2.5 billion, and total deposits of $3.7 billion.

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), 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 expected benefits, synergies, results and growth resulting from the acquisition of NXT and NXT Bank, and the Company’s plans, objectives, future performance, goals, future earnings levels and future loan growth, including as a result of expected improvement in economic conditions with respect to COVID-19. 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 timing, outcome and results of integrating the operations of NXT into those of HBT; the possibility that expected benefits, synergies and results from the acquisition are delayed or not achieved; the effects of the merger on HBT’s future financial condition, results of operations, strategy and plans; potential adverse reactions or changes to customer or employee relationships resulting from the completion of the transaction; the diversion of management time on integration-related issues; 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 continued disruption or worsening of global, national, state and local economies associated with the COVID-19 pandemic, including in connection with inflationary pressures and supply chain constraints, 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 and Iowa in particular, including in the financial markets; changes in business plans as circumstances warrant; risks relating to other 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

HBT Financial, Inc.
Consolidated Financial Summary
Consolidated Balance Sheets

HBT Financial, Inc.
Consolidated Financial Summary

HBT Financial, Inc.
Consolidated Financial Summary

* Annualized measure.

(1) Net interest margin represents net interest income divided by average total interest-earning assets.
(2) On a tax-equivalent basis assuming a federal income tax rate of 21% and a state income tax rate of 9.5%.
(3) See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(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