Hbt Financial, Inc. · NASDAQ:HBT
Hbt Financial — Q3 2020 Earnings Presentation
43 slides from Hbt Financial's earnings presentation, Oct 26, 2020
Slide 1: Q3 2020 Results Presentation
STRICTLY PRIVATE AND CONFIDENTIAL Q3 2020 Results Presentation October 26, 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: Q3 2020 highlights
Q3 2020 highlights Continued disciplined growth ◼ Total assets increased $34 million, or 1%, from the second quarter driven by the issuance of subordinated notes with the proceeds primarily invested in securities ◼ Total deposits were substantially unchanged and the cost of total deposits declined 3
Slide 4: Company snapshot
C&I 17% CRE–Owner occupied 10% Agricultural & farm land 10% CRE–Non-owner occupied 23% C&D 12% Multi-family 9% 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 Source: The COVID Tracking Project (cumulative case data through October 18); CDC (data on COVID-19 cases in the last 7 days is through October 17) Cumulative COVID-19 Cases (Confirmed & Probable) in Illinois ◼ Like the rest of the U.S., COVID-19 remains a challenge fo
Slide 6: Paycheck Protection Program (PPP) Details
Paycheck Protection Program (PPP) Details PPP Loans by Portfolio as of September 30, 2020 Portfolio Balance ($000) Commercial and industrial $168,466 Agricultural and farmland 4,179 Municipal, consumer, and other 7,095 Total PPP Loans $179,740 ◼ PPP loan balances, net of deferred origination fees, t
Slide 7: COVID-19 Loan Modification Update
COVID-19 Loan Modification Update Loan Modification Balances ($mm) ◼ Loans in modifications declined 82% from the second quarter to $36.4 million, or 1.6% of total loans, as of September 30, 2020 ➢ $16.1 million of the loans still in modification as of September 30, 2020 had returned to regular paym
Slide 8: Loan Portfolio Overview: Commercial Real Estate
Loan Portfolio Overview: Commercial Real Estate ◼ $998 million portfolio as of September 30, 2020 ➢ $532 million in non-owner occupied CRE primarily supported by rental cash flow of the underlying properties ➢ $266 million in construction and land development loans primarily to developers to sell up
Slide 9: Loan Portfolio Overview: Commercial
Loan Portfolio Overview: Commercial ◼ $389 million C&I loans outstanding as of September 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 b
Slide 10: Loan Portfolio Overview: Agriculture and Farmland
Loan Portfolio Overview: Agriculture and Farmland ◼ $236 million portfolio as of September 30, 2020 ◼ Federal crop insurance programs mitigate production risks ◼ No customer accounts for more than 4% of the agriculture portfolio ◼ Weighted average LTV on Farmland Loans is 52.7% ◼ 1.8% received a COV
Slide 11: Loan Portfolio Overview: 1-4 Family Residential Mortgage
Loan Portfolio Overview: 1-4 Family Residential Mortgage ◼ $308 million in-house portfolio as of September 30, 2020 ◼ Weighted average LTV is 61.2% ◼ 6.4% received a COVID-19 modification and 0.6% was still in modification as of September 30, 2020 ◼ 4.2% is rated substandard 1st Mortgages Non-owner
Slide 12: Loan Portfolio Overview: Municipal, Consumer and Other
Loan Portfolio Overview: Municipal, Consumer and Other ◼ $123 million portfolio as of September 30, 2020 ➢ Loans to municipalities are primarily federally tax-exempt ➢ Consumer loans include loans to individuals for consumer purposes and typically consist of small balance loans ◼ Commercial Tax-Exem
Slide 13: Loan Portfolio Overview: Asset Quality and Reserves
Loan Portfolio Overview: Asset Quality and Reserves ◼ At September 30, 2020, non-performing assets were $19.1 million, or 0.54% of total assets compared to $24.1 million, or 0.74% of total assets at December 31, 2019 ◼ Net charge-offs were $0.7 million, or 0.04% on an annualized basis for the nine m
Slide 14: Capital and Liquidity Overview
Capital and Liquidity Overview 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 12.52 2016 2017 2018 2019 3Q20 9.93 9.94 10.80 10.38 10.04 2016 2017 2018 2019 3Q20 8.94 8.94 9.67 9.49 9.36 2016 2017
Slide 15: Securities Portfolio Overview
U.S Gov’t Agency 3.51% Agency RMBS 2.35% Agency CMBS 2.68% U.S Gov’t Agency 1.80% Muncipal 2.19% Agency RMBS 1.50% Agency CMBS 2.20% Corporate 3.44% Securities Portfolio Overview ◼ Company owns debt securities with a total carrying value of $889mm, consisting primarily of the following types of fixe
Slide 16: Near-Term Outlook
Near-Term Outlook ◼ Loan pipelines remain healthy but near-term loan growth (excluding the impact of PPP loans) is expected to be relatively flat over the next quarter ◼ NIM pressure (excluding the impact of PPP loans and excess liquidity) is expected to persist for the next couple of quarters but m
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 19 years with Company 26 years in industry Patrick F. Busch Chief Lending Officer, President of Heartland Ban
Slide 22: 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 21
Slide 23: 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 24: Profitability 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 25: 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 $16 per share. Total proceeds rece
Slide 26: Leading market position in core mid-sized markets
Leading market position in core mid-sized markets . . . Top 3 deposit share rank in 6 of 7 largest core mid-sized markets in Central Illinois Company Market County % of Company deposits Deposits ($mm) Branches Market share Rank Population (000) Money Center share1 McLean $570 9 16.3% 2 171 10.5% DeK
Slide 27: Growth opportunity in the Chicago MSA
Loans within the Chicago MSA ($mm) CAGR of 7.3% .. . . 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 28: Stable, low-cost deposit base
18% 20% 10% 18% 2016 2Q19 2016 1Q19 0.17% 0.16% 0.16% 0.15% 0.17% 0.17% 0.18% 0.17% 0.17% 0.20% 0.23% 0.24% 0.29% 0.30% 0.29% 0.26% 0.24% 0.14% 0.11% 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% 0.83% 0.70% 0.43% Company cost of deposits* High performing
Slide 29: Supporting NIM trends
3.72% 3.83% 3.71% 3.37% 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 October 18, 2020); 1 Tax-equivalent basis metric; for reconciliation
Slide 30: 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 $184mm deposits 2011 Citizens First National Bank Princeton, IL FDIC-assisted
Slide 31: Prudent risk management
Prudent risk management Framework and key policies Balance sheet composition as of September 30, 2020 Originated and acquired loans1 ($mm) ◼ Risk management culture instilled by management ◼ Well-diversified loan portfolio across commercial, regulatory CRE, and residential ◼ Primarily originated acr
Slide 32: Appendix
Appendix 31
Slide 33: Non-GAAP reconciliations
Non-GAAP reconciliations Adjusted net income and adjusted ROAA ($000) 2017 2018 2019 3Q20 Q3-YTD Net income $56,103 $63,799 $66,865 $10,563 $24,203 C-Corp equivalent adjustment 2 (18,809) (15,502) (13,493) -- -- C-Corp equivalent net income 2 $37,294 $48,297 $53,372 $10,563 $24,203 Adjustments: Net
Slide 34: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Average tangible common equity and adjusted ROATCE ($000) 2017 2018 2019 3Q20 Q3-YTD Total stockholders’ equity $338,317 $330,214 $341,544 $355,296 $347,812 Less: goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less: core deposit intangible assets (7,943) (6,2
Slide 35: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 1Q20 2Q20 3Q20 Q3-YTD Net interest income $120,998 $129,442 $133,800 $30,662 $28,908 $28,871 $88,441 Tax equivalent adjustment 5,527 2,661 2,309 463 483 495 1,441 Net interest income (tax-equivalent basis) $126,525 $132,103 $136,109 $31,125 $29
Slide 36: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Efficiency ratio (tax-equivalent basis) ($000) 2017 2018 2019 3Q20 Q3-YTD Total noninterest expense $94,057 $90,317 $91,026 $22,485 $69,291 Less: amortization of intangible assets (1,916) (1,559) (1,423) (305) (927) Adjusted noninterest expense $92,141 $88,758 $89,6
Slide 37: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2016 2017 2018 2019 Q3-YTD Net charge-offs $4,974 $3,082 $4,953 $1,614 $747 Net charge-offs (originated) 1 1,245 2,500 3,137 732 155 Net charge-offs (acquired) 1 3,729 582 1,816 882 592 Average loans, before allowance for loan losses $2,132,405 $2,091,863 $2,
Slide 38: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 3Q20 Non-performing loans 2 $22,102 $15,913 $19,049 $15,208 Foreclosed assets 16,545 9,559 5,099 3,857 Non-performing assets 2 $38,647 $25,472 $24,148 $19,065 Loans, before allowance for loan losses $2,115,946 $2,144,257 $2,163,826 $2,279,639 N
Slide 39: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) Tangible book value per share and cumulative effect of dividends (2007 to 3Q19) ($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 $349 Less go
Slide 40: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) IPO adjusted tangible book value per share ($mm) IPO Adjusted 3Q19 2019 3Q20 Tangible book value per share Total equity $333 $355 Less goodwill (24) (24) Less core deposit intangible (4) (3) Tangible common equity $305 $329 Shares outstanding (mm) 27.46 27.46 Book v
Slide 41: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2016 2017 2018 2019 3Q20 Tangible common equity Total equity $326,246 $323,916 $340,396 $332,918 $355,294 Less goodwill (23,620) (23,620) (23,620) (23,620) (23,620) Less core deposit intangible (8,928) (7,012) (5,453) (4,030) (3,103) Tangible common equity $2
Slide 42: Non-GAAP reconciliations (cont'd)
Non-GAAP reconciliations (cont’d) ($000) 2017 2018 2019 3Q20 Total deposits $2,855,685 $2,795,970 $2,776,855 $3,016,661 Less time deposits of $250,000 or more (42,830) (36,875) (44,754) (24,734) Less brokered deposits -- -- -- -- Core deposits $2,812,855 $2,759,095 $2,732,101 $2,991,927 Core deposit
Slide 43: HBT Financial, Inc.
HBT Financial, Inc.