425: HBT Financial Details CNBN Equity Award Merger Conversion

HBT Financial provides details on the conversion of CNB Bank Shares' stock options and SARs into cash payments following their merger.

Summary

• CNB Bank Shares, Inc. (CNBN) is merging with HBT Financial, Inc. (HBT) through a Merger Agreement dated October 20, 2025.
• A wholly-owned subsidiary of HBT (Merger Sub) will merge into CNBN, with CNBN as the surviving corporation and a wholly-owned subsidiary of HBT, followed by CNBN merging into HBT.
• A special meeting of CNBN shareholders is scheduled for January 26, 2026, to approve the Merger Agreement and related transactions.
• At the effective time of the Merger, all outstanding CNBN stock options (Options) and stock appreciation rights (SARs), whether vested or unvested, will be cancelled and automatically vested.
• Cancelled Options and SARs will be converted into a cash payment equal to the product of (i) the excess, if any, of the Stock Consideration Cash Value over the exercise price per share, multiplied by (ii) the number of shares subject to the Option or SAR.
• The Exchange Ratio for the merger is 1.0434 shares of HBT common stock per share of CNBN common stock.
• The Stock Consideration Cash Value is calculated as the volume weighted average closing price (VWAP Price) of HBT common stock over 10 trading days ending on the fifth trading day prior to closing, multiplied by the Exchange Ratio.
• For illustrative purposes, with an assumed VWAP Price of $25.00 and a SAR exercise price of $18.25, 100 SARs would yield a Cash Payment of $783.50 (less applicable taxes).
• Any Option or SAR with an exercise price per share equal to or greater than the Stock Consideration Cash Value will be cancelled without any payment.
• To receive the Cash Payment, holders must sign and return an Option/SAR cancellation agreement, anticipated to be provided in January 2026.
• Cash payments will be made as soon as administratively practicable following the closing of the Merger, provided a signed cancellation agreement is delivered prior to closing.
• Vested Options and/or SARs may be exercised until February 16, 2026, at 5:00 pm CST, after which a Blackout Period commences, and no further exercises will be accepted.
• Unvested Options and/or SARs cannot be exercised at any point prior to the merger.
• Exercising vested Options prior to the Blackout Period will result in receiving CNBN common stock, which will then be subject to conversion into merger consideration (stock, cash, or mixed).
• The deadline to make an election for merger consideration is January 26, 2026, and holders intending to exercise vested Options and make an election should do so by January 16, 2026.

Sentiment

Score: 6

Explanation: The filing provides clear, detailed instructions for equity award holders regarding an announced merger, which is positive for transparency and stakeholder communication. However, it also highlights inherent risks associated with merger completion and the potential for out-of-the-money awards to be cancelled without payment, introducing some negative sentiment.

Positives

• All outstanding Options and SARs (whether vested or unvested) will be automatically vested at the effective time of the Merger, providing immediate liquidity for in-the-money awards.
• Holders of in-the-money options and SARs will receive a cash payment, simplifying the conversion process.
• Clear and detailed Q&A format provides transparency and guidance for equity award holders regarding the merger's impact on their holdings.

Negatives

• Options and SARs with an exercise price per share equal to or greater than the Stock Consideration Cash Value will be cancelled without any payment, resulting in a loss for those holders.
• Cash payments received from the conversion of Options and SARs will be treated as ordinary compensation income, subject to applicable tax withholdings and deductions.
• A Blackout Period for exercising vested Options and SARs will commence on February 16, 2026, limiting the window for pre-merger exercise.
• Unvested Options and SARs cannot be exercised at any point prior to the merger, only converted to cash at the effective time.

Risks

• The possibility that shareholders of CNBN may not approve the merger agreement.
• The risk that a condition to closing of the proposed transaction may not be satisfied.
• The risk that either party may terminate the merger agreement.
• The risk that the closing of the proposed transaction might be delayed or not occur at all.
• Potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction.
• The diversion of management time on transaction-related issues.
• The ultimate timing, outcome, and results of integrating the operations of CNBN into those of HBT.
• The effects of the merger on HBT's future financial condition, results of operations, strategy, and plans.
• Regulatory approvals of the transaction.

Future Outlook

The filing primarily details the procedural aspects and mechanics of the merger and the treatment of equity awards. It notes that the effects of the merger on HBT's future financial condition, results of operations, strategy, and plans are a risk, but does not provide specific forward-looking guidance or projections for the combined entity.

Industry Context

This merger between HBT Financial and CNB Bank Shares reflects an ongoing trend of consolidation within the U.S. banking sector. Such transactions are often driven by the pursuit of economies of scale, expanded market reach, increased operational efficiency, and enhanced competitive positioning in a dynamic financial landscape.

Stakeholder Impact

• **CNBN Shareholders**: Will vote on the merger and receive merger consideration (stock, cash, or mixed) for their shares, subject to election and proration procedures.
• **CNBN Equity Award Holders**: Will have their outstanding stock options and SARs automatically vested and converted into cash payments (if in-the-money) or cancelled (if out-of-the-money), subject to tax implications.
• **Employees (CNBN & HBT)**: The filing notes potential adverse reactions or changes to business or employee relationships as a risk, and management time will be diverted to transaction-related issues.
• **HBT**: Will acquire CNBN, which is expected to impact its future financial condition, results of operations, strategy, and plans, and will involve significant integration efforts.

Next Steps

• CNBN shareholders are to vote on the Merger Agreement at a special meeting on January 26, 2026.
• CNBN equity award holders are expected to receive and must sign and return an Option/SAR cancellation agreement (anticipated in January 2026).
• Cash payments for converted Options and SARs will be made as soon as administratively practicable following the merger's closing and receipt of signed cancellation agreements.
• Vested Options and SARs can be exercised until February 16, 2026, before a Blackout Period commences.
• HBT and CNBN will proceed with the integration of their operations following the merger's completion.

Key Dates

Recommendation

This filing is a procedural communication detailing the treatment of equity awards in an already announced merger. It does not introduce new financial performance data or strategic shifts that would fundamentally alter the investment thesis for either HBT or CNBN beyond the merger itself. Investors in CNBN should hold to receive the merger consideration, while HBT investors should hold as the acquisition's impact is likely already factored into the share price. Any decision to buy or sell would be based on a broader assessment of the combined entity's long-term prospects, not solely on this operational update.

Keywords

HBT Financial, CNB Bank Shares, Merger, Stock Options, SARs, Equity Awards, Cash Payment, Merger Agreement, Corporate Action, Shareholder Meeting, Financial Services, Banking