8-K: HBT Financial to Acquire CNB Bank Shares for $170.2M

HBT Financial, Inc. announced a definitive agreement to merge with CNB Bank Shares, Inc. in a $170.2 million stock and cash transaction, expanding its footprint across Illinois, Eastern Iowa, and Missouri.

Summary

• HBT Financial, Inc. (HBT) will merge with CNB Bank Shares, Inc. (CNBN) in a transaction valued at approximately $170.2 million.
• CNBN shareholders can elect to receive 1.0434 shares of HBT common stock, $27.73 in cash, or a mix, subject to proration.
• The aggregate cash consideration is approximately $33.8 million, with the remainder in approximately 5.5 million HBT common shares.
• The implied per share purchase price for CNBN is $25.92, based on HBT's 15-day volume weighted average stock price of $24.44 as of October 17, 2025.
• Pro forma, the combined company will have approximately $6.9 billion in total assets, $4.7 billion in total loans, and $5.9 billion in total deposits, with 84 branch locations.
• HBT reported Q3 2025 net income of $19.8 million ($0.63 diluted EPS) and adjusted net income of $20.5 million ($0.65 adjusted diluted EPS).
• HBT's Q3 2025 Return on Average Assets (ROAA) was 1.56%, and adjusted ROAA was 1.61%.
• HBT's Q3 2025 net interest margin (tax-equivalent basis) was 4.18%, a 1 basis point decrease from Q2 2025.
• HBT's tangible book value per share increased by $0.62 to $16.64, a 3.9% increase from Q2 2025 and 14.4% over the last year.
• CNBN had total assets of $1.8 billion, total loans of $1.3 billion, and total deposits of $1.5 billion as of September 30, 2025.
• The transaction is anticipated to be 19% EPS accretive in the first full year with cost savings.
• Manageable tangible book value dilution of 3.3% at closing with an earnback of less than 1 year using the crossover method.
• Valuation multiples for CNBN are 120% of Tangible Book Value, 10.7x LTM Earnings, and 6.2x 2026E Earnings + Fully Phased-In Cost Savings.
• Anticipated cost savings of 29% of CNBN's noninterest expense base, 85% phased-in during 2026, 100% thereafter.
• Estimated pre-tax transaction expenses of $21.5 million.
• Loan credit mark of 1.53% gross loans ($20.3 million) and interest rate mark on loans of 1.12% ($14.9 million) are assumed for CNBN's portfolio.
• CNBN pre-tax loss on AFS securities of $40.8 million is assumed.

Sentiment

Score: 8

Explanation: The filing announces a strategic acquisition with strong financial metrics, including significant EPS accretion and a quick tangible book value earnback. HBT's Q3 results also show robust profitability, strong asset quality, and healthy capital ratios, indicating a well-managed company executing a growth strategy. While there are integration risks and transaction costs, the overall outlook is positive for long-term shareholder value.

Positives

• Increased operating scale with pro forma assets of approximately $6.9 billion.
• Anticipated EPS accretion of 19% in the first full year with cost savings.
• Manageable tangible book value dilution of 3.3% at closing with an earnback of less than 1 year.
• CNBN's suburban southwestern Chicago branches contribute $525 million of loans, and St. Louis metropolitan branches add $260 million of loans with historically solid organic growth.
• Enhances ability to attract and retain top talent in Chicago and St. Louis MSAs.
• Culturally aligned with a shared relationship-based approach and commitment to the communities served.
• Continues HBT's growth strategy by merging with a high-performing community bank with a strong core deposit franchise.
• HBT's Q3 2025 adjusted diluted EPS of $0.65 was its highest quarterly adjusted diluted earnings per share since becoming a public company.
• HBT's tangible book value per share increased 3.9% for the quarter and 14.4% over the last year.
• HBT's asset quality remained strong with nonperforming assets to total assets of 0.17%.
• HBT's loan growth returned in Q3 2025, increasing 6.2% on an annualized basis.
• HBT's capital ratios exceed all regulatory requirements, including a Common Equity Tier 1 (CET1) ratio of 14.35% and Total Capital to Risk-Weighted Assets of 16.77%.

Negatives

• HBT's net interest margin decreased 1 basis point to 4.13% in Q3 2025.
• HBT recorded a $0.4 million loss on the extinguishment of debt in Q3 2025.
• HBT's nonperforming assets increased to $8.6 million (0.17% of total assets) from $6.5 million (0.13%) in Q2 2025.
• The transaction involves $21.5 million in estimated pre-tax transaction expenses.
• CNBN pre-tax loss on AFS securities of $40.8 million is assumed, which will impact the combined entity's balance sheet.
• Loan credit mark of 1.53% gross loans ($20.3 million) and interest rate mark on loans of 1.12% ($14.9 million) indicate potential asset quality and interest rate adjustments for the acquired portfolio.

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, that either party may terminate the merger agreement, or 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.
• Uncertainty regarding 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 may not be obtained or may impose burdensome conditions.
• Changes in local, state, and federal laws, regulations, and governmental policies concerning the company's general business and any changes in response to bank failures.
• Increased competition in the financial services sector, including from non-bank competitors such as credit unions and fintech companies, and the inability to attract new customers.
• Technological changes implemented by the company and other parties, including third-party vendors, which may have unforeseen consequences.
• 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.
• The loss of key executives and employees, talent shortages, and employee turnover.
• Unexpected outcomes or costs of existing or new litigation or other legal proceedings and regulatory actions involving the company.
• Fluctuations in the value of securities held in the 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 the loan portfolio (including commercial real estate loans) and large loans to certain borrowers.
• 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 the balance sheet.
• Interruptions involving information technology and communications systems or third-party servicers.
• The occurrence of fraudulent activity, breaches or failures of 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 expects loan growth in the low single digits on an annualized basis in Q4 2025, with net interest income and net interest margin remaining relatively stable. Deposit balances are expected to be up slightly, and investment balances generally stable. Noninterest income is projected to be flat, while noninterest expense (excluding acquisition expenses) is anticipated to be between $31 million and $33 million. Asset quality is expected to remain solid, though a return to more normalized metrics and charge-offs may occur if the economy softens, potentially increasing CECL calculation volatility. The merger with CNBN is expected to generate profitable growth and create shareholder value in coming years, with anticipated EPS accretion of 19% in the first full year and a tangible book value earnback of less than 1 year.

Management Comments

• "During the third quarter of 2025, we continued to produce consistently strong earnings while we maintained a solid balance sheet and saw loan growth return. Adjusted net income of $20.5 million, or $0.65 per diluted share, was our highest quarterly adjusted diluted earnings per share since becoming a public company." J. Lance Carter, President and Chief Executive Officer of HBT Financial.
• "Our strong profitability coupled with an improvement in our AOCI due to lower interest rates resulted in a $0.62 increase in our tangible book value per share to $16.64. Tangible book value per share increased by 3.9% for the quarter and 14.4% over the last year." J. Lance Carter.
• "This morning, we announced the signing of a definitive agreement to merge with CNB Bank Shares, Inc. (CNB Bank Shares or CNB) and its wholly owned subsidiary CNB Bank & Trust, N.A (CNB Bank). CNB Bank Shares, like HBT Financial, has central Illinois roots going back for generations and has expanded into more metro areas in the Chicago MSA and St. Louis MSA. CNB Bank is a true community bank focused on supporting their customers and communities, and we are excited to partner with them to continue that tradition." J. Lance Carter.
• "We are truly honored to welcome the CNBN team and customers to Heartland Bank and HBT Financial. CNBN has a long and storied history in Central Illinois, very much like HBT. We are both very focused on serving our customers as a true community bank. For many years, Jim Ashworth and his team have built a solid and well-respected bank. More recently, Andy Tinberg has provided excellent leadership in developing new markets and organic growth. We are an excellent match." Fred L. Drake, Executive Chairman of HBT Financial.
• "Both our banks have strong local roots in Central Illinois, have successfully expanded to larger growth markets, have excellent deposit bases and solid commercial loan growth. We have both grown our business, while maintaining a strong credit culture. HBT has historically followed a disciplined approach to M&A, which has led to logical expansion of our footprint and outstanding financial performance. Uniting with CNBN will help generate profitable growth and create shareholder value in coming years. I look forward to working with Andy Tinberg and the entire CNBN team to make this venture a success." J. Lance Carter.
• "This partnership marks an important milestone in our ongoing commitment to deliver exceptional service and value to our customers, employees, and communities. CNBN has always believed in the enduring strength of community banking, and joining HBT positions us to continue that mission with expanded capabilities and a broader foundation for future growth." James T. Ashworth, President of CNB Bank Shares, Inc.
• "CNB Bank's culture has consistently been centered on relationships. We know customers personally, support local businesses, and are actively involved in our communities. This partnership is a natural fit, as Heartland Bank shares our core values and unwavering commitment to the principles of community banking." Andrew E. Tinberg, President and CEO of CNB Bank & Trust, N.A.

Industry Context

This acquisition by HBT Financial continues a trend of consolidation within the community banking sector, particularly in the Midwest. HBT's strategy of expanding into larger metropolitan statistical areas (MSAs) like Chicago and St. Louis through M&A aligns with broader industry efforts to achieve scale and diversify geographic and loan portfolios. The focus on 'relationship-based banking' and 'community bank' values highlights a competitive differentiator against larger, more bureaucratic financial institutions, as noted by HBT management. The transaction also leverages in-market disruption from other bank M&A in the Chicago MSA to attract talent, indicating a dynamic competitive landscape.

Comparison to Industry Standards

• HBT's Q3 2025 adjusted ROAA of 1.61% and adjusted ROATCE of 15.81% demonstrate strong profitability, outperforming the peer median pre-tax ROAA (which was lower than HBT's adjusted pre-tax ROAA in previous periods, though specific Q3 2025 peer data is not provided for direct comparison).
• HBT's CET1 Capital Ratio of 14.35% as of Q3 2025 is robust and significantly above the peer median of 11.59% as of 1H25, indicating strong capitalization relative to industry standards.
• HBT's cost of funds at 1.29% in Q3 2025 is notably lower than the peer median of 2.13% as of 1H25, reflecting a superior funding base.
• HBT's nonperforming assets to total assets of 0.17% in Q3 2025 is lower than the peer median of 0.42% as of 1H25, indicating conservative credit underwriting and exceptional asset quality.
• The acquisition valuation multiples for CNBN (120% of Tangible Book Value, 10.7x LTM Earnings, 6.2x 2026E Earnings + Fully Phased-In Cost Savings) should be assessed against recent bank M&A transactions in the Midwest, which typically range from 1.2x to 1.5x tangible book value and 12x to 15x LTM earnings for high-performing community banks, suggesting a reasonable valuation for CNBN given the anticipated EPS accretion and quick earnback period.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders (HBT): Expected EPS accretion of 19% and quick TBV earnback (less than 1 year) suggest positive financial impact and value creation.
• Shareholders (CNBN): Receive consideration in cash, HBT stock, or a mix, with an implied per share value of $25.92, and will hold approximately 15% of HBT's outstanding common stock post-merger, allowing participation in future growth.
• Employees (CNBN): Key executives (Jim Ashworth, Nancy Ruyle, Andy Tinberg) will join HBT's boards and management. All Covered Employees will become HBT employees and receive comparable benefits, with service credit for eligibility and vesting. Severance policies will be terminated, but eligible employees will be covered by HBT's severance policy or receive CIC payments.
• Customers (CNBN): Will benefit from increased scale and enhanced product opportunities from the combined company.
• Communities: Both organizations share a commitment to the communities they serve, suggesting continued local support and investment.

Next Steps

• HBT will file a Registration Statement on Form S-4 with the SEC, including a proxy statement for CNBN and a prospectus for HBT.
• CNBN shareholders will vote on the merger agreement at a special meeting.
• Obtain required regulatory approvals.
• Mail a definitive proxy statement/prospectus to CNBN shareholders after the Registration Statement is declared effective.
• Expected closing of the merger in the first quarter of 2026.
• Immediately following the merger, CNBN will merge into HBT (Mid-Tier Merger).
• Subsequent to the mergers, CNB Bank & Trust, N.A. will merge into Heartland Bank and Trust Company (Bank Merger).
• HBT will appoint Jim Ashworth and Nancy Ruyle to the Boards of Directors of HBT and Heartland Bank post-closing.
• Andy Tinberg will join Heartland Bank and Trust Company as a senior executive officer.
• The Company will take actions to terminate the CNB Bank Shares, Inc. 401(k) Plan prior to the Effective Time if requested by Acquiror.
• The Company will take all necessary actions to withdraw from the OTCQX and cause CNBN common stock to cease to be quoted on the OTCQX on or before the Closing Date.

Key Dates

Recommendation

The acquisition of CNB Bank Shares by HBT Financial is a strategically compelling and financially attractive transaction. The anticipated 19% EPS accretion in the first full year, coupled with a rapid tangible book value earnback of less than one year, indicates significant value creation for HBT shareholders. HBT's strong Q3 2025 financial results, including record adjusted EPS, robust asset quality (0.17% nonperforming assets), and healthy capital ratios (14.35% CET1), demonstrate a solid foundation for growth. The expansion into key metropolitan areas like Chicago and St. Louis, combined with a culturally aligned partner and HBT's proven integration track record, positions the company for continued outperformance in the consolidating banking sector. While integration risks exist, the favorable financial terms and strategic rationale make this a strong investment opportunity.

Keywords

Bank Merger, Acquisition, Financial Services, Community Banking, HBT Financial, CNB Bank Shares, Heartland Bank, Illinois Banking, St. Louis MSA, Chicago MSA, EPS Accretion, Tangible Book Value, SEC Filing, Q3 2025 Earnings, Loan Growth, Deposit Growth, Asset Quality, Capital Ratios