HBT - HBT Financial Inc. Announces First Quarter 2022 Financial Results

First Quarter Highlights

• Net income of $13.6 million, or $0.47 per diluted share; return on average assets (ROAA) of 1.27%; return on average stockholders' equity (ROAE) of 13.58%; and return on average tangible common equity (ROATCE) ⁽¹⁾ of 14.71%
• Adjusted net income ⁽¹⁾ of $12.2 million; or $0.42 per diluted share; adjusted ROAA ⁽¹⁾ of 1.14%; adjusted ROAE ⁽¹⁾ of 12.20%; and adjusted ROATCE ⁽¹⁾ of 13.22%

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

BLOOMINGTON, Ill., April 25, 2022 (GLOBE NEWSWIRE) -- HBT Financial, Inc. (NASDAQ: HBT) (the “Company” or “HBT Financial” or “HBT”), the holding company for Heartland Bank and Trust Company, today reported net income of $13.6 million, or $0.47 diluted earnings per share, for the first quarter of 2022. This compares to net income of $13.6 million, or $0.47 diluted earnings per share, for the fourth quarter of 2021, and net income of $15.2 million, or $0.55 diluted earnings per share, for the first quarter of 2021.

Fred L. Drake, Chairman and Chief Executive Officer of HBT Financial, said, “We saw positive trends in a number of areas during the first quarter, including solid inflows of low-cost deposits and improved asset quality, which contributed to our strong financial performance despite a more challenging environment for generating loan growth. We are seeing increased competition in loan pricing in our markets, particularly in commercial real estate lending, which has started to impact new loan production, which remained relatively flat in the first quarter. Although this competitive environment and the developing macroeconomic trends, including higher input costs and interest rates, may make it more challenging to replicate the strong loan growth we experienced at the end of 2021, we believe the strength of our deposit base and asset quality, as well as our diversified business mix will enable us to continue to generate solid financial performance for our shareholders.”

Adjusted Net Income

In addition to reporting GAAP results, the Company believes adjusted net income and adjusted earnings per share, which adjust for acquisition expenses, branch closure expenses, gains (losses) on sale of closed branch premises, 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 $12.2 million, or $0.42 adjusted diluted earnings per share, for the first quarter of 2022. This compares to adjusted net income of $14.2 million, or $0.49 adjusted diluted earnings per share, for the fourth quarter of 2021, and adjusted net income of $14.0 million, or $0.51 adjusted diluted earnings per share, for the first quarter of 2021 (see "Reconciliation of Non-GAAP Financial Measures" tables).

Net Interest Income and Net Interest Margin

Net interest income for the first quarter of 2022 was $31.9 million, a decrease of 2.8% from $32.9 million for the fourth quarter of 2021. The decrease was primarily attributable to lower Paycheck Protection Program (“PPP”) loan fees recognized as loan interest income which totaled $0.7 million during the first quarter of 2022 and $1.6 million during the fourth quarter of 2021. As of March 31, 2022, the remaining deferred PPP loan fees to be recognized as income totaled $0.8 million.

Relative to the first quarter of 2021, net interest income increased $2.8 million, or 9.6%. The increase was primarily attributable to higher average loan and securities balances. These higher average balances more than offset a decrease in PPP loan fees recognized as loan interest income, which were $2.2 million during the first quarter of 2021.

Net interest margin for the first quarter of 2022 was 3.08%, compared to 3.17% for the fourth quarter of 2021. The decrease was primarily attributable to lower PPP loan fees recognized as loan interest income. The contribution of PPP loan fees to net interest margin was 7 basis points during the first quarter of 2022 and 15 basis points during the fourth quarter of 2021. Additionally, the contribution of acquired loan discount accretion to net interest margin decreased to 1 basis point during the first quarter of 2022 from 6 basis points during the fourth quarter of 2021.

Relative to the first quarter of 2021, net interest margin decreased from 3.25%. This decrease was also primarily attributable to lower PPP loan fees recognized as loan interest income which contributed 25 basis points to net interest margin during the first quarter 2021. The contribution of acquired loan discount accretion to net interest margin was 1 basis point during the first quarter of 2021.

Noninterest Income

Noninterest income for the first quarter of 2022 was $10.0 million, an increase of 7.4% from $9.4 million for the fourth quarter of 2021. The increase was primarily attributable to a positive $1.7 million mortgage servicing rights (“MSR”) fair value adjustment included in the first quarter of 2022 results, compared to a positive $0.3 million MSR fair value adjustment included in the fourth quarter of 2021 results. Additionally, the first quarter of 2022 results included $0.2 million of gains on sale of closed branch premises, with no similar gains recognized in the fourth quarter of 2021. Partially offsetting these improvements was a $0.3 million decrease in gains on sale of mortgage loans as a result of a lower level of mortgage refinancing activity and normal seasonality.

Relative to the first quarter of 2021, noninterest income decreased 7.1% from $10.8 million, primarily attributable to a $1.5 million decrease in gains on sale of mortgage loans due to a lower level of mortgage refinancing activity. Partially offsetting this decrease were a $0.4 million increase in service charges on deposit accounts and a $0.3 million increase in wealth management fees, driven by higher values of managed assets during first quarter of 2022 compared to the first quarter of 2021.

Noninterest Expense

Noninterest expense for the first quarter of 2022 was $24.2 million, a decrease of 0.9% from $24.4 million for the fourth quarter of 2021. The decrease was primarily attributable to $0.9 million of non-recurring NXT Bancorporation, Inc. (NXT) acquisition-related expenses included in the fourth quarter of 2021 results. Partially offsetting this decrease was an increase in employee benefits expense, primarily due to accelerated recognition of $0.6 million of stock compensation expense during the first quarter of 2022 as a result of a modification to all existing restricted stock unit (“RSU”) and performance restricted stock unit (“PRSU”) agreements to address treatment upon retirement. Total compensation costs related to the modified agreements remains the same.

Relative to the first quarter of 2021, noninterest expense increased 7.2% from $22.5 million. The increase was also primarily attributable to the modification of the RSU and PRSU agreements previously discussed and a higher base level of noninterest expense following the NXT acquisition, primarily related to personnel costs and branch operation expenses.

Loan Portfolio

Total loans outstanding, before allowance for loan losses, were $2.49 billion at March 31, 2022, compared with $2.50 billion at December 31, 2021 and $2.27 billion at March 31, 2021. The decrease in total loans from the end of the prior quarter was primarily attributable to the ongoing forgiveness of PPP loans.

Deposits

Total deposits were $3.82 billion at March 31, 2022, compared with $3.74 billion at December 31, 2021 and $3.36 billion at March 31, 2021. The $77.9 million increase from the end of the prior quarter was primarily attributable to increased balances held in interest-bearing demand and savings accounts, partially offset by run-off of higher cost time deposit accounts.

Asset Quality

Nonperforming loans totaled $2.5 million, or 0.10% of total loans, at March 31, 2022, compared with $2.8 million, or 0.11% of total loans, at December 31, 2021, and $9.1 million, or 0.40% of total loans, at March 31, 2021.

The Company recorded a negative provision for loan losses of $0.6 million for the first quarter of 2022, compared to a negative provision for loan losses of $0.8 million for the fourth quarter of 2021. The negative provision was primarily due to net recoveries of $1.2 million and improvements in qualitative factors which resulted in a $1.1 million decrease in required reserves, primarily reflecting improved economic conditions. Partially offsetting these improvements was a $1.7 million increase in specific reserves on loans individually evaluated for impairment.

Net recoveries for the first quarter of 2022 were $1.2 million, or (0.19)% of average loans on an annualized basis, compared to net charge-offs of $82 thousand, or 0.01% of average loans on an annualized basis, for the fourth quarter of 2021, and net recoveries of $0.3 million, or (0.06)% of average loans on an annualized basis, for the first quarter of 2021.

The Company’s allowance for loan losses was 0.99% of total loans and 992.63% of nonperforming loans at March 31, 2022, compared with 0.96% of total loans and 861.32% of nonperforming loans at December 31, 2021.

Capital

At March 31, 2022, the Company exceeded all regulatory capital requirements under Basel III 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 first quarter of 2022, the Company repurchased 50,062 shares of its common stock at a weighted average price of $18.84 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 January 1, 2023. As of March 31, 2022, the Company had $14.1 million remaining under the current stock repurchase authorization.

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 March 31, 2022, HBT had total assets of $4.3 billion, total loans of $2.5 billion, and total deposits of $3.8 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 contains, and future oral and written statements of the Company and its management may contain, "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. 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.

Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to: (i) the strength of the local, state, national and international economies (including effects of inflationary pressures and supply chain constraints); (ii) the economic impact of any future terrorist threats and attacks, widespread disease or pandemics (including the COVID-19 pandemic in the United States), acts of war or other threats thereof, or other adverse external events that could cause economic deterioration or instability in credit markets, and the response of the local, state and national governments to any such adverse external events; (iii) changes in accounting policies and practices, as may be adopted by state and federal regulatory agencies, the FASB or the PCAOB; (iv) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (v) changes in interest rates and prepayment rates of the Company’s assets (including the impact of LIBOR phase-out); (vi) increased competition in the financial services sector and the inability to attract new customers; (vii) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (viii) unexpected results of acquisitions, which may include failure to realize the anticipated benefits of acquisitions and the possibility that transaction costs may be greater than anticipated; (ix) the loss of key executives or employees; (x) changes in consumer spending; (xi) unexpected outcomes of existing or new litigation involving the Company; (xii) the economic impact of exceptional weather occurrences such as tornadoes, floods and blizzards; and (xiii) the ability of the Company to manage the risks associated with the foregoing. 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. Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

CONTACT:
Tony Rossi
HBTIR@hbtbank.com
(310) 622-8221

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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*      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

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(1)   Excludes loans acquired with deteriorated credit quality that are past due 90 or more days, still accruing totaling $25 thousand, $32 thousand, and $29 thousand as of March 31, 2022, December 31, 2021, and March 31, 2021, respectively.

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*       Annualized measure.

HBT Financial, Inc.
Consolidated Financial Summary

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*      Annualized measure.
(1)   See "Reconciliation of Non-GAAP Financial Measures" below for reconciliation of non-GAAP financial measures to their most closely comparable GAAP financial measures.
(2)   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 –
Adjusted Net Income and Adjusted Return on Average Assets