8-K: HBT Financial Inc. Announces Strong Fourth Quarter 2024 Results and Increased Dividend

HBT Financial Inc. reported a strong fourth quarter of 2024 with increased net income, solid asset quality, and an increased quarterly cash dividend.

Summary

• HBT Financial Inc. reported net income of $20.3 million, or $0.64 per diluted share, for the fourth quarter of 2024, compared to $18.4 million, or $0.58 per diluted share, in the same quarter of 2023.
• Adjusted net income for the quarter was $19.5 million, or $0.62 per diluted share, up from $19.3 million, or $0.60 per diluted share, in the fourth quarter of 2023.
• The company's net interest margin remained resilient at 3.96%, or 4.01% on a tax-equivalent basis, despite a 100 basis point cut in the federal funds target range since September 18, 2024.
• Asset quality remained strong with nonperforming assets to total assets at 0.16% and net charge-offs to average loans at 0.08% on an annualized basis.
• The Board of Directors increased the quarterly cash dividend to $0.21 per share, a 10.5% increase from the previous $0.19 per share.

Sentiment

Score: 9

Explanation: The document presents a very positive outlook with strong financial results, increased dividend, and solid asset quality. The management's confidence and the company's strategic positioning contribute to a high sentiment score.

Positives

• The company demonstrated strong earnings and profitability in the fourth quarter of 2024.
• The balance sheet remains strong with all capital ratios increasing during the fourth quarter of 2024.
• Asset quality is exceptional with low nonperforming assets and net charge-offs.
• The company's tangible book value per share has increased significantly during 2024.
• The increase in the quarterly cash dividend reflects the company's strong financial performance and capital ratios.
• The company is well-positioned to absorb market interest rate changes and pursue acquisition opportunities.

Negatives

• Net interest income decreased slightly by 0.7% from the third quarter of 2024 due to lower yields on loans and deposits with banks.
• The net interest margin decreased slightly by 2 basis points compared to the third quarter of 2024.
• Noninterest expense increased by 1.7% compared to the fourth quarter of 2023, primarily due to increases in data processing and occupancy expenses.

Risks

• The company is exposed to risks related to changes in interest rates and prepayment rates of its assets.
• Increased competition in the financial services sector could impact the company's ability to attract new customers.
• Unexpected results of acquisitions could lead to failure to realize anticipated benefits.
• The company faces risks related to credit concentrations within its loan portfolio.
• Fluctuations in the value of securities held in the portfolio could impact financial results.
• The company is exposed to risks related to cybersecurity incidents and fraudulent activity.
• The company is exposed to the economic impact of climate change and natural disasters.

Future Outlook

The company anticipates low single-digit loan growth in 2025, with stronger growth in the latter half of the year. Deposit balances are expected to be flat or grow in the low single digits. The company plans to reinvest at least half of the quarterly investment portfolio run-off. Net interest margin is expected to gradually increase throughout the year. Noninterest income is expected to be flat, and noninterest expense is expected to be between $31 million and $33 million per quarter. Asset quality is expected to remain solid, and the stock repurchase program will continue to be used opportunistically. The company's capital levels and operational structure support potential M&A opportunities.

Management Comments

• J. Lance Carter, President and Chief Executive Officer of HBT Financial, said, 'We ended 2024 with another quarter of strong earnings.'
• Mr. Carter noted, 'We are very pleased to announce that our strong financial performance and capital ratios have enabled us to further increase our quarterly cash dividend by $0.02 per share, or 10.5%, while maintaining more than sufficient capital to support the continued growth of the Company.'

Industry Context

This announcement reflects a trend of regional banks focusing on maintaining strong asset quality and profitability amidst interest rate fluctuations. The company's emphasis on a low-cost deposit base and strategic acquisitions aligns with common strategies in the current banking environment. The increase in the dividend is a positive signal to investors, indicating confidence in the company's financial health and future prospects.

Comparison to Industry Standards

• HBT Financial's return on average assets (ROAA) of 1.61% and return on average tangible common equity (ROATCE) of 17.40% are strong compared to many regional banks.
• The company's net interest margin of 3.96% is competitive, especially considering the recent interest rate cuts by the Federal Reserve.
• HBT Financial's nonperforming assets to total assets ratio of 0.16% is significantly lower than the industry average, indicating strong asset quality.
• The company's efficiency ratio of 50.68% (tax-equivalent basis) is better than many of its peers, suggesting efficient operations.
• Compared to the peer group median, HBT Financial has demonstrated superior profitability, a strong funding base, and conservative credit underwriting.
• The company's cost of deposits remains consistently below peers, contributing to its strong net interest margin.
• HBT Financial's deposit beta of 23.6% during the latest interest rate tightening cycle is lower than the peer median of 36.6%, indicating a more stable deposit base.
• The company's cumulative total return since its IPO has significantly outperformed both the peer median and the S&P 600 Small Cap Bank Index.

Stakeholder Impact

• Shareholders will benefit from the increased dividend and the company's strong financial performance.
• Employees will benefit from the company's continued success and stability.
• Customers will benefit from the company's strong financial position and ability to provide quality financial services.
• The company's strong financial health will benefit the communities it serves.

Next Steps

• The company will continue to monitor and manage its loan portfolio and asset quality.
• The company will continue to reinvest at least half of the estimated quarterly investment portfolio run-off during 2025.
• The company will continue to use its stock repurchase program opportunistically.
• The company will explore potential M&A opportunities.

Key Dates

Keywords

financial results, net income, earnings per share, net interest margin, asset quality, cash dividend, capital ratios, loan portfolio, deposit growth, nonperforming assets, ROAA, ROATCE