HBT - HBT Financial Inc. Announces First Quarter 2021 Financial Results

First Quarter Highlights

• Net income of $15.2 million, or $0.55 per diluted share; return on average assets (ROAA) of 1.64%; return on average stockholders' equity (ROAE) of 17.01%; and return on average tangible common equity (ROATCE) ⁽¹⁾ of 18.33%
• Adjusted net income ⁽¹⁾ of $14.0 million; or $0.51 per diluted share, adjusted ROAA ⁽¹⁾ of 1.51%; adjusted ROAE ⁽¹⁾ of 15.65%; and adjusted ROATCE ⁽¹⁾ of 16.88%

BLOOMINGTON, Ill., April 26, 2021 (GLOBE NEWSWIRE) -- HBT Financial, Inc. (NASDAQ: HBT) (the “Company” or “HBT Financial”), the holding company for Heartland Bank and Trust Company, today reported net income of $15.2 million, or $0.55 diluted earnings per share, for the first quarter of 2021. This compares to net income of $12.6 million, or $0.46 diluted earnings per share, for the fourth quarter of 2020, and net income of $6.2 million, or $0.23 diluted earnings per share, for the first quarter of 2020.

Fred L. Drake, Chairman and Chief Executive Officer of HBT Financial, said, “We delivered strong results for the first quarter of 2021, as our continued healthy asset quality, consistent sources of non-interest income, and disciplined expense control combined to produce a high level of profitability. We remain focused on operating a highly efficient institution. We are executing on expense management initiatives to ensure that we continue to deliver strong performance in a challenging environment for revenue growth. With the vaccine rollout in Illinois progressing and expectations for economic activity to increase across the remainder of the year, we are optimistic that we will have more opportunities to deploy our excess liquidity as loan demand in our markets improves.”

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, 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 $14.0 million, or $0.51 adjusted diluted earnings per share, for the first quarter of 2021. This compares to adjusted net income of $12.4 million, or $0.45 adjusted diluted earnings per share, for the fourth quarter of 2020, and adjusted net income of $8.4 million, or $0.30 adjusted diluted earnings per share, for the first quarter of 2020 (see "Reconciliation of Non-GAAP Financial Measures" tables).

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2021 was $29.1 million, nearly unchanged from $29.2 million for the fourth quarter of 2020. The slight decrease was primarily attributable to lower yields on earning assets which was almost entirely offset by an increase in average balances.

Relative to the first quarter of 2020, net interest income decreased $1.5 million, or 5.0%. The decline was primarily attributable to lower yields on average interest-earning assets.

Net interest margin for the first quarter of 2021 was 3.25%, compared to 3.31% for the fourth quarter of 2020. The decrease was primarily attributable to increases in the average balances of lower yielding securities and deposits with banks, as a result of funds received from the forgiveness of Paycheck Protection Program (PPP) loans and federal economic stimulus received by retail customers. The contribution of acquired loan discount accretion to net interest margin remained low at 1 basis point during the first quarter of 2021 and 2 basis points during the fourth quarter of 2020.

Relative to the first quarter of 2020, net interest margin decreased from 4.03%. The decrease was due primarily to the decline in the average yield on earning assets. The contribution of acquired loan discount accretion to net interest margin was 5 basis points during the first quarter of 2020.

Noninterest Income

Noninterest income for the first quarter of 2021 was $10.8 million, a decrease of 2.6% from $11.1 million for the fourth quarter of 2020. The decrease was primarily attributable to a $0.9 million decrease in gains on sale of mortgage loans as a result of less refinancing activity and normal seasonality. Additionally, wealth management fees decreased $0.3 million, following strong results during the fourth quarter of 2020, and service charges on deposit accounts decreased $0.2 million as a result of lower overdraft incidences. Mostly offsetting these decreases was a positive $1.7 million mortgage servicing rights (“MSR”) fair value adjustment included in the first quarter 2021 results, compared to a positive $0.4 million MSR fair value adjustment included in the fourth quarter 2020 results.

Relative to the first quarter of 2020, noninterest income increased 105.8% from $5.3 million, primarily due to the first quarter of 2020 results including a negative $2.2 million MSR fair value adjustment. The $1.7 million increase in noninterest income, net of MSR fair value adjustments, from the first quarter of 2020 was primarily due to a $1.6 million increase in gains on sale of mortgage loans as a result of the strong mortgage refinance environment that started in the second quarter of 2020.

Noninterest Expense

Noninterest expense for the first quarter of 2021 was $22.5 million, nearly unchanged from $22.7 million for the fourth quarter of 2020. Decreases in marketing and data processing expenses were mostly offset by increases in occupancy and employee benefits expenses. Additionally, nonrecurring costs related to systems conversion for the consolidation of State Bank of Lincoln into Heartland Bank and Trust Company were $0.3 million during the first quarter of 2021 and $0.3 million during the fourth quarter of 2020, consisting of primarily data processing expenses.

Relative to the first quarter of 2020, noninterest expense decreased 3.3% from $23.3 million. The decline was primarily attributable to the first quarter of 2020 results including a $0.8 million charge for the supplemental executive retirement plan (SERP) which was terminated in June 2019 and paid out in June 2020.

Branch Rationalization Plan

In April 2021, the Company made plans to close or consolidate six branches during the third quarter of 2021. This branch rationalization plan is expected to result in approximately $0.8 million of pre-tax nonrecurring costs, primarily related to asset impairment charges and severance payments. When fully realized, the Company estimates annual cost savings, net of associated revenue impacts, related to the branch rationalization plan to be approximately $1.1 million.

Mr. Drake commented, “We conducted a comprehensive analysis to determine the appropriate size of our branch network given the increased usage of our online and mobile banking services. The branch rationalization plan will better position our bank for the evolving way that customers access banking services and will drive improved operating efficiencies. We plan to continue investing in technology to offer our customers a superior experience through our digital banking platform, while maintaining an appropriately sized branch network that will ensure that we continue to offer convenient in-person banking services and have a strong presence in our communities.”

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.27 billion at March 31, 2021, compared with $2.25 billion at December 31, 2020 and $2.13 billion at March 31, 2020. The $23.7 million increase in loans from December 31, 2020 was primarily attributable to an increase in PPP loans, as originations of second draw PPP loans exceeded the payoffs and paydowns from PPP loan forgiveness. The $52.8 million decrease in total loans outstanding, net of PPP loans, from March 31, 2020 was primarily due to a $40.8 million reduction in balances on existing lines of credit.

Deposits

Total deposits were $3.36 billion at March 31, 2021, compared with $3.13 billion at December 31, 2020 and $2.73 billion at March 31, 2020. The $225.4 million increase in total deposits from December 31, 2020 was primarily due to second draw PPP loan proceeds received by commercial customers and federal economic stimulus payments received by retail customers.

Asset Quality

Nonperforming loans totaled $9.1 million, or 0.40% of total loans, at March 31, 2021, compared with $10.0 million, or 0.44% of total loans, at December 31, 2020, and $15.4 million, or 0.72% of total loans, at March 31, 2020. The decrease in nonperforming loans from December 31, 2020 was primarily attributable to the pay down, pay off, or return to accrual status of several smaller loans. The $6.3 million reduction in nonperforming loans from March 31, 2020 was primarily attributable to the return to accrual status of one agriculture credit that totaled $4.8 million at March 31, 2020.

The Company recorded a negative provision for loan losses of $3.4 million for the first quarter of 2021, compared to a provision for loan losses of $0.4 million for the fourth quarter of 2020. The negative provision was primarily due to changes to qualitative factors reflecting an improved economic environment and improved asset quality metrics, resulting in a $1.8 million decrease in required reserve; a decrease in specific reserves on loans individually evaluated for impairment, resulting in a $1.3 million decrease in required reserves; and a $0.3 million net recovery during the quarter.

Net recoveries for the first quarter of 2021 were $0.3 million, or (0.06)% of average loans on an annualized basis, compared to net charge-offs of $0.2 million, or 0.04% of average loans on an annualized basis, for the fourth quarter of 2020, and net charge-offs of $0.6 million, or 0.11% of average loans on an annualized basis, for the first quarter of 2020.

The Company’s allowance for loan losses was 1.27% of total loans and 315.48% of nonperforming loans at March 31, 2021, compared with 1.42% of total loans and 319.66% of nonperforming loans at December 31, 2020.

Capital

At March 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:

Stock Repurchase Program

During the first quarter of 2021, the Company repurchased 95,462 shares of its common stock at a weighted average price of $15.86 under its stock repurchase program. The Company’s Board of Directors authorized the repurchase of up to $15 million of its common stock under its stock repurchase program in effect until December 31, 2021. As of March 31, 2021, the Company had $13.5 million remaining under the current stock repurchase authorization.

Annualization Factor

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

About HBT Financial, Inc.

HBT Financial, Inc. is headquartered in Bloomington, Illinois and is the holding company for Heartland Bank and Trust Company. The bank provides a comprehensive suite of business, commercial, wealth management, and retail banking products and services to individuals, businesses and municipal entities throughout Central and Northeastern Illinois through 63 branches. As of March 31, 2021, HBT had total assets of $3.9 billion, total loans of $2.3 billion, and total deposits of $3.4 billion. HBT is a longstanding Central Illinois company, with banking roots that can be traced back to 1920.

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

HBT Financial, Inc.
Consolidated Financial Summary
Consolidated Balance Sheets

HBT Financial, Inc.
Consolidated Financial Summary

HBT Financial, Inc.
Consolidated Financial Summary

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HBT Financial, Inc.
Consolidated Financial Summary

HBT Financial, Inc.
Consolidated Financial Summary

*       Annualized measure.