Hbt Financial, Inc. · NASDAQ:HBT
Hbt Financial — Q2 2020 Earnings Presentation
42 slides from Hbt Financial's earnings presentation, Jul 27, 2020
Slide 1: Q2 2020 Results Presentation
STRICTLY PRIVATE AND CONFIDENTIAL Q2 2020 Results Presentation J u l y 2 7 , 2020 HBT Financial, Inc.
Slide 2: Forward-Looking Statements
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: Q2 2020 highlights
Q2 2020 highlights Continued disciplined growth ◼ Total assets increased $288 million, or 9%, linked quarter driven by strong deposit growth and the addition of $178 million of PPP loans ◼ Total deposits increased by $284 million, or 10%, linked quarter as cost of total deposits declined by 9 basis
Slide 4: Company snapshot
C&I 18% CRE–Owner occupied 10% Agricultural & farm land 10% CRE–Non-owner occupied 24% C&D 11% Multi-family 8% 1-4 Family residential 14% Municipal, consumer & other 5% Company snapshot ✓ Company incorporated in 1982 from base of family-owned banks and completed its IPO in October 2019 ✓ Headquarter
Slide 5: Impact of COVID-19 in Illinois
Impact of COVID-19 in Illinois 4 Source: U.S. CDC, Johns Hopkins Coronavirus Resource Center, and the Illinois Department of Public Health (IDPH); COVID-19 case data is as of or through July 19, 2020 Cumulative COVID-19 Cases in Illinois ◼ The growth in COVID-19 cases in Illinois is starting to slow
Slide 6: COVID-19: Customer, Community, and Employee Support Efforts
COVID-19: Customer, Community, and Employee Support Efforts 5 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 Ini
Slide 7: Paycheck Protection Program (PPP) Details
Paycheck Protection Program (PPP) Details 6 PPP Loan Originations PPP Loans by Portfolio as of June 30, 2020 Portfolio Balance ($000) Commercial and industrial $166,868 Agricultural and farmland 4,027 Municipal, consumer, and other 7,063 Total PPP Loans $177,958 ◼ Originated $184 million of PPP loan
Slide 8: COVID-19 Related Loan Modifications
191 247 58 49 5 $128 $128 $13 $14 $2 March April May June July 17 Number Balance as of July 17 COVID-19 Related Loan Modifications 7 1 Includes non-owner occupied CRE, construction and land development, and multi-family 2 Includes commercial and industrial and owner-occupied CRE 3 Original month mod
Slide 9: Loan Portfolio Overview: Commercial Real Estate
Loan Portfolio Overview: Commercial Real Estate 8 ◼ $969 million portfolio as of June 30, 2020 ➢ $535 million in non-owner occupied CRE primarily supported by rental cash flow of the underlying properties ➢ $248 million in construction and land development loans primarily to developers to sell upon
Slide 10: Loan Portfolio Overview: Commercial
Loan Portfolio Overview: Commercial 9 ◼ $408 million C&I loans outstanding as of June 30, 2020 ➢ For working capital, asset acquisition, and other business purposes ➢ Underwritten primarily based on borrower’s cash flow and majority further supported by collateral and personal guarantees; loans base
Slide 11: Loan Portfolio Overview: Agriculture and Farmland
Loan Portfolio Overview: Agriculture and Farmland 10 ◼ $239 million portfolio as of June 30, 2020 ➢ 57% real estate loans secured by farmland ➢ 41% production, of which most is corn and soybeans ➢ 2% PPP loans ◼ Federal crop insurance programs mitigate production risks ◼ No customer accounts for mor
Slide 12: Loan Portfolio Overview: 1-4 Family Residential Mortgage
Loan Portfolio Overview: 1-4 Family Residential Mortgage 11 ◼ $308 million in-house portfolio as of June 30, 2020 1st Motgages Non-owner Occupied 48% HELOCs and 2nd Mortgages 27% 1st Mortgages Owner Occupied 25% 1-4 Family Residential Loan Mix ◼ $1.09 billion sold to the secondary market with servic
Slide 13: Loan Portfolio Overview: Asset Quality and Reserves
Loan Portfolio Overview: Asset Quality and Reserves 12 ◼ At June 30, 2020, non-performing assets were $18.4 million, or 0.53% of total assets compared to $24.1 million, or 0.74% of total assets at December 31, 2019 ◼ Net charge-offs were $0.5 million, or 0.05% on an annualized basis for the six mont
Slide 14: Capital and Liquidity Overview
Capital and Liquidity Overview 13 CET 1 Risk-based Capital Ratio (%) Leverage Ratio (%) Tangible Common Equity to Tangible Assets (%)1 Liquidity Sources ($000) 12.21 12.09 12.71 12.15 12.43 2016 2017 2018 2019 2Q20 9.93 9.94 10.80 10.38 10.00 2016 2017 2018 2019 1Q20 8.94 8.94 9.67 9.49 9.23 2016 20
Slide 15: Near-Term Outlook
Near-Term Outlook 14 ◼ Active participant in the Paycheck Protection Program (PPP); through June 30, 2020: ➢ Approved and funded $184 million of PPP loans to 2,245 businesses representing approximately 24,000 employees ➢ Average loan size of $82,000 and median loan size of $25,000 ➢ Fees of $7.5 mil
Slide 16: Our history
Our history Fred Drake named President and CEO of Heartland Bank and Trust Company and led its entry into Bloomington-Normal 1992 1964 - 1982 George Drake purchases El Paso National Bank and assembles group of banks in rural communities in Central IL M.B. Drake starts bank in Central IL 1920 HBT Fin
Slide 17: Our markets
Our markets Company branches outside of Chicago MSA Company branches in Chicago MSA Lake Kane DeKalb Cook Will Kendall LaSalle Bureau Grundy Ford McLean De Witt Logan Tazewell Peoria Marshall Woodford Champaign Exposure to mid-sized and metropolitan markets Branch locations Chicago MSA 34% Mid-sized
Slide 18: Business strategy
Business strategy ◼ Drake family involved in Central IL banking since 1920 ◼ Management lives and works in our communities ◼ Community banking and relationship-based approach stems from adherence to our Midwestern values ◼ Committed to providing products and services to support the unique needs of o
Slide 19: Our core operating principles
Our core operating principles Continue disciplined growth ◼ Grow conservatively in our core mid-sized markets and in the Chicago MSA via organic channels and through M&A ◼ Pursue strategically compelling and financially attractive growth opportunities that are consistent with our culture Uphold our
Slide 20: Experienced executive management team with deep community ties
Experienced executive management team with deep community ties Fred L. Drake Chairman and CEO 37 years with Company 40 years in industry J. Lance Carter President and Chief Operating Officer 18 years with Company 26 years in industry Patrick F. Busch Chief Lending Officer, President of Heartland Ban
Slide 21: Investment highlights
Investment highlights 4 1 2 3 5 Track record of successfully integrating acquisitions Consistent performance through cycles Leading market position in core mid-sized markets, with growth opportunity in the Chicago MSA Stable, low-cost deposit base Prudent risk management 20
Slide 22: Company's performance compares favorably to peers
Company’s performance compares favorably to peers . . . Cost of deposits 0.29% 0.84% Yield on loans 5.51% 5.27% Net interest margin (tax equivalent basis)2 4.38% 3.80% 77.9% 92.4% Loans-to-deposits 53.1% 56.8% Efficiency ratio (tax equivalent basis)2 Source: S&P Global Market Intelligence Note: Fina
Slide 23: Performance sustained through cycles
. . . and has been sustained through cycles . . . Drivers of profitability Pre-tax return on average assets (%) 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% 2006 2007 2008 2009 2010 2011¹ 2012¹ 2013¹ 2014 2015 2016 2017 2018 2019 Source: S&P Global Market Intelligenc
Slide 24: Driving tangible book value growth
. . . driving compelling tangible book value growth Tangible book value per share over time ($ per share)1 1 For reconciliation with GAAP metric, see “Non-GAAP reconciliations”; 2 In 2019, HBT Financial issued and sold 9,429,794 shares of common stock at a price of $16 per share. Total proceeds rece
Slide 25: Leading market position in core mid-sized markets
Leading market position in core mid-sized markets . . . Top 3 deposit share rank in 6 of 7 largest core mid-sized markets in Central Illinois Company Market County % of Company deposits Deposits ($mm) Branches Market share Rank Population (000) Money Center share1 McLean $508 9 16.6% 2 172 13.0% DeK
Slide 26: Growth opportunity in the Chicago MSA
Loans within the Chicago MSA ($mm) CAGR of 6.8% .. . . with growth opportunity in the Chicago MSA ◼ Entered market in 2011 with acquisition of Western Springs National Bank ◼ Chicago MSA is home to >9.5mm residents, with an annual GDP >$675bn ◼ Second largest MSA in the country for middle market bus
Slide 27: Stable, low-cost deposit base
18% 20% 12% 21% 2016 2Q19 2016 1Q19 0.17% 0.16% 0.16% 0.15% 0.17% 0.17% 0.18% 0.17% 0.17% 0.20% 0.24% 0.24% 0.29% 0.30% 0.29% 0.26% 0.23% 0.14% 0.25% 0.24% 0.27% 0.27% 0.26% 0.30% 0.35% 0.36% 0.40% 0.51% 0.63% 0.70% 0.77% 0.87% 0.89% 0.84% 0.74% Company cost of deposits High performing peers cost of
Slide 28: Net interest margin trends
3.72% 3.83% 3.72% 2017 2018 2019 1Q20 2Q20 3.80% .. . . has supported NIM trends FTE NIM1 Source: S&P Global Market Intelligence; Note: Peer group NIMs shown on FTE basis when available; (data for peers as available through May 15, 2020); 1 Tax-equivalent basis metric; for reconciliation with GAAP m
Slide 29: Track record of successfully integrating acquisitions
Track record of successfully integrating acquisitions BankPlus Morton, IL $231mm deposits 2007 2012 Bank of Illinois Normal, IL FDIC-assisted $176mm deposits Western Springs National Bank Western Springs, IL FDIC-assisted $184mm deposits 2011 Citizens First National Bank Princeton, IL FDIC-assisted
Slide 30: Prudent risk management
Prudent risk management Framework and key policies Balance sheet composition as of June 30, 2020 Originated and acquired loans1 ($mm) ◼ Risk management culture instilled by management ◼ Well-diversified loan portfolio across commercial, regulatory CRE, and residential ◼ Primarily originated across i
Slide 31: Appendix
Appendix 30
Slide 32: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted net income and adjusted ROAA ($000) 2017 2018 2019 2Q20 1H20 Net income $56,103 $63,799 $66,865 $7,419 $13,640 C-Corp equivalent adjustment 2 (18,809) (15,502) (13,493) -- -- C-Corp equivalent net income 2 $37,294 $48,297 $53,372 $7,419 $13,640 Adjustments: Net earn
Slide 33: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Average tangible common equity and adjusted ROATCE ($000) 2017 2018 2019 2Q20 1H20 Total stockholders’ equity $338,317 $330,214 $341,544 $346,540 $344,030 Less: goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less: core deposit intangible assets (7,943) (6,256
Slide 34: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2016 2017 2018 2019 2Q20 1H20 Net interest income $121,101 $120,998 $129,442 $133,800 $28,908 $59,570 Tax equivalent adjustment 5,468 5,527 2,661 2,309 483 946 Net interest income (tax-equivalent basis) $126,569 $126,525 $132,103 $136,109 $29,391 $60,516 Aver
Slide 35: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Efficiency ratio (tax-equivalent basis) ($000) 2017 2018 2019 2Q20 1H20 Total noninterest expense $94,057 $90,317 $91,026 $23,499 $46,806 Less: amortization of intangible assets (1,916) (1,559) (1,423) (305) (622) Adjusted noninterest expense $92,141 $88,758 $89,603
Slide 36: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2016 2017 2018 2019 1H20 Net charge-offs $4,974 $3,082 $4,953 $1,614 $504 Net charge-offs (originated) 1 1,245 2,500 3,137 732 175 Net charge-offs (acquired) 1 3,729 582 1,816 882 329 Average loans, before allowance for loan losses $2,132,405 $2,091,863 $2,13
Slide 37: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 2Q20 Non-performing loans 2 $22,102 $15,913 $19,049 $13,952 Foreclosed assets 16,545 9,559 5,099 4,450 Non-performing assets 2 $38,647 $25,472 $24,148 $18,402 Loans, before allowance for loan losses $2,115,946 $2,144,257 $2,163,826 $2,275,795 N
Slide 38: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Tangible book value per share and cumulative effect of dividends (2007 to 3Q19) ($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 $349 Less go
Slide 39: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) IPO adjusted tangible book value per share ($mm) IPO Adjusted 3Q19 2019 2Q20 Tangible book value per share Total equity $333 $347 Less goodwill (24) (24) Less core deposit intangible (4) (3) Tangible common equity $305 $321 Shares outstanding (mm) 27.46 27.46 Book v
Slide 40: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2016 2017 2018 2019 2Q20 Tangible common equity Total equity $326,246 $323,916 $340,396 $332,918 $347,840 Less goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less core deposit intangible (8,928) (7,012) (5,453) (4,030) (3,408) Tangible common equity $2
Slide 41: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 2Q20 Total deposits $2,855,685 $2,795,970 $2,776,855 $3,015,113 Less time deposits of $250,000 or more (42,830) (36,875) (44,754) (24,602) Less brokered deposits -- -- -- -- Core deposits $2,812,855 $2,759,095 $2,732,101 $2,990,511 Core deposit
Slide 42: HBT Financial, Inc.
HBT Financial, Inc.