HBT Financial, Inc.

Previous 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.

Current wording

The following is management’s discussion and analysis of the financial condition as of September 30, 2025 (unaudited), as compared with December 31, 2024, and the results of operations for the three and nine months ended September 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 nine months ended September 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 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.

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 September 30, 2025, the Company had total assets of $5.0 billion, loans held for investment of $3.4 billion, and total deposits of $4.3 billion.

Previous 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:

Current wording

For the three months ended September 30, 2025, net income was $19.8 million, increasing by $1.6 million, or 8.7%, when compared to net income for the three months ended September 30, 2024. Notable changes include the following:

Previous wording

•A $2.6 million increase in net interest income, primarily attributable to lower funding costs, improved yields on debt securities, and higher average loan balances;

Current wording

•A $2.3 million increase in net interest income, primarily attributable to lower funding costs and improved yields on debt securities which were partially offset by a decrease in loan yields;

Previous 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.

Current wording

•A $0.6 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

For the six months ended June 30, 2025, net income was $38.3 million, increasing by $5.0 million, or 14.9%, when compared to net income for the six months ended June 30, 2024. Notable changes include the following:

Current wording

For the nine months ended September 30, 2025, net income was $58.1 million, increasing by $6.6 million, or 12.7%, when compared to net income for the nine months ended September 30, 2024. Notable changes include the following:

Previous 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;

Current wording

•A $6.9 million increase in net interest income, primarily attributable to lower funding costs, higher yields on debt securities, and higher average loan balances;

Previous wording

•The absence of $3.4 million of losses on sales of securities during the first quarter of 2024;

Current wording

•A $49 thousand loss on sales of securities during the nine months ended September 30, 2025 compared to a $3.4 million of loss on sales of securities during the same period in 2024;

Previous wording

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

Current wording

•A $2.0 million increase in salaries and benefits expense, primarily driven by higher medical benefits expenses and annual merit increases;

Previous wording

•The absence of $0.6 million of impairment losses on bank premises related to the closure of two branch premises recognized in 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 nine months ended September 30, 2024;

Previous wording

Net interest income for the three months ended June 30, 2025 was $49.7 million, increasing $2.6 million, or 5.6%, when compared to the three months ended June 30, 2024. The increase is primarily attributable to lower funding costs, improved yields on debt securities, and higher average loan balances. Additionally, a $0.5 million increase in nonaccrual interest recoveries and loan fees contributed to the increase in net interest income.

Current wording

Net interest income for the three months ended September 30, 2025 was $50.0 million, increasing $2.3 million, or 4.7%, when compared to the three months ended September 30, 2024. The increase is primarily attributable to lower funding costs and improved yields on debt securities which were partially offset by a decrease in loan yields. Additionally, a $0.4 million increase in loan fees was mostly offset by a $0.3 million decrease in acquired loan discount accretion.

Previous 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.

Current wording

Net interest margin increased to 4.13% for the three months ended September 30, 2025, compared to 3.98% for the three months ended September 30, 2024. The increase was primarily attributable to lower funding costs and higher yields on debt securities. Additionally, a 3 basis point increase in the contribution of loan fees to net interest margin was offset by a 3 basis point decrease in the contribution of acquired loan discount accretion to net interest margin when comparing each of the three months ended September 30, 2025 and 2024.

Previous 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.

Current wording

Net interest income for the nine months ended September 30, 2025 was $148.4 million, increasing $6.9 million, or 4.9%, when compared to the nine months ended September 30, 2024. The increase is primarily attributable to lower funding costs, higher yields on debt securities, and higher average loan balances. Additionally, a $1.4 million increase in loan fees and nonaccrual interest recoveries was partially offset by a $0.4 million decrease in acquired loan discount accretion.

Previous wording

Net interest margin increased to 4.13% for the six months ended June 30, 2025, compared to 3.95% for the six months ended June 30, 2024. The increase was primarily attributable to a decrease in funding costs and higher yields on interest-earning assets. The increase in the contribution of nonaccrual interest recoveries and loan fees accounted for 5 basis points of the increase in net interest margin. Additionally, the contribution of acquired loan discount accretion to net interest margin was 9 basis points for each of the six months ended June 30, 2025 and 2024.

Current wording

Net interest margin increased to 4.13% for the nine months ended September 30, 2025, compared to 3.96% for the nine months ended September 30, 2024. The increase was primarily attributable to a decrease in funding costs, higher yields on debt securities, and a favorable shift in the mix of interest-earning assets. Additionally, the increase in the contribution of loan fees and nonaccrual interest recoveries accounted for 5 basis points of the increase in net interest margin and were partially offset by a 2 basis point decrease in the contribution from acquired loan discount accretion.

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 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.

Current wording

In early 2024, our net interest margin was relatively stable, with increases in our loans and debt securities 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. In September 2025, the FOMC further reduced the target range for the federal funds rate by 25 basis points to a range of 4.00% to 4.25%. These changes have 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 during the first three quarters of 2025, relative to 2024.

Previous wording

The Company recorded a provision for credit losses of $0.5 million during the three months ended June 30, 2025, compared to a $1.2 million provision during the three months ended June 30, 2024. The second quarter of 2025 provision for credit losses primarily reflects a $1.0 million increase in required reserves resulting from changes in economic forecasts; a $0.8 million increase in required reserves resulting from qualitative factor changes; a $1.2 million decrease in required reserves driven by decreased loan balances and changes within the loan portfolio; and a $0.1 million decrease in specific reserves.

Current wording

The Company recorded a provision for credit losses of $0.6 million during the three months ended September 30, 2025, compared to a $0.6 million provision during the three months ended September 30, 2024. The third quarter of 2025 provision for credit losses primarily reflects a $1.2 million increase in required reserves driven by increased loan balances and changes within the portfolio; a $0.3 million increase in specific reserves; a $0.6 million decrease in required reserves resulting from changes in qualitative factors; and a $0.3 million decrease in required reserves driven by changes in the economic forecast.

Previous 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.

Current wording

The Company recorded a provision for credit losses of $1.7 million for the nine months ended September 30, 2025, compared to a $2.3 million provision during the nine months ended September 30, 2024. The 2025 provision for credit losses primarily reflects a $1.1 million increase in required reserves resulting from changes in qualitative factors; a $0.7 million increase in required reserves resulting from changes in economic forecasts; a $0.1 million increase in required reserves driven by changes within the portfolio; and a $0.1 million decrease in specific reserves.

Previous wording

Credit losses are highly dependent on current and forecast economic conditions. Potential deterioration of economic conditions may lead to higher credit losses and adversely impact our financial condition and results of operations. The economic forecasts utilized in estimating the allowance for credit losses on loans and unfunded lending-related commitments include the unemployment rate and changes in GDP as macroeconomic variables, although other economic metrics are considered on a qualitative basis.

Current wording

The provision for credit losses is highly dependent on current and forecast economic conditions. Potential deterioration of economic conditions may lead to higher credit losses and adversely impact our financial condition and results of operations. The economic forecasts utilized in estimating the allowance for credit losses on loans and unfunded lending-related commitments include the unemployment rate and changes in GDP as macroeconomic variables, although other economic metrics are considered on a qualitative basis.

Previous 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:

Current wording

Total noninterest income for the three months ended September 30, 2025, was $9.8 million, an increase of $1.1 million, or 13.1%, from the three months ended September 30, 2024. Notable changes in noninterest income include the following:

Previous wording

•A $0.8 million negative mortgage servicing rights fair value adjustment included the second quarter of 2025 results, primarily reflecting changes in the prepayment and future interest rate assumptions utilized in the valuations, compared to a $0.1 million negative mortgage servicing rights fair value adjustment included in the second quarter 2024 results;

Current wording

•A $0.5 million negative mortgage servicing rights fair value adjustment included the third quarter of 2025 results, primarily reflecting the net decrease in the servicing portfolio due to payments and principal reductions, compared to a $1.5 million negative mortgage servicing rights fair value adjustment included in the third quarter 2024 results;

Previous wording

•A $0.2 million increase in wealth management fees, driven by higher values of assets under management and an increase in farm management income; and

Current wording

•A $0.5 million increase in wealth management fees, driven by higher values of assets under management and an increase in agricultural real estate brokerage commissions; and

Previous wording

Total noninterest income for the six months ended June 30, 2025, was $18.4 million, an increase of $3.2 million, or 21.1%, from the six months ended June 30, 2024. Notable changes in noninterest income include the following:

Current wording

Total noninterest income for the nine months ended September 30, 2025, was $28.3 million, an increase of $4.4 million, or 18.2%, from the nine months ended September 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 2024 results; and

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.

Previous 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:

Current wording

Total noninterest expense for the three months ended September 30, 2025, was $32.5 million, an increase of $1.2 million, or 3.8%, from the three months ended September 30, 2024. Notable changes in noninterest expense include the following:

Previous wording

•A $0.7 million increase in benefits expense, primarily driven by higher medical benefits costs;

Current wording

•A $0.3 million increase in benefits expense, primarily driven by higher medical benefits costs;

Previous wording

•A $0.3 million increase in bank occupancy expense, primarily due to planned building maintenance and upgrades.

Current wording

•A $0.3 million increase in furniture and equipment expense, primarily due to planned maintenance and upgrades; and

Previous wording

Total noninterest expense for the six months ended June 30, 2025, was $63.8 million, an increase of $2.1 million, or 3.4%, from the six months ended June 30, 2024. Notable changes in noninterest expense include the following:

Current wording

Total noninterest expense for the nine months ended September 30, 2025, was $96.4 million, an increase of $3.3 million, or 3.5%, from the nine months ended September 30, 2024. Notable changes in noninterest expense include the following:

Previous wording

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

Current wording

•A $1.5 million increase in employee benefits expense, primarily driven by higher medical benefits cost;

Previous wording

•A $0.5 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;

Previous wording

•A $0.2 million increase in bank occupancy expense, primarily due to planned building maintenance and upgrades.

Current wording

•A $0.4 million increase in bank occupancy expense, primarily due to planned building maintenance and upgrades; and

Previous 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.

Current wording

The higher effective tax rate during the third quarter of 2025 was primarily attributable to a lower proportion of tax-exempt interest income to pre-tax income during 2025 relative to 2024. The higher effective tax rate during the nine months ended September 30, 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

•A $117.9 million decrease in loans, primarily attributable to paydowns from property sales;

Current wording

•A $66.1 million decrease in loans, primarily attributable to early payoffs from property sales and refinancings;

Previous wording

•A $57.2 million increase in debt securities, primarily attributable to a reinvestment of cash flows from loan paydowns and an $18.2 million increase in the fair value of debt securities available-for-sale;

Current wording

•A $62.4 million increase in debt securities, primarily attributable to a reinvestment of cash flows from loan paydowns into debt securities and a $25.4 million increase in the fair value of debt securities available-for-sale;

Previous wording

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

Current wording

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

Previous 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:

Current wording

Loans, before allowance for credit losses were $3.40 billion at September 30, 2025, a decrease of $66.1 million, or 1.9%, from December 31, 2024. Notable changes include the following:

Previous 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.

Current wording

Multi-family loans totaled $514.8 million as of September 30, 2025, and are primarily made based on projected cash flows from the rental of the underlying collateral. As of September 30, 2025, multi-family loans had a weighted average LTV of 56%, based on the most recent appraisals available, which are generally obtained at the time of origination.

Previous 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.

Current wording

Construction and land development loans totaled $269.9 million as of September 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

Management’s disciplined approach to credit risk management is exercised through portfolio diversification, robust underwriting policies, and routine loan monitoring practices in order to identify and mitigate any credit weakness as early as possible. Management continually monitors and evaluates commercial real estate concentrations by property class, industry, and relative to the Bank’s regulatory capital to remain in line with board-established limits and adapt to changing industry conditions. A centralized credit underwriting group, independent of the originating lender, evaluates a vast majority of the commercial exposures over $750 thousand annually, if not more frequently, through a standardized credit review process to ensure uniform application of policies and procedures as well as analyze credit performance. All loans require appropriate internal approval, with a centralized credit approval group reviewing all exposures over $500 thousand. Additionally, a robust internal review process reviews more than 45% of loan commitments on a rolling 24 month basis that is in addition to an annual third-party review of a sample of the portfolio.

Current wording

Management’s disciplined approach to credit risk management is exercised through portfolio diversification, robust underwriting policies, and routine loan monitoring practices in order to identify and mitigate any credit weakness as early as possible. Management continually monitors and evaluates commercial real estate concentrations by property class, industry, and relative to the Bank’s regulatory capital to remain in line with board-established limits and adapt to changing industry conditions. A centralized credit underwriting group, independent of the originating lender, evaluates a vast majority of the commercial exposures over $750 thousand annually, if not more frequently, through a standardized credit review process to ensure uniform application of policies and procedures as well as analyze credit performance. All loans require appropriate internal approval, with a centralized credit approval group reviewing the vast majority of exposures over $500 thousand. Additionally, more than 45% of loan commitments are reviewed on a rolling 24 month basis between a robust internal review process and an annual third-party review of a sample of the portfolio.

Previous 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.

Current wording

Total nonperforming assets were $8.6 million at September 30, 2025, an increase of 7.8%, when compared to $8.0 million at December 31, 2024. Additionally, of the $7.6 million of nonperforming loans held as of September 30, 2025, $1.8 million are either wholly or partially guaranteed by the U.S. Government. The $0.6 million increase in nonperforming assets from December 31, 2024 was primarily attributable to an increase in foreclosed assets.

Previous 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.

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 half of 2025 and $45.0 million of wealth management customer reciprocal money market deposits were brought on balance sheet at the end of the third quarter of 2025.