8-K: HBT Financial Reports Strong First Quarter 2025 Results, Driven by Net Interest Margin Expansion and Exceptional Asset Quality

HBT Financial announces a solid start to 2025 with strong first-quarter results, highlighted by a net income of $19.1 million and significant improvements in net interest margin and asset quality.

Summary

• HBT Financial, Inc. reported a net income of $19.1 million, or $0.60 per diluted share, for the first quarter of 2025.
• This compares to a net income of $20.3 million, or $0.64 per diluted share, for the fourth quarter of 2024, and $15.3 million, or $0.48 per diluted share, for the first quarter of 2024.
• Adjusted net income was $19.3 million, or $0.61 per diluted share.
• The company's return on average assets (ROAA) was 1.54%, and the return on average tangible common equity (ROATCE) was 16.20%.
• Net interest margin increased by 16 basis points to 4.12%, and the tax-equivalent net interest margin increased by 15 basis points to 4.16%.
• Nonperforming assets to total assets decreased to 0.11%.
• Net charge-offs to average loans were 0.05% on an annualized basis.
• Total loans outstanding were $3.46 billion, and total deposits were $4.38 billion.
• Tangible book value per share increased by $0.63 to $15.43.
• The company did not repurchase any shares during the quarter but has $15.0 million remaining under its stock repurchase program.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, improved asset quality, and increased profitability. Management expresses confidence in the company's ability to navigate economic uncertainties, contributing to a favorable sentiment.

Positives

• Strong profitability with a net income of $19.1 million and an adjusted net income of $19.3 million.
• Exceptional asset quality with nonperforming assets at 0.11% of total assets and net charge-offs at 0.05% of average loans.
• Net interest margin expansion, increasing 16 basis points to 4.12%.
• Tangible book value per share increased by $0.63 to $15.43.
• All capital ratios increased during the quarter and exceed regulatory requirements.
• Deposit growth was aided by moving most of the repurchase agreements into interest-bearing demand deposits.

Negatives

• Net income decreased from $20.3 million in the fourth quarter of 2024.
• Noninterest income decreased by 20.0% from the previous quarter, primarily due to changes in mortgage servicing rights fair value adjustment and decreases in wealth management fees and card income.
• Noninterest expense increased by 3.3% from the previous quarter, mainly due to increases in salaries and employee benefits expenses.

Risks

• Economic uncertainty leading to interest rate volatility and stock market declines.
• Potential for increased volatility in the CECL calculation if there are large movements in forecast unemployment and GDP.
• The economic impact on the Company and its customers of climate change, natural disasters and of exceptional weather occurrences such as tornadoes, floods and blizzards.
• Fluctuations in the value of securities held in our securities portfolio, including as a result of changes in interest rates.
• Credit risks and risks from concentrations (by type of borrower, geographic area, collateral and industry) within our loan portfolio (including commercial real estate loans) and large loans to certain borrowers.
• The overall health of the local and national real estate market.
• The ability to maintain an adequate level of allowance for credit losses on loans.
• The concentration of large deposits from certain clients who have balances above current FDIC insurance limits and who may withdraw deposits to diversify their exposure.
• The ability to successfully manage liquidity risk, which may increase dependence on non-core funding sources such as brokered deposits, and may negatively impact the Company's cost of funds.
• The level of nonperforming assets on our balance sheet.
• Interruptions involving our information technology and communications systems or third-party servicers.
• The occurrence of fraudulent activity, breaches or failures of our third-party vendors information security controls or cybersecurity-related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools or as a result of insider fraud.
• The effectiveness of the Company's risk management framework.

Future Outlook

HBT Financial expects net interest income to be up slightly in Q2 2025, relative to Q1 2025, due to a stable NIM and an increased day count despite lower projected average and end of period loan balances. Deposit balances are expected to be flat in Q2 2025, relative to Q1 2025. Noninterest income is expected to increase slightly during Q2 2025, relative to Q1 2025. Noninterest expense is expected to be between $31 million and $33 million per quarter in 2025. Asset quality is expected to remain solid, although a return to more normalized asset quality metrics and charge-offs may occur should the economy soften.

Management Comments

• J. Lance Carter, President and Chief Executive Officer of HBT Financial, said, 'We are off to a great start in 2025 with strong first quarter results.'
• Carter also stated, 'Despite the economic outlook recently becoming more uncertain, leading to interest rate volatility and stock market declines, we still believe that 2025 will be a solid year for HBT.'
• He added, 'Our credit discipline, strong profitability and solid balance sheet give us confidence that we are prepared for a variety of economic environments.'

Industry Context

HBT Financial's focus on community banking and relationship-based approach aligns with a broader trend in the industry towards personalized service and local market expertise. The company's strong deposit base and efficient operations position it well to compete with larger regional and national banks, as well as non-bank competitors like credit unions and fintech companies.

Comparison to Industry Standards

• HBT Financial's performance is compared to a peer group of publicly-traded bank holding companies, including Bank First Corporation, Byline Bancorp, Inc., and Civista Bancshares, Inc.
• The company's cost of deposits remains consistently below peers, with a lower deposit beta during the latest interest rate tightening cycle.
• HBT Financial's CET1 capital ratio, return on average equity, cost of funds, and nonperforming assets to total assets are compared to the peer median to demonstrate its strong capitalization, superior profitability, exceptional funding base, and conservative credit underwriting.

Stakeholder Impact

• Shareholders benefit from strong profitability, increasing tangible book value, and a stock repurchase program.
• Employees benefit from a stable and growing company with opportunities for advancement.
• Customers benefit from a comprehensive suite of financial products and services and a relationship-based approach.
• The company's strong financial performance supports the local economies in Illinois and eastern Iowa.

Next Steps

• The company will continue to use its stock repurchase program opportunistically with $15 million available through January 1, 2026.
• HBT Financial will continue to evaluate potential M&A opportunities.
• The company may increase debt security purchases during the remainder of 2025, if yields are attractive.

Key Dates

Keywords

financial results, net income, net interest margin, asset quality, ROAA, ROATCE, loans, deposits, HBT Financial, earnings