HBT Financial, Inc.

Previous wording

The following is management’s discussion and analysis of the financial condition as of March 31, 2025 (unaudited), as compared with December 31, 2024, and the results of operations for the three months ended March 31, 2025 and 2024 (unaudited). Management’s discussion and analysis should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 7, 2025. Results of operations for the three months ended March 31, 2025 and 2024 are not necessarily indicative of results to be attained for the year ended December 31, 2025, or for any other period.

Current wording

The following is management’s discussion and analysis of the financial condition as of June 30, 2025 (unaudited), as compared with December 31, 2024, and the results of operations for the three and six months ended June 30, 2025 and 2024 (unaudited). Management’s discussion and analysis should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 7, 2025. Results of operations for the three and six months ended June 30, 2025 and 2024 are not necessarily indicative of results to be attained for the year ended December 31, 2025, or for any other period.

Previous wording

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. As of March 31, 2025, the Company had total assets of $5.1 billion, loans held for investment of $3.5 billion, and total deposits of $4.4 billion.

Current wording

HBT Financial, Inc., headquartered in Bloomington, Illinois, is the holding company for Heartland Bank and Trust Company, and has banking roots that can be traced back to 1920. We provide a comprehensive suite of financial products and services to consumers, businesses, and municipal entities throughout Illinois and eastern Iowa. As of June 30, 2025, the Company had total assets of $5.0 billion, loans held for investment of $3.3 billion, and total deposits of $4.3 billion.

Previous wording

For the three months ended March 31, 2025, net income was $19.1 million, increasing by $3.8 million, or 25.0%, when compared to net income for the three months ended March 31, 2024. Notable changes include the following:

Current wording

For the three months ended June 30, 2025, net income was $19.2 million, increasing by $1.2 million, or 6.4%, when compared to net income for the three months ended June 30, 2024. Notable changes include the following:

Previous wording

•A $2.0 million increase in net interest income, primarily attributable to higher average loan balances, a decrease in deposit costs, and higher yields on debt securities;

Current wording

•A $4.7 million increase in net interest income, primarily attributable to higher average loan balances, lower funding costs, and higher yields on debt securities;

Previous wording

• A $0.9 million increase in salaries and benefits expense, primarily driven by annual merit increases and higher medical benefits expense;

Current wording

•A $1.7 million increase in salaries and benefits expense, primarily driven by annual merit increases and higher medical benefits expense;

Previous wording

•The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in the first quarter of 2024;

Current wording

•The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in 2024;

Previous wording

•A $1.2 million increase in income tax expense, primarily due to an increase in pre-tax income as a result of the items noted above.

Current wording

•A $1.4 million increase in income tax expense, primarily due to an increase in pre-tax income as a result of the items noted above.

Previous wording

The following table sets forth average balances, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and costs, discounts and premiums, as well as purchase accounting adjustments that are accreted or amortized to interest income or expense.

Current wording

The following tables set forth average balances, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and costs as well as purchase accounting adjustments that are accreted or amortized to interest income or expense.

Previous wording

Net interest margin increased to 4.12% for the three months ended March 31, 2025, compared to 3.94% for the three months ended March 31, 2024. The increase was primarily attributable to higher yields on interest-earning assets, a decrease in funding costs, and an increase in nonaccrual interest recoveries and loan fees. The contribution of acquired loan discount accretion to net interest margin was 9 basis points for the three months ended March 31, 2025 compared to 10 basis points for the three months ended March 31, 2024. Additionally, the contribution of nonaccrual interest recoveries and loan fees to net interest margin increased to 17 basis points during the three months ended March 31, 2025, compared to 11 basis points for the three months ended March 31, 2024.

Current wording

Net interest margin increased to 4.14% for the three months ended June 30, 2025, compared to 3.95% for the three months ended June 30, 2024. The increase was primarily attributable to lower funding costs, higher yields on interest-earning assets, and an increase in nonaccrual interest recoveries and loan fees. The increase in the contribution of nonaccrual interest recoveries and loan fees accounted for 4 basis points of the increase in net interest margin. Additionally, the contribution of acquired loan discount accretion to net interest margin was 8 basis points for each of the three months ended June 30, 2025 and 2024.

Previous wording

Net interest income for the three months ended March 31, 2025 was $48.7 million, increasing $2.0 million, or 4.3%, when compared to the three months ended March 31, 2024. The increase is primarily attributable to higher average loan balances, a decrease in deposit costs, and higher yields on debt securities. Also contributing was a $0.7 million increase in nonaccrual interest recoveries and loan fees.

Current wording

Net interest income for the six months ended June 30, 2025 was $98.4 million, increasing $4.7 million, or 5.0%, when compared to the six months ended June 30, 2024. The increase is primarily attributable to higher average loan balances, a decrease in funding costs, and higher yields on debt securities. Also contributing was a $1.2 million increase in nonaccrual interest recoveries and loan fees.

Previous wording

In early 2024, our net interest margin was relatively stable, with increases in our loans and debt security yields being mostly offset by increases in funding costs. In September 2024, the Federal Open Market Committee ("FOMC") began lowering interest rates, with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024. These changes contributed to a decrease in funding costs while maturing fixed rate loans and securities continued to reprice at higher rates, driving our net interest margin higher in the first quarter of 2025.

Current wording

In early 2024, our net interest margin was relatively stable, with increases in our loans and debt security yields being mostly offset by increases in funding costs. In September 2024, the Federal Open Market Committee ("FOMC") began lowering interest rates, with the target range for the federal funds rate decreasing by 100 basis points to a range of 4.25% to 4.50% by the end of 2024. These changes contributed to a decrease in funding costs and yields on variable rate loans while maturing fixed rate loans and securities continued to reprice at higher rates, driving our net interest margin higher in the first half of 2025.

Previous wording

Decreases in market interest rates, and potential future decreases, may put downward pressure on our net interest margin, as the negative impact on floating rate loans may not be fully offset by the positive impacts of maturing fixed rate loans and securities repricing at higher rates or potential decreases in deposit costs. Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of interest rate fluctuations and may not always be the case.

Current wording

Decreases in market interest rates, and potential future decreases, may put downward pressure on our net interest margin, as the negative impact on floating rate loans may not be fully offset by the positive impacts of maturing fixed rate loans and securities repricing at higher rates or potential decreases in deposit costs. Generally, we expect increases in market interest rates will increase our net interest income and net interest margin in future periods, while decreases in market interest rates may decrease our net interest income and net interest margin in future periods; however, this depends upon the timing and extent of both short-term and long-term interest rate fluctuations and may not always be the case.

Previous wording

The Company recorded a provision for credit losses of $0.6 million for the three months ended March 31, 2025. The 2025 provision for credit losses primarily reflects a $0.8 million increase in required reserves resulting from changes in qualitative factors; a $0.1 million increase in required reserves driven by changes within the portfolio; and a $0.3 million decrease in specific reserves.

Current wording

The Company recorded a provision for credit losses of $1.1 million for the six months ended June 30, 2025, compared to a $1.7 million provision during the six months ended June 30, 2024. The 2025 provision for credit losses primarily reflects a $1.6 million increase in required reserves resulting from changes in qualitative factors; a $1.0 million increase in required reserves resulting from changes in economic forecasts; a $1.1 million decrease in required reserves driven by changes within the portfolio; and a $0.4 million decrease in specific reserves.

Previous wording

Total noninterest income for the three months ended March 31, 2025, was $9.3 million, an increase of $3.7 million, or 65.4%, from the three months ended March 31, 2024. Notable changes in noninterest income include the following:

Current wording

Total noninterest income for the three months ended June 30, 2025, was $9.1 million, a decrease of $0.5 million, or 4.9%, from the three months ended June 30, 2024. Notable changes in noninterest income include the following:

Previous wording

•The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in the first quarter of 2024;

Current wording

•The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in the 2024 results; and

Previous wording

•A $0.3 million increase in wealth management fees, driven primarily by higher assets under management and an increase in farm management income.

Current wording

•A $0.5 million increase in wealth management fees, driven primarily by higher assets under management and an increase in farm management income.

Previous wording

Total noninterest expense for the three months ended March 31, 2025, was $31.9 million, an increase of $0.7 million, or 2.1%, from the three months ended March 31, 2024. Notable changes in noninterest expense include the following:

Current wording

Total noninterest expense for the three months ended June 30, 2025, was $31.9 million, an increase of $1.4 million, or 4.6%, from the three months ended June 30, 2024. Notable changes in noninterest expense include the following:

Previous wording

•A $0.5 million increase in employee benefits expense, primarily driven by increased medical benefits cost;

Current wording

•A $1.2 million increase in employee benefits expense, primarily driven by higher medical benefits cost;

Previous wording

•A $0.4 million increase in salaries expense, primarily driven by annual merit increases; and

Current wording

•A $0.5 million increase in salaries expense, primarily driven by annual merit increases; and

Previous wording

During the three months ended March 31, 2025 and 2024, we recorded income tax expense of $6.4 million, or an effective tax rate of 25.2%, and $5.3 million, or an effective tax rate of 25.6%, respectively. The lower effective tax rate during the first quarter of 2025 was primarily attributable to a $0.2 million tax benefit from stock-based compensation that vested during the first quarter of 2025, compared to a $0.1 million tax benefit during the first quarter of 2024. Additionally, during the second quarter of 2025, we expect to recognize an additional $0.3 million of tax expense related to the reversal of a stranded tax effect included in accumulated other comprehensive income in connection with the maturity of a derivative designated as a cash flow hedge.

Current wording

During the three months ended June 30, 2025 and 2024, we recorded income tax expense of $7.1 million, or an effective tax rate of 27.0%, and $6.9 million, or an effective tax rate of 27.6%, respectively. During the six months ended June 30, 2025 and 2024, we recorded income tax expense of $13.6 million, or an effective tax rate of 26.1%, and $12.1 million, or an effective tax rate of 26.7%, respectively. The higher effective tax rate during 2024 was primarily attributable to an additional $0.5 million of tax expense for a deferred tax asset write-down, recognized during the second quarter of 2024, as a result of an Illinois tax change. Additionally, $0.3 million of additional tax expense was recognized during the second quarter of 2025, related to the nonrecurring reversal of a stranded tax effect included in accumulated other comprehensive income, in connection with the maturity of a derivative designated as a cash flow hedge.

Previous wording

•The vast majority of repurchase agreement account balances were transitioned to reciprocal interest-bearing demand deposit accounts during the first quarter of 2025; and

Current wording

•A transition of the vast majority of repurchase agreement account balances to reciprocal interest-bearing demand deposit accounts.

Previous wording

Loans, before allowance for credit losses were $3.46 billion at March 31, 2025, nearly unchanged from December 31, 2024. Notable changes include the following:

Current wording

Loans, before allowance for credit losses were $3.35 billion at June 30, 2025, a decrease of $117.9 million, or 3.4%, from December 31, 2024. Notable changes include the following:

Previous wording

Multi-family loans totaled $424.1 million as of March 31, 2025, and are primarily made based on projected cash flows from the rental or sale of the underlying collateral. As of March 31, 2025, multi-family loans had a weighted average LTV of 57%, based on the most recent appraisals available, which are generally obtained at the time of origination.

Current wording

Multi-family loans totaled $453.8 million as of June 30, 2025, and are primarily made based on projected cash flows from the rental or sale of the underlying collateral. As of June 30, 2025, multi-family loans had a weighted average LTV of 57%, based on the most recent appraisals available, which are generally obtained at the time of origination.

Previous wording

Construction and land development loans totaled $376.0 million as of March 31, 2025. The majority of these loans consist of multi-family and one-to-four family residential construction projects to either be sold upon completion or held for long-term investment, but also include other property types to be owner occupied upon completion. Construction and land development loans are primarily based on projected cash flows from the rental or sale of the underlying collateral, or based on the identified cash flows of the borrower.

Current wording

Construction and land development loans totaled $310.3 million as of June 30, 2025. The majority of these loans consist of multi-family and one-to-four family residential construction projects either to be sold upon completion or held for long-term investment, but also include other property types that may be rented, sold, or owner occupied upon completion. Construction and land development loans are primarily based on projected cash flows from the rental or sale of the underlying collateral, or based on the identified cash flows of the borrower.

Previous wording

Total nonperforming assets were $5.6 million at March 31, 2025, a decrease of 30.6%, when compared to $8.0 million at December 31, 2024. Additionally, of the $5.1 million of nonperforming loans held as of March 31, 2025, $1.4 million are either wholly or partially guaranteed by the U.S. Government. The $2.5 million decrease in nonperforming assets from December 31, 2024 was primarily attributable to the pay-off of a $1.6 million nonaccrual commercial real estate – non-owner occupied credit.

Current wording

Total nonperforming assets were $6.5 million at June 30, 2025, a decrease of 18.8%, when compared to $8.0 million at December 31, 2024. Additionally, of the $5.6 million of nonperforming loans held as of June 30, 2025, $1.9 million are either wholly or partially guaranteed by the U.S. Government. The $1.5 million decrease in nonperforming assets from December 31, 2024 was primarily attributable to the pay-off of a $1.6 million nonaccrual commercial real estate – non-owner occupied credit with a decrease in the one-to-four family residential segment being mostly offset by an increase in the commercial and industrial segment.

Previous wording

Loans rated pass-watch or worse were relatively stable as of March 31, 2025, increasing $3.6 million, or 1.8%, from December 31, 2024.

Current wording

Loans rated pass-watch or worse were relatively stable as of June 30, 2025, increasing $1.8 million, or 0.9%, from December 31, 2024. Additionally, a $12.1 million construction and land development credit paid off in July 2025 which was rated substandard as of June 30, 2025 and special mention as of December 31, 2024.

Previous wording

Additionally, heightened net charge-offs within the commercial and industrial segment are primarily related to equipment finance loans which were purchased as part of a pool of loans during 2023.

Current wording

Additionally, equipment finance loans which were purchased as part of a pool of loans during 2023 contributed to heightened net charge-offs within the commercial and industrial segment.

Previous wording

Management continues to focus on growing deposits through the Company’s relationship-driven banking philosophy and community-focused marketing programs. Additionally, the Bank continues to add and improve digital banking services to solidify deposit relationships.

Current wording

Management continues to focus on growing deposits through the Company’s relationship-driven banking philosophy and community-focused marketing programs.

Previous wording

Average deposit balances were relatively stable in 2025 compared to 2024, with growth in time deposits mostly offset by the planned repayment of brokered time deposits at scheduled maturities. Additionally, the vast majority of repurchase agreement account balances were transitioned to reciprocal interest-bearing demand accounts during the first quarter of 2025.

Current wording

Average deposit balances have been relatively stable in 2025 compared to 2024, with growth in money market and time deposits being offset by decreases in savings and the planned repayment of brokered time deposits at scheduled maturities. Additionally, the vast majority of repurchase agreement account balances were transitioned to reciprocal interest-bearing demand accounts during the first quarter of 2025.

Previous wording

As of March 31, 2025 and 2024, the Bank’s uninsured deposits were estimated to be $894.4 million and $949.4 million, respectively.

Current wording

As of June 30, 2025 and December 31, 2024, the Bank’s uninsured deposits were estimated to be $953.4 million and $949.4 million, respectively.

Previous wording

Further, the Bank could utilize brokered deposits as an additional source of liquidity, as needed.

Current wording

Furthermore, the Bank could utilize brokered deposits as an additional source of liquidity, as needed.

Previous wording

The Holding Company, or HBT Financial, Inc. on an unconsolidated basis, is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. As of March 31, 2025, the Holding Company had cash and cash equivalents of $13.9 million.

Current wording

The Holding Company, or HBT Financial, Inc. on an unconsolidated basis, is a corporation separate and apart from the Bank and, therefore, it must provide for its own liquidity. As of June 30, 2025, the Holding Company had cash and cash equivalents of $35.3 million.

Previous wording

The Holding Company’s main source of funding is dividends declared and paid to it by the Bank. Dividends paid by the Bank to the Holding Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. Management believes that such limitations will not impact the Holding Company’s ability to meet its ongoing short-term or intermediate-term cash obligations. During the three months ended March 31, 2025 and 2024, the Bank paid $7.5 million and $8.0 million in dividends to the Holding Company, respectively.

Current wording

The Holding Company’s main source of funding is dividends declared and paid to it by the Bank. Dividends paid by the Bank to the Holding Company would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. Management believes that such limitations will not impact the Holding Company’s ability to meet its ongoing short-term or intermediate-term cash obligations. During the three months ended June 30, 2025 and 2024, the Bank paid $30.0 million and $10.0 million in dividends to the Holding Company, respectively. During the six months ended June 30, 2025 and 2024, the Bank paid $37.5 million and $18.0 million in dividends to the Holding Company, respectively.

Previous wording

The liquidity needs of the Holding Company on an unconsolidated basis consist primarily of operating expenses, interest payments on the subordinated notes and junior subordinated debentures, and shareholder distributions in the form of dividends and stock repurchases. During the three months ended March 31, 2025 and 2024, holding company operating expenses consisted of interest expense of $1.4 million and $1.4 million, respectively, and other operating expenses of $1.0 million and $1.1 million, respectively.

Current wording

The liquidity needs of the Holding Company on an unconsolidated basis consist primarily of operating expenses, interest payments on the subordinated notes and junior subordinated debentures, and shareholder distributions in the form of dividends and stock repurchases. During the three months ended June 30, 2025 and 2024, holding company operating expenses consisted of interest expense of $1.4 million and $1.4 million, respectively, and other operating expenses of $1.1 million and $1.0 million, respectively. During the six months ended June 30, 2025 and 2024, holding company operating expenses consisted of interest expense of $2.8 million and $2.8 million, respectively, and other operating expenses of $2.1 million and $2.1 million, respectively.

Previous wording

Additionally, the Holding Company paid $6.7 million and $6.1 million of dividends to stockholders during the three months ended March 31, 2025 and 2024, respectively.

Current wording

Additionally, the Holding Company paid $6.6 million and $6.0 million of dividends to stockholders during the three months ended June 30, 2025 and 2024, respectively, and paid $13.3 million and $12.1 million of dividends to stockholders during the six months ended June 30, 2025 and 2024, respectively.

Previous wording

During 2024, the Company paid quarterly cash dividends of $0.19 per share. In January 2025, the Company announced an increase of $0.02 and paid a $0.21 per share dividend during the first quarter of 2025.

Current wording

During 2024, the Company paid quarterly cash dividends of $0.19 per share. In January 2025, the Company announced an increase of $0.02 and paid a $0.21 per share dividend during the first and second quarters of 2025.

Previous wording

The Company did not repurchase any shares of its common stock during the three months ended March 31, 2025. The Company’s Board of Directors have authorized the repurchase of up to $15.0 million of its common stock under its stock repurchase program in effect until January 1, 2026. As of March 31, 2025, the Company had $15.0 million remaining under the current stock repurchase authorization.

Current wording

Under the Company's stock repurchase program, the Company repurchased 135,997 shares of its common stock at a weighted average price of $21.30 during the three months ended June 30, 2025. The Company’s Board of Directors have authorized the repurchase of up to $15.0 million of its common stock under its stock repurchase program in effect until January 1, 2026. As of June 30, 2025, the Company had $12.1 million remaining under the current stock repurchase authorization.