425: HBT Financial to Acquire CNB Bank Shares in $170M Deal

HBT Financial, Inc. announced a definitive agreement to acquire CNB Bank Shares, Inc. for approximately $170.2 million, alongside strong third-quarter 2025 financial results.

Summary

• HBT Financial, Inc. (HBT) will acquire CNB Bank Shares, Inc. (CNBN) in a combined stock and cash transaction valued at approximately $170.2 million.
• CNBN shareholders will have the option to receive 1.0434 shares of HBT common stock, $27.73 in cash, or a combination, subject to proration.
• The aggregate consideration for CNBN shareholders is expected to be approximately $33.8 million in cash and 5.5 million shares of HBT common stock.
• The combined entity is projected to have approximately $6.9 billion in total assets, $4.7 billion in total loans, and $5.9 billion in total deposits, operating 84 branches across Illinois, Eastern Iowa, and Missouri.
• HBT reported third-quarter 2025 net income of $19.8 million, or $0.63 per diluted share, and adjusted net income of $20.5 million, or $0.65 per diluted share.
• Net interest income for Q3 2025 was $50.0 million, a 0.7% increase from the previous quarter, with a net interest margin of 4.13%.
• Total loans outstanding increased by $51.8 million to $3.40 billion at September 30, 2025, representing a 6.2% annualized growth for the quarter.
• Total deposits grew by $40.7 million to $4.35 billion, primarily due to $45.0 million in wealth management customer reciprocal money market deposits.
• Asset quality remained strong with nonperforming assets at $8.6 million, or 0.17% of total assets, and net charge-offs of $0.1 million, or 0.02% of average loans on an annualized basis.
• The allowance for credit losses stood at 1.23% of total loans and 548% of nonperforming loans.
• HBT's tangible book value per share increased by $0.62 to $16.64, a 3.9% increase for the quarter and 14.4% over the last year.
• HBT repurchased 39,631 shares of its common stock at a weighted average price of $25.36 during the quarter, with $11.1 million remaining under the repurchase program.
• The transaction is expected to be 19% accretive to EPS in the first full year with cost savings, and result in a tangible book value dilution of (3.3)% at closing with an earnback period of less than 1 year.

Sentiment

Score: 9

Explanation: The filing presents a highly positive outlook, driven by a strategic and financially attractive acquisition, coupled with strong Q3 2025 financial performance that exceeded previous quarters and demonstrated robust asset quality and capital levels. The projected EPS accretion and rapid TBV earnback from the merger, alongside HBT's consistent outperformance against industry peers, contribute to a very strong positive sentiment.

Positives

• The merger creates a larger, more diversified financial institution with approximately $6.9 billion in assets, enhancing operating scale and product opportunities.
• The transaction is expected to be 19% accretive to EPS in the first full year with cost savings, indicating strong financial benefits.
• Tangible book value dilution of (3.3)% at closing is projected to have an earnback period of less than 1 year using the crossover method, suggesting rapid recovery.
• HBT reported its highest quarterly adjusted diluted earnings per share since becoming a public company at $0.65.
• Loan growth returned in Q3 2025, with total loans increasing 6.2% on an annualized basis, driven by new originations and fewer payoffs.
• Asset quality remained strong, with nonperforming assets at a low 0.17% of total assets and net charge-offs at only 0.02% of average loans (annualized).
• Net interest margin remained stable at 4.13% (4.18% tax-equivalent basis), decreasing only 1 basis point from the prior quarter, supported by lower funding costs and improved debt securities yields.
• Tangible book value per share increased by $0.62 to $16.64, reflecting a 3.9% quarterly increase and 14.4% annual increase.
• HBT's capital ratios (Total, Tier 1, CET1, Tier 1 leverage) all exceed regulatory requirements, indicating strong financial health.
• Wealth management fees increased by $0.3 million, driven by higher assets under management and agricultural real estate brokerage commissions.
• The company's deposit base is highly granular and low-cost, with a cost of deposits of 1.19% and 95.4% core deposits, with no reliance on brokered deposits.

Negatives

• Net interest margin decreased by 1 basis point to 4.13% from the prior quarter.
• Loan yields decreased by 3 basis points to 6.35%, primarily due to a reduction in loan fees, accretion of acquired loan discounts, and nonaccrual interest recoveries.
• Noninterest expense increased by 1.9% from the prior quarter, partly due to a $0.4 million loss on the extinguishment of debt and $0.1 million in transaction-related expenses for the CNB merger.
• The provision for credit losses increased to $0.6 million, reflecting a $1.2 million increase in required reserves due to increased loan balances and portfolio changes, and a $0.3 million increase in specific reserves.
• The effective tax rate decreased to 26.1% from 27.0% in the prior quarter, partly due to the absence of a nonrecurring reversal of a stranded tax effect recognized in Q2 2025.

Risks

• Shareholders of CNBN may not approve the merger agreement.
• A condition to closing of the proposed transaction may not be satisfied, or either party may terminate the merger agreement, or the closing might be delayed or not occur at all.
• Potential adverse reactions or changes to business or employee relationships could result from the announcement or completion of the transaction.
• Diversion of management time on transaction-related issues could impact ongoing operations.
• 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 may differ from expectations.
• Regulatory approvals of the transaction may not be obtained or may impose unforeseen restrictions or conditions.
• The strength of local, state, national, and international economies and financial markets, including inflationary pressures and supply chain constraints, could impact results.
• Changes in interest rates and prepayment rates of assets could affect profitability.
• Increased competition in the financial services sector, including from non-bank competitors, could hinder customer attraction.
• Technological changes, including the development and implementation of artificial intelligence, may have unforeseen consequences.
• Unexpected outcomes or costs of existing or new litigation or other legal proceedings and regulatory actions could arise.
• Credit risks and risks from concentrations within the loan portfolio (by type of borrower, geographic area, collateral, and industry) could materialize.
• The ability to maintain an adequate level of allowance for credit losses on loans is crucial.
• Concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits poses a liquidity risk.
• The ability to successfully manage liquidity risk, which may increase dependence on non-core funding sources, could negatively impact the cost of funds.
• Interruptions involving information technology and communications systems or third-party servicers could occur.
• The occurrence of fraudulent activity, breaches or failures of third-party vendors' information security controls, or cybersecurity-related incidents, including sophisticated attacks using artificial intelligence, could pose significant threats.

Future Outlook

HBT Financial expects low single-digit annualized loan growth in Q4 2025, with net interest income and net interest margin remaining relatively stable. Deposit balances are projected to be slightly up, and investment balances generally stable, with opportunistic debt securities purchases. Noninterest income is expected to be flat, and 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 volatility in CECL calculations due to changes in unemployment and GDP forecasts.

Management Comments

• J. Lance Carter, President and CEO of HBT Financial, stated, '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.'
• Carter also commented on the merger, '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.'
• Fred L. Drake, Executive Chairman of HBT Financial, said, '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.'
• Drake added, '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.'
• J. Lance Carter further noted, '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.'
• James T. Ashworth, President of CNB Bank Shares, Inc., stated, '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.'
• Andrew E. Tinberg, President and CEO of CNB Bank & Trust, N.A., said, '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.'

Industry Context

The acquisition of CNB Bank Shares by HBT Financial reflects a continuing trend of consolidation within the community banking sector, particularly in regional markets like Illinois, Eastern Iowa, and the St. Louis and Chicago metropolitan areas. This strategic move allows HBT to increase its operating scale, enhance market density, and leverage cost synergies, which are critical for maintaining competitiveness against larger financial institutions and adapting to evolving regulatory and technological landscapes. The focus on expanding into larger growth markets while maintaining a community banking ethos aligns with strategies employed by successful regional banks seeking to balance local presence with broader market reach. HBT's consistent outperformance against its peer median in key financial metrics suggests a strong operational foundation for integrating acquisitions and navigating industry challenges.

Comparison to Industry Standards

• HBT Financial consistently outperforms its peer median in Pre-Tax Return on Average Assets, demonstrating superior profitability compared to comparable banking organizations.
• HBT's CET1 Capital Ratio consistently exceeds the peer median, indicating a more robust capital position and greater financial stability.
• The company's Return on Average Equity consistently surpasses the peer median, highlighting efficient use of shareholder capital.
• HBT's Cost of Funds remains consistently below the peer median, reflecting a strong, low-cost deposit base and a competitive funding advantage.
• Nonperforming Assets to Total Assets for HBT are consistently lower than the peer median, showcasing conservative credit underwriting and superior asset quality.
• HBT's deposit beta is consistently below peers in both rising and falling rate environments, indicating a more stable and less rate-sensitive deposit base.
• The company's strong core deposits (95.4% of total deposits) and lack of reliance on brokered deposits compare favorably to industry standards, providing a stable funding source.
• HBT's loan-to-deposit ratio of 78% indicates ample on-balance sheet liquidity, which is a strong position relative to many industry peers.

Management Changes

Corporate Governance

Related Party Transactions

• All Company Loans to any directors, executive officers and principal shareholders (as defined in Regulation O of the Federal Reserve Board) of the Company or any of its Subsidiaries are and were originated in compliance in all material respects with all applicable Legal Requirements.

Stakeholder Impact

• **Shareholders (HBT):** Expected to benefit from EPS accretion (19% in first full year) and rapid TBV earnback (<1 year), indicating increased shareholder value. The share repurchase program also provides direct returns.
• **Shareholders (CNBN):** Will receive consideration in cash, HBT stock, or a combination, and are expected to hold approximately 15% of HBT's outstanding common stock post-closing, allowing them to participate in the combined entity's future growth.
• **Employees (CNBN):** Will become employees of HBT or its subsidiaries, with employee benefits and compensation opportunities substantially comparable to similarly situated HBT employees. Key CNBN management will join HBT's leadership.
• **Customers (CNBN):** Will benefit from increased product opportunities and enhanced service capabilities due to the combined company's larger scale and increased density in key markets.
• **Customers (HBT):** May benefit from an expanded branch network and potentially broader service offerings.
• **Communities:** The combined entity aims to maintain a relationship-based approach and commitment to the communities served by both banks, potentially leading to continued local support and investment.

Next Steps

• HBT and CNBN will prepare and file a Registration Statement on Form S-4 with the SEC, which will include a proxy statement for CNBN shareholders and a prospectus for HBT.
• CNBN will call a meeting of its shareholders to adopt the Merger Agreement.
• HBT and CNBN will seek required regulatory approvals for the merger.
• HBT will appoint current CNBN directors Jim Ashworth and Nancy Ruyle to the Boards of Directors of HBT and Heartland Bank, effective at the merger's close.
• Andrew E. Tinberg, CNB Bank & Trust, N.A. President & CEO, will join Heartland Bank and Trust Company as a senior executive officer.
• The merger is expected to close in the first quarter of 2026.
• HBT will continue its stock repurchase program, which is in effect until January 1, 2026.
• HBT will continue to monitor economic conditions for potential volatility in CECL calculations and adjust loan loss provisions accordingly.
• HBT will continue to be opportunistic around debt securities purchases based on interest rates.

Key Dates

Recommendation

The acquisition of CNB Bank Shares is strategically compelling and financially attractive, projected to be 19% accretive to EPS in the first full year with a rapid tangible book value earnback of less than one year. This indicates significant value creation for HBT shareholders. Furthermore, HBT's Q3 2025 financial results demonstrate robust organic performance, including strong adjusted earnings, healthy loan growth, stable net interest margin, and exceptional asset quality. The company consistently outperforms its peer group in key profitability, capital, and asset quality metrics. The combination of a well-executed growth strategy through M&A and strong underlying operational performance positions HBT for continued success and makes it a strong investment opportunity.

Keywords

Bank Merger, Acquisition, Financial Services, Community Banking, SEC Filing, Earnings Report, Net Income, Loan Growth, Deposits, Asset Quality, Capital Ratios, Share Repurchase, Illinois, Iowa, Missouri, Wealth Management, Commercial Real Estate