HBT Financial, Inc. · NASDAQ:HBT
HBT Financial — Investor Presentation (May 2020)
39 slides from HBT Financial's investor presentation, May 2020
Slide 1: HBT Financial, Inc. Investor Presentation
STRICTLY PRIVATE AND CONFIDENTIAL HBT Financial, Inc. May 2020 Investor Presentation
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements Certain statements contained in this presentation are forward-looking statements. Forward-looking statements may include statements relating to our future plans, strategies and expectations, as well as the economic impact of COVID-19 and the related impacts on our future f
Slide 3: Company snapshot
Company snapshot Overview Financial highlights $mm 2017 2018 2019 1Q20 Company incorporated in 1982 from base of family-owned banks and completed its IPO in October 2019 Total assets $3,313 $3,250 $3,245 $3,213 Headquartered in Bloomington, IL, with operations in Central Illinois Total gross loa
Slide 4: Experienced executive management team with deep community ties
Experienced executive management team with deep community ties Fred L. Drake J. Lance Carter Matthew J. Doherty Patrick F. Busch Chairman and CEO President and Chief Financial Officer Chief Lending Officer, 37 years with Company Chief Operating Officer 10 years with Company President of Heartland Ba
Slide 5: Our history
Our history 1920 1982 1992 1999 - 2008 2010-2015 2019 M.B. Drake HBT Financial, Inc. Fred Drake named Entry into several new Wave of Completed starts bank in incorporated as a multi- President and CEO of markets in Central IL FDIC- IPO in Central IL bank holding company Heartland Bank and through de
Slide 6: Our markets
Our markets Branch locations Exposure to mid-sized and metropolitan markets Deposits Lake Chicago MSA 34% DeKalb Mid-sized $2.7bn Kane markets Kendall 66% Cook Bureau LaSalle Loans Will Marshall Grundy Mid-sized Chicago MSA markets $2.1bn 49% Peoria 51% Woodford Ford Tazewell Branches McLean De Witt
Slide 7: Our core operating principles
Our core operating principles Preserve asset quality through prudent underwriting standards Prioritize safety and Robust compliance management framework emphasizing sound governance practices soundness Protect stable core deposit base through excellent customer service Consistently generate
Slide 8: Business strategy
Business strategy Small enough to know you, big enough to serve you Deploy excess deposit Maintain a prudent Pursue strategic Preserve strong ties to funding into loan approach to credit acquisitions and sustain our communities growth opportunities underwriting strong profitability Drake family in
Slide 9: Investment highlights
Investment highlights 1 Consistent performance through cycles Leading market position in core mid-sized markets, 2 with growth opportunity in the Chicago MSA 3 Stable, low-cost deposit base Track record of successfully integrating 4 acquisitions 5 Prudent risk management 8
Slide 10: Company's performance compares favorably to peers
1 Company’s performance compares favorably to peers . . . Company High-performing peers1 2019 Performance Net interest margin Cost of deposits Yield on loans (tax equivalent basis)2 Loans-to-deposits 0.84% 5.51% 92.4% 5.27% 4.38% 3.80% 77.9% 0.29% Efficiency ratio (tax equivalent basis)2 Adjusted RO
Slide 11: Performance sustained through cycles
1 . . . and has been sustained through cycles . . . Drivers of profitability Pre-tax return on average assets (%) 3.00% Company Company Adjusted1 High Performing Peer Median2 Strong, low-cost deposits 2.75% 1 supported by our leading market share in core mid-sized markets 2.50% 2.25% 2.00% Relations
Slide 12: Driving tangible book value growth
1 . . . driving compelling tangible book value growth Tangible book value per share over time ($ per share)1 $(7.26) $17.27 $17.80 $14.72 $15.33 $16.25 $16.23 $12.56 $12.93 $10.15 $10.54 $11.12 $11.38 $5.38 $6.10 $6.91 $4.69 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19 IPO 3Q19 2
Slide 13: Leading market position in core mid-sized markets
2 Leading market position in core mid-sized markets . . . Top 3 deposit share rank in 6 of 7 largest core mid-sized markets in Central Illinois Company market share by county Shaded counties denote Company’s top mid-sized markets by deposit share Company Market Money Deposits Market Population Cente
Slide 14: Growth opportunity in the Chicago MSA
2 . . . with growth opportunity in the Chicago MSA Overview Chicago MSA comprises a major component of our business . . . Entered market in 2011 with acquisition of Western Springs National Bank Chicago MSA is home to >9.5mm residents, with an annual GDP >$675bn 34% 49% 33% of deposits of loans
Slide 15: Stable, low-cost deposit base
3 Stable, low-cost deposit base . . . Cost of deposits remains considerably below peers Company cost of deposits 1 peers cost of deposits High performing 0.89% 0.84% 0.77% 0.87% 0.74% 0.70% 0.63% 0.51% 0.40% 0.35% 0.36% 0.25% 0.24% 0.27% 0.27% 0.26% 0.30% 0.24% 0.24% 0.29% 0.30% 0.29% 0.26% 0.17% 0.
Slide 16: Supporting NIM trends
3 . . . has supported NIM trends The 150-basis point reduction in the target federal funds rate in March 2020 is expected to continue placing downward pressure on the net interest margin in 2020 50% of the loan portfolio matures or reprices within the next 12 months Loan mix is 57% fixed rate
Slide 17: Track record of successfully integrating acquisitions
4 Track record of successfully integrating acquisitions 2007 2010 2012 2015 BankPlus Bank of Illinois Farmer City State Bank National Bancorp, Inc. Morton, IL Normal, IL Farmer City, IL (American Midwest Bank) $231mm deposits FDIC-assisted $70mm deposits Schaumburg, IL $176mm deposits Citizens First
Slide 18: Prudent risk management
5 Prudent risk management Framework and key policies Balance sheet composition as of March 31, 2020 Risk management culture instilled by management Cash & Other Well-diversified loan portfolio across commercial, regulatory Loans securities assets CRE, and residential Primarily originated acros
Slide 19: Loan Portfolio Overview: Commercial Real Estate
Loan Portfolio Overview: Commercial Real Estate $950 million portfolio as of March 31, 2020 Commercial Real Estate Loan Mix $541 million in non-owner occupied CRE primarily Hotels Auto Repair supported by rental cash flow of the underlying properties Other* 3% & Dealers 4% 2% $232 million in c
Slide 20: Loan Portfolio Overview: Commercial
Loan Portfolio Overview: Commercial $299 million C&I loans outstanding as of March 31, 2020 Commercial Loan Mix For working capital, asset acquisition, and other business purposes Restaurants 4% Finance Auto Repair Underwritten primarily based on borrower’s cash flow and & Dealers Manufacturin
Slide 21: Loan Portfolio Overview: Agriculture and Farmland
Loan Portfolio Overview: Agriculture and Farmland $229 million portfolio as of March 31, 2020 Agriculture and Farmland Loan Mix 43% production, of which most is corn and soybeans 57% real estate loans secured by farmland Equipment Livestock finance 3% Federal crop insurance programs mitigate
Slide 22: Loan Portfolio Overview: 1-4 Family Residential Mortgage
Loan Portfolio Overview: 1-4 Family Residential Mortgage In-house 1-4 Family Residential Mortgage Portfolio Secondary Market 1-4 Family Residential Mortgage Portfolio $314 million in-house portfolio as of March 31, 2020 $1.13 billion sold to the secondary market with servicing retained as of Mar
Slide 23: Loan Portfolio Overview: Asset Quality and Reserves
Loan Portfolio Overview: Asset Quality and Reserves Asset quality impact from COVID-19 is modest so far Augmenting allowance for loan losses At March 31, 2020, non-performing assets were $19.8 million, or Allowance for loan losses totaled $26.1 million, or 1.22% of loans 0.62% of total assets co
Slide 24: Capital and Liquidity Overview
Capital and Liquidity Overview CET 1 Risk-based Capital Ratio (%) Leverage Ratio (%) 12.71 12.44 10.80 10.70 12.21 12.09 12.15 10.38 9.93 9.94 2016 2017 2018 2019 1Q20 2016 2017 2018 2019 1Q20 Tangible Common Equity to Tangible Assets (%)1 Liquidity Sources Liquidity Source As of 3/31/20 9.67 9.49 9
Slide 25: Impact of COVID-19 in Illinois
Impact of COVID-19 in Illinois Illinois has the 3rd highest number of confirmed COVID-19 cases Confirmed COVID-19 Cases in Illinois by County in the U.S. Some 66% of the state’s confirmed COVID-19 cases are in Cook County The impact of COVID-19 is more moderate in markets outside Cook County a
Slide 26: COVID-19: Customer, Community, and Employee Support Efforts
COVID-19: Customer, Community, and Employee Support Efforts Initial Response Business Continuity Plan (BCP) activated Executive leaders began meeting daily to discuss COVID-19 considerations Enhanced disinfecting and cleaning protocols implemented at all facilities Customer and Community Initi
Slide 27: Near-Term Outlook
Near-Term Outlook Active participant in the Paycheck Protection Program (PPP); through May 15, 2020: Approved and funded $179 million of PPP loans to 2,048 businesses representing approximately 23,000 employees Average loan size of $87,000 and median loan size of $28,000 Fees of $7.3 million
Slide 28: Appendix
Appendix HBT Financial 27
Slide 29: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted net income and adjusted ROAA ($000) 2017 2018 2019 1Q20 Net income $56,103 $63,799 $66,865 $6,221 C-Corp equivalent adjustment 2 (18,809) (15,502) (13,493) -- C-Corp equivalent net income 2 $37,294 $48,297 $53,372 $6,221 Adjustments: Net earnings (losses) from close
Slide 30: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Average tangible common equity and adjusted ROATCE ($000) 2017 2018 2019 1Q20 Total stockholders’ equity $338,317 $330,214 $341,544 $341,519 Less: goodwill (23,620) (23,620) (23,620) (23,620) Less: core deposit intangible assets (7,943) (6,256) (4,748) (3,898) Avera
Slide 31: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Net interest income (tax-equivalent basis) ($000) 2016 2017 2018 2019 1Q20 Net interest income $121,101 $120,998 $129,442 $133,800 $30,662 Tax equivalent adjustment 5,468 5,527 2,661 2,309 463 Net interest income (tax-equivalent basis) $126,569 $126,525 $132,103 $13
Slide 32: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Efficiency ratio (tax-equivalent basis) ($000) 2017 2018 2019 1Q20 Total noninterest expense $94,057 $90,317 $91,026 $23,307 Less: amortization of intangible assets (1,916) (1,559) (1,423) (317) Adjusted noninterest expense $92,141 $88,758 $89,603 $22,990 Net intere
Slide 33: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Originated and acquired NCOs / loans ($000) 2016 2017 2018 2019 1Q20 Net charge-offs $4,974 $3,082 $4,953 $1,614 567 Net charge-offs (originated) 1 1,245 2,500 3,137 732 172 Net charge-offs (acquired) 1 3,729 582 1,816 882 395 Average loans, before allowance for loa
Slide 34: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Credit quality ratios ($000) 2017 2018 2019 1Q20 Non-performing loans 2 $22,102 $15,913 $19,049 $15,372 Foreclosed assets 16,545 9,559 5,099 4,469 Non-performing assets 2 $38,647 $25,472 $24,148 $19,841 Loans, before allowance for loan losses $2,115,946 $2,144,257 $
Slide 35: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Tangible book value per share and cumulative effect of dividends (2007 to 3Q19) ($mm) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19 Tangible book value per share Total equity $109 $120 $130 $143 $197 $262 $257 $287 $311 $326 $324 $340 $349 Less go
Slide 36: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) IPO adjusted tangible book value per share ($000) 3Q19 Tangible common equity Total equity $348,936 Less goodwill (23,620) Less core deposit intangible (4,366) Tangible common equity 320,950 Net proceeds from initial public offering 138,493 Use of proceeds from init
Slide 37: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Tangible common equity to tangible assets ($000) 2016 2017 2018 2019 1Q20 Tangible common equity Total equity $326,246 $323,916 $340,396 $332,918 $339,813 Less goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less core deposit intangible (8,928) (7,012) (5,453)
Slide 38: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Core deposits ($000) 2017 2018 2019 1Q20 Total deposits $2,855,685 $2,795,970 $2,776,855 $2,730,303 Less time deposits of $250,000 or more (42,830) (36,875) (44,754) (28,060) Less brokered deposits -- -- -- -- Core deposits $2,812,855 $2,759,095 $2,732,101 $2,702,24
Slide 39: HBT Financial, Inc.
HBT Financial, Inc.